Qualcomm signs deal to supply US-made chips with GlobalFoundries

Qualcomm more than doubled its investment in GlobalFoundriesas it seeks to increase US chip manufacturing by 50% over the next five years as a result of the CHIPS and Science Act.

Under terms of the deal, the San Diego, Calif.-based smartphone chip giant has agreed to purchase an additional $4.2 billion worth of chips from GlobalFoundries’ most advanced facility in northern California. New York State. The deal brings Qualcomm’s total purchase deal to $7.4 billion through 2028, according to GlobalFoundries.

The new long-term agreement covers chips based on GlobalFoundries’ FinFET platforms. The chips are intended for use in RF transceivers for 5G smartphones, Wi-Fi, automotive, and Internet of Things (IoT) connectivity.

CEO Thomas Caulfield said the arrival of Qualcomm as a long-term customer at its upstate New York plant, coupled with new federal and state funding, will fuel the expansion of manufacturing. business in the United States.

The world’s leading fabless semiconductor maker, Qualcomm was one of the first GlobalFoundries customers to sign a long-term agreement (LTA) to span multiple geographies and technologies in 2021.

The announcement comes as the United States prepares to begin distributing funds made possible by the CHIPS Act, which will allocate more than $52 billion in federal grants to companies that build chip production capacity in the United States. and avoid China. Rounding out the package is $24 billion in manufacturing equipment tax credits to ease the burden of building new chip factories that can cost more than $10 billion each.

The bill creates tens of billions of dollars to fund basic science research to spur innovation that, in the future, could give a boost to Qualcomm and other chip designers that aren’t eligible for grants.

The White House said the funding is the first step in rebuilding the U.S. chip industry and will “unlock hundreds of billions more” in private spending, citing Qualcomm’s deal with GlobalFoundries as proof of that.

Micron Technology plans to spend $40 billion on a US factory expansion through the end of the decade in a bid to boost US memory production from less than 2% to more 10% of global supply by 2030.

Senate Majority Leader Chuck Schumer, who was a strong supporter of subsidies for the US chip industry, welcomed the deal. “We can already see the semiconductor industry reinvesting in the United States,” he said.

“With major new federal incentives for microchip manufacturing in the United States, I look forward to many more announcements like this to come,” the leading Senate Democrat said in a statement Monday.

GlobalFoundries is the world’s third-largest contracted chip supplier behind TSMC and Samsung, but it ranks second when excluding Samsung’s foundry unit which manufactures chips designed by other divisions of the conglomerate.

GlobalFoundries manufactures chips for the US Department of Defense and companies such as AMD, Broadcom and MediaTek. The company has tried to transform after exiting the race with TSMC, Intel and Samsung to build the most advanced processors in favor of focusing on feature-rich chips based on more mature process nodes that are essential to everything. , from smartphones to automotive to IoT.

Business has boomed amid a global chip shortage that has stalled production of a wide range of consumer goods for years, although there are signs the pandemic boom in chip demand is cooling .

Due to the shortage of chips, many semiconductor companies have decided to enter into long-term agreements with their foundries. Qualcomm, Nvidia and others are spending billions of dollars to book production capacity years in advance at GlobalFoundries and other overburdened contract chipmakers. For its part, GlobalFoundries has access to more binding long-term forecasts and capital to fund its expansion plans.

The new agreement builds on a long-standing partnership between the companies. In 2021, Qualcomm signed a long-term deal for chips based on GlobalFoundries’ 22FDX technology at its factory in Dresden, Germany.

The partnership expands to include additional capacity at GlobalFoundries’ future production plant in France, where it plans to invest approximately $5.7 billion to build a plant with the help of STMicroelectronics.

Qualcomm said it has also reserved production capacity for the company’s RF silicon-on-insulator (RFSOI) technology for use in sub-6GHz front-end modules (FEMs) for 5G smartphones and other mobile devices.

These chips, which sit in front of the baseband modem in 5G smartphones, will primarily be manufactured at GlobalFoundries’ Singapore factory, which is currently being expanded. Full ramp-up is scheduled for early 2023.

“With the accelerating demand for 5G, automotive and IoT applications, a strong supply chain is essential to ensure innovation in these areas remains uninterrupted,” said Roawen Chen, senior vice president and director of supply chain and operations at Qualcomm.

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