Biden Admin Announces Potential $1.5 Billion Deal With US Semiconductor Manufacturer

President Joe Biden speaks about his Investing in America and Bipartisan Infrastructure plans at Earth Rider Brewery in Superior, Wis., on Jan. 25, 2024. Saul Loeb/AFP via Getty Images

A New York City microchip manufacturer could soon receive a $1.5 billion grant from the Biden administration to help bolster semiconductor manufacturing capacity in the United States, the White House has announced.

The agreement with one of the world’s leading semiconductor manufacturers, GlobalFoundries, is a nonbinding preliminary memorandum of terms under the CHIPS and Science Act, according to a Feb. 19 press release from the National Institute of Standards and Technology.

Signed into law by President Joe Biden in 2022, the CHIPS and Science Act authorizes about $280 billion in new funding to boost domestic research and manufacturing of semiconductors across the wider United States.

Secretary of Commerce Gina Raimondo said if the billion-dollar agreement goes ahead, it will increase the domestic production of semiconductors, improving supply chain stability to the local auto and aerospace industries that currently rely on shipments from overseas. The deal could also bolster U.S. competitiveness in current-generation and mature-node semiconductor production.

“Semiconductors are in everything from our cellphones, to refrigerators, to cars, and our most advanced weapons systems, and access to them carries important economic and national security implications,” Ms. Raimondo said.

“It was the shortages of semiconductors during the COVID-19 pandemic that raised prices for consumers and led to the shutdown of automobile manufacturing sites across the country,” she added.

According to GlobalFoundries, the government funding will be used to create a new top of the line semiconductor production facility in Malta, New York, that will produce technologies not currently available the local area.

Some of the grant will also go toward expanding an existing GlobalFoundries facility in New York. This expansion, combined with the fabrication facility, is expected to triple the existing capacity of the Malta campus over the next 10 years. A Burlington, Vermont, facility will also receive a makeover and revitalization with some of the government funds.

Improving the US Market

Thomas Caulfield, president and CEO of GlobalFoundries, said in the company’s announcement that the new and refurbished facilities will “play an important role in making the U.S. semiconductor ecosystem more globally competitive and resilient and cements the New York Capital Region as a global semiconductor hub.

“With new onshore capacity and technology on the horizon, as an industry we now need to turn our attention to increasing the demand for U.S.-made chips, and to growing our talented U.S. semiconductor workforce,” he said.

In addition to potential direct funding, approximately $1.6 billion in loans will be available to GlobalFoundries under the preliminary memorandum of terms. In total, the potential public and private investment for all the announced projects would be at least $12.5 billion.

At the moment, there are only a handful of companies that produce microchips in significant quantities, and nearly all are in China.

Late last year, the Biden administration expanded its restrictions on semiconductor exports to China, seeking to slow the communist regime’s development of advanced military tech. The new rules limit the types of advanced semiconductors that U.S. firms can sell to China. U.S. companies must notify the government or get a license to export advanced semiconductor chips or the machinery needed to manufacture them.