In its brief 14-year historical past, GlobalFoundries has risen to turn into the world’s third-largest chip foundry. Based mostly in upstate New York, GlobalFoundries is not a family identify as a result of it is manufacturing semiconductors which might be designed and bought by different firms.
However it’s quietly serving to energy almost each linked gadget.
“Have a look at each digital gadget in your home, and I’d wager you cash that each a type of units has no less than one GlobalFoundries chip in it,” Thomas Caulfield, GlobalFoundries CEO, advised CNBC.
GlobalFoundries chips are inside all the things from smartphones and vehicles to good audio system and Bluetooth-enabled dishwashers. They’re additionally within the servers operating generative synthetic intelligence fashions, a market that is booming so shortly that chipmaker Nvidia has surpassed a $1 trillion market cap and is forecasting 170% gross sales development this quarter.
Inside generative AI, GlobalFoundries is not centered on making the highly effective graphics processing models (GPUs) used to coach giant language fashions like ChatGPT. As an alternative, the corporate is manufacturing chips that carry out features like energy administration, connecting to shows, or enabling wi-fi connections.
Caulfield says AI is “the catalyst for our trade to double within the subsequent eight years and GF could have its justifiable share, if no more, of that chance.”
5 years in the past, GlobalFoundries made a daring transfer away from modern chips, exiting a race that was received by Taiwan Semiconductor Manufacturing Firm.
Now, as tensions with China elevate issues over the world’s reliance on TSMC, and the U.S. and China play technological tug-of-war with export controls, GlobalFoundries finds itself positioned effectively exterior the geopolitical crosshairs. The corporate has spent about $7 billion to develop manufacturing in Singapore, Germany, France and upstate New York.
CNBC went to Malta, New York, for a firsthand have a look at the fabrication plant the place GlobalFoundries is including 800 acres, to ask how the corporate plans to remain forward whereas creating the older chips nonetheless important for on a regular basis units.
‘It labored out for everyone’
The story started in 2009, when Superior Micro Gadgets determined to interrupt off its manufacturing operations right into a separate firm and focus completely on designing chips. The newly fashioned GlobalFoundries took over AMD’s chip fabrication plant, or fab, in Dresden, Germany. On the time, it was a three way partnership between AMD and the federal government of Abu Dhabi’s tech funding arm. Moorhead was working at AMD.
“Our founder, Jerry Sanders, at AMD mentioned, ‘actual males have fabs.’ So the considered spinning out the fab from AMD into its personal firm was a extremely large deal,” Moorhead mentioned. AMD “needed to do it,” he added, as a result of “the bills for a forefront fab had been doubling each two or three years. And proper now we’re investments of campuses upwards of $100 billion.”
For the primary few years, AMD was GlobalFoundries’ solely main buyer. AMD has since grown to turn into Nvidia’s primary rival for designing GPUs.
“I believe it labored out for everyone,” Moorhead mentioned.
GlobalFoundries began constructing its new fab, and future headquarters, in Malta in 2009. The following yr, it expanded into Singapore with the acquisition of Chartered Semiconductor. By 2015, it had acquired IBM’s in-house semiconductor division, taking up manufacturing websites in Vermont and New York. By 2018, GlobalFoundries was a $6 billion enterprise.
“Sadly, it had a technique that was not capable of produce profitability or free money movement,” mentioned Caulfield. “So in 2018, after I turned the CEO of GlobalFoundries, we determined to make a strategic pivot to focus all our power, all our R&D, all of our capital deployment to go be the perfect at these important chips. And that started a journey to turning our firm round to profitability.”
To today, GlobalFoundries solely makes 12-nanometer chips and above, or what it calls “important” chips.
GlobalFoundries CEO Thomas Caulfield reveals a 300mm wafer to CNBC’s Katie Tarasov at Fab 8 in Malta, New York, on September 5, 2023.
Carlos Waters
“When you do safe pay transactions, whether or not it is in your bank card or in your good cellular gadget, we make the chip that does that,” Caulfield mentioned. “Do you want the pictures your digital camera takes? Effectively, we make picture sensor processors that drive that digital camera. Do you just like the battery life in your cellphone? We make the PMICs, the ability administration ICs that make it possible for energy is managed on these units.”
In the course of the 2021 chip scarcity, GlobalFoundries advised CNBC it bought out completely. That very same yr, the corporate went public on the Nasdaq.
“Finally, we actually want these chips,” mentioned Daniel Newman, CEO of analysis agency Futurum Group. “We discovered that out as a result of we had parking heaps stuffed with pickup vehicles that could not be shipped as a result of they could not put the ECU in or they could not set up energy seats. So GlobalFoundries had a extremely robust market requirement.”
International development
GlobalFoundries is the one one of many world’s prime 5 chip foundries based mostly within the U.S. The opposite 4 are Semiconductor Manufacturing Worldwide in China, Samsung with fabs in South Korea and the U.S., and United Microelectronics and TSMC, that are each in Taiwan.
“Not solely do we’ve got a excessive focus of semiconductor manufacturing in Taiwan between TSMC and UMC, however TSMC is twice the dimensions of the opposite 4 firms mixed,” Caulfield mentioned.
TSMC makes greater than 90% of the world’s most-advanced microchips, creating vulnerability throughout provide chain backlogs in addition to dangers tied to China’s continued threats to invade Taiwan. Like GlobalFoundries, TSMC additionally makes older nodes. Caulfield mentioned GlobalFoundries is totally going after TSMC.
“Not solely do we’ve got aspirations, we predict in sure areas we have received,” Caulfield mentioned. He pointed to his firm’s radio frequency chips and silicon on insulator expertise.
“Silicon on insulator is a big differentiator with regards to energy, and TSMC would not use that,” Moorhead mentioned.
At a time of geopolitical turmoil, GlobalFoundries is investing about $7 billion so as to add capability in components of the world with decrease danger.
In Singapore, the corporate simply accomplished a $4 billion enlargement that it says makes it the nation’s most-advanced fab. In June, it finalized a take care of STMicroelectronics to construct a collectively owned fab in Crolles, France.
Not all world enlargement endeavors have gone easily, nonetheless. In 2017, GlobalFoundries made large plans for a fab in Chengdu, China. In 2020, it backed out.
“It turned out we had three comparatively giant services all over the world already that had been severely underloaded,” Caulfield mentioned. “Including extra capability at a time after we could not fill our present capability was simply going to create a much bigger financial gap for us.”
The U.S. has just lately enacted a collection of export bans on chip firms sending superior tech to China. By solely producing older nodes, GlobalFoundries says it has been “very minimally” impacted.
Making chips within the U.S.
Though GlobalFoundries’ chips are thought of legacy nodes, the method and sources wanted are nonetheless extremely complicated. Caulfield mentioned every silicon wafer goes via no less than 1,000 steps over 90 days within the Malta fab. The method requires in depth cleansing, cooling and chemical therapy, which makes use of numerous water. GlobalFoundries says Fab 8 makes use of about 4 million gallons of water a day, reclaiming 65% of that.
“Upstate New York is an excellent place for entry to high-quality and plentiful water,” Caulfield mentioned.
All of the heavy equipment additionally requires about 2 gigawatts of energy per day, in response to Hui Peng Koh, who heads up the Malta fab. She mentioned it is sufficient energy to “run a small metropolis.”
“I’d say our lowest-cost energy is within the U.S.,” Caulfield mentioned. “A whole lot of our energy in upstate New York, the place this facility is at, comes from hydroelectric, so it is a greener energy. In each Europe and Singapore, a lot of that energy comes off of pure fuel.”
Then there’s the manpower. GlobalFoundries has 13,000 staff worldwide. About 1,500 individuals report back to Koh in Malta. She advised CNBC it is “difficult to draw expertise to this a part of the world.”
GlobalFoundries just lately established the primary apprenticeship program that is registered within the U.S. to assist develop a semiconductor workforce in Vermont and New York. In July, TSMC blamed a scarcity of expert labor for delays to its fab being in-built Arizona.
The excessive value of supplies and development work additionally make constructing a fab within the U.S. dearer than in a lot of Asia, so public subsidies have been key for reshoring manufacturing. GlobalFoundries mentioned New York pitched in additional than $2 billion for the Malta fab. The corporate additionally utilized for funds from the $52 billion nationwide CHIPS and Science Act. Specializing in 12-nanometer and above additionally helps the corporate hold prices down.
GlobalFoundries’ Fab 8 in Malta, New York, the place Tools Engineering Supervisor Chris Belfi led CNBC’s Katie Tarasov on a tour on September 5, 2023.
GlobalFoundries mentioned it is placing out 400,000 wafers per yr from its Malta fab. Whereas Caulfield would not put a greenback determine on the wafers, he mentioned at any given time, there’s “a few half-billion {dollars} value of stock that is operating over these 90 days to create product.”
GlobalFoundries’ primary prospects for this large output of important chips are the world’s largest fabless chip firms, together with Qualcomm, AMD, NXP and Infineon.
Finally, lots of its chips find yourself within the auto, aerospace, and U.S. protection industries.
GlobalFoundries is thought for making “specialty chips” in large, unique offers, like one with Lockheed Martin in June for onshoring manufacturing of sure chips, and a latest $3 billion settlement with the U.S. Division of Protection.
Newman mentioned GlobalFoundries has round 50 such long-term agreements.
“Successfully they’re saying, ‘We are going to create a secure margin dedication capability and if the market shifts, we will stand by the letter of our settlement,'” he mentioned.
For firms hit hardest by the chip scarcity, a take care of GlobalFoundries is a hedge towards it occurring once more. In February, Normal Motors put aside unique manufacturing capability on the Malta fab.
“GM, their strains obtained held up for very low-cost parts as a result of they could not get sufficient,” Moorhead mentioned. “What GM determined is that that is an excessive amount of provide chain danger. We will go on to GF.”
GlobalFoundries says automotive is one among its fastest-growing segments. It makes many alternative sorts of chips for vehicles: the microcontrollers for energy seats, airbags and braking; the sensing chips for cameras and Lidar; and battery administration chips for electrical automobiles.
In the meantime, the expansion of GlobalFoundries’ smartphone enterprise is decelerating, alongside an industrywide slowdown. GlobalFoundries laid off 800 staff in December and January, and issued weaker-than-expected income steerage for the third quarter.
“Good cellular units final yr represented 46% of our income,” Caulfield mentioned. “Whereas it grew final yr, it was 50% the yr earlier than. So we have been attempting to construct our different enterprise and to get extra balanced, moderately than having such a excessive publicity to good cellular units.”
