GlobalFoundries, STMicro to build new US$5.7 Bn French chip factory

Highlights:

Chipmakers GlobalFoundries (Nasdaq: GFS) and STMicroelectronics announce a new factory in France.

The proposed factory to get governmental funds.

New plant to address shortages of chips and dependence on Asian suppliers.

GlobalFoundries (Nasdaq: GFS) and STMicroelectronics are planning to build a semiconductor plant in France, the chipmakers announced on Monday. The factory will be built with funding from the government as part of the latest initiative to bolster regional supplies.

The announcement from GFS and STM has come on the eve of French President Emmanuel Macron’s preparation to unveil US$6.8 billion worth of investment from major global companies at the France summit this week.

The US and the EU have been prodding to build indigenous chip factories by offering billions in state subsidies to end dependency on Asian suppliers. The global scarcity of chips has greatly hindered car makers in the last few months.

The statement also revealed that this proposed factory, which will be in the vicinity of STM's existing plant in Crolles, will reach its peak capacity by 2026. It will reach a production of 620,000 wafers every year at a size of 18 nanometers, the statement said.

Apart from automotive, the chips are used in IoT (internet of things) and mobile applications.

© Neurone89 | Megapixl.com

The project will create jobs

The companies said that the new plant would generate around 1,000 new jobs apart from helping STMicro hit its target revenue of over US$20 billion.

However, both the companies haven’t disclosed the investment amount or how much funds the new factory would receive from the French government. Reuters quoted a person familiar with the matter that the factory’s total investment would be around US$5.7 billion.

Bottom line

Chipmakers have seen a humongous surge in demand since late 2020 as orders from electronics manufacturers swelled due to the work-from-home culture. The WFH practices fueled the growing need for gadgets leading to supply crunches for sectors like telecom suppliers and automotive.

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