In its quick 14-year historical past, GlobalFoundries has risen to turn out to be the world’s third-largest chip foundry. Based in upstate New York, GlobalFoundries is not a family identify as a result of it is manufacturing semiconductors which might be designed and offered by different firms.
But it is quietly serving to energy practically each related gadget.
“Look at each digital gadget in your own home, and I’d wager you cash that each a type of gadgets has no less than one GlobalFoundries chip in it,” Thomas Caulfield, GlobalFoundries CEO, advised CNBC.
GlobalFoundries chips are inside all the pieces from smartphones and automobiles to sensible 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 progress this quarter.
Within generative AI, GlobalFoundries is not targeted on making the highly effective graphics processing models (GPUs) used to prepare giant language fashions like ChatGPT. Instead, the corporate is manufacturing chips that carry out capabilities like energy administration, connecting to shows, or enabling wi-fi connections.
Caulfield says AI is “the catalyst for our business to double within the subsequent eight years and GF may have its fair proportion, if no more, of that chance.”
Five years in the past, GlobalFoundries made a daring transfer away from leading-edge chips, exiting a race that was received by Taiwan Semiconductor Manufacturing Company.
Now, as tensions with China elevate considerations 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 nicely exterior the geopolitical crosshairs. The firm has spent about $7 billion to broaden manufacturing in Singapore, Germany, France and upstate New York.
CNBC went to Malta, New York, for a firsthand take a look at the fabrication plant the place GlobalFoundries is including 800 acres, to ask how the corporate plans to keep forward whereas growing the older chips nonetheless important for on a regular basis gadgets.
‘It labored out for everyone’
The story started in 2009, when Advanced Micro Devices determined to break off its manufacturing operations right into a separate firm and focus completely on designing chips. The newly shaped GlobalFoundries took over AMD’s chip fabrication plant, or fab, in Dresden, Germany. At 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 stated, ‘actual males have fabs.’ So the considered spinning out the fab from AMD into its personal firm was a extremely huge deal,” Moorhead stated. AMD “had 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 become Nvidia’s main rival for designing GPUs.
“I feel it labored out for everyone,” Moorhead stated.
GlobalFoundries began constructing its new fab, and future headquarters, in Malta in 2009. The subsequent yr, it expanded into Singapore with the acquisition of Chartered Semiconductor. By 2015, it had acquired IBM‘s in-house semiconductor division, taking on manufacturing websites in Vermont and New York. By 2018, GlobalFoundries was a $6 billion enterprise.
“Unfortunately, it had a technique that was not in a position to produce profitability or free money movement,” stated Caulfield. “So in 2018, once I grew to become the CEO of GlobalFoundries, we determined to make a strategic pivot to focus all our vitality, all our R&D, all of our capital deployment to go be the easiest at these important chips. And that started a journey to turning our firm round to profitability.”
To at the present time, GlobalFoundries solely makes 12-nanometer chips and above, or what it calls “important” chips.
GlobalFoundries CEO Thomas Caulfield exhibits a 300mm wafer to CNBC’s Katie Tarasov at Fab 8 in Malta, New York, on September 5, 2023.
Carlos Waters
“If you do safe pay transactions, whether or not it is in your bank card or in your sensible cellular gadget, we make the chip that does that,” Caulfield stated. “Do you want the images your digicam takes? Well, we make picture sensor processors that drive that digicam. Do you just like the battery life in your cellphone? We make the PMICs, the ability administration ICs that be sure that energy is managed on these gadgets.”
During the 2021 chip scarcity, GlobalFoundries advised CNBC it sold out entirely. That similar yr, the corporate went public on the Nasdaq.
“Ultimately, we actually want these chips,” stated Daniel Newman, CEO of analysis agency Futurum Group. “We discovered that out as a result of we had parking tons filled with pickup vans 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 sturdy market requirement.”
Global progress
GlobalFoundries is the one one of many world’s high 5 chip foundries based mostly within the U.S. The different 4 are Semiconductor Manufacturing International 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 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 stated.
TSMC makes more 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 stated GlobalFoundries is totally going after TSMC.
“Not solely do we’ve aspirations, we predict in sure areas we have received,” Caulfield stated. He pointed to his firm’s radio frequency chips and silicon on insulator know-how.
“Silicon on insulator is a big differentiator when it comes to energy, and TSMC would not use that,” Moorhead stated.
At a time of geopolitical turmoil, GlobalFoundries is investing about $7 billion to add capability in elements of the world with decrease danger.
In Singapore, the corporate simply accomplished a $4 billion expansion that it says makes it the nation’s most-advanced fab. In June, it finalized a deal with STMicroelectronics to construct a collectively owned fab in Crolles, France.
Not all world enlargement endeavors have gone easily, nevertheless. In 2017, GlobalFoundries made huge plans for a fab in Chengdu, China. In 2020, it backed out.
“It turned out we had three comparatively giant services around the globe already that had been severely underloaded,” Caulfield stated. “Adding extra capability at a time once we could not fill our current capability was simply going to create an even 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.
Although GlobalFoundries’ chips are thought-about legacy nodes, the method and assets wanted are nonetheless extremely complicated. Caulfield stated every silicon wafer goes by way of no less than 1,000 steps over 90 days within the Malta fab. The course of requires intensive 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 stated.
All the heavy equipment additionally requires about 2 gigawatts of energy per day, in accordance to Hui Peng Koh, who heads up the Malta fab. She stated it is sufficient energy to “run a small metropolis.”
“I’d say our lowest-cost energy is within the U.S.,” Caulfield stated. “Numerous 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 gasoline.”
Then there’s the manpower. GlobalFoundries has 13,000 staff worldwide. About 1,500 folks report to Koh in Malta. She advised CNBC it is “difficult to entice expertise to this a part of the world.”
GlobalFoundries just lately established the first apprenticeship program that’s registered in the U.S. to assist develop a semiconductor workforce in Vermont and New York. In July, TSMC blamed a shortage of skilled labor for delays to its fab being in-built Arizona.
The excessive value of supplies and building work additionally make building a fab in the U.S. more expensive than in much of Asia, so public subsidies have been key for reshoring manufacturing. GlobalFoundries stated New York pitched in additional than $2 billion for the Malta fab. The firm additionally applied for funds from the $52 billion nationwide CHIPS and Science Act. Focusing on 12-nanometer and above additionally helps the corporate maintain prices down.
GlobalFoundries’ Fab 8 in Malta, New York, the place Equipment Engineering Manager Chris Belfi led CNBC’s Katie Tarasov on a tour on September 5, 2023.
GlobalFoundries stated it is placing out 400,000 wafers per yr from its Malta fab. While Caulfield would not put a greenback determine on the wafers, he stated at any given time, there’s “a couple of half-billion {dollars} price of stock that is operating over these 90 days to create product.”
GlobalFoundries’ primary prospects for this huge output of important chips are the world’s largest fabless chip firms, together with Qualcomm, AMD, NXP and Infineon.
Eventually, a lot of its chips find yourself within the auto, aerospace, and U.S. protection industries.
GlobalFoundries is understood for making “specialty chips” in huge, 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. Department of Defense.
Newman stated GlobalFoundries has round 50 such long-term agreements.
“Effectively they’re saying, ‘We will create a steady margin dedication capability and if the market shifts, we’re going to stand by the letter of our settlement,'” he stated.
For firms hit hardest by the chip scarcity, a take care of GlobalFoundries is a hedge in opposition to it taking place once more. In February, General Motors put aside unique manufacturing capability on the Malta fab.
“GM, their traces received held up for very low-cost parts as a result of they could not get sufficient,” Moorhead stated. “What GM determined is that that is an excessive amount of provide chain danger. We’re going to go instantly to GF.”
GlobalFoundries says automotive is considered one of its fastest-growing segments. It makes many alternative sorts of chips for automobiles: the microcontrollers for energy seats, airbags and braking; the sensing chips for cameras and Lidar; and battery administration chips for electrical autos.
Meanwhile, 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 revenue guidance for the third quarter.
“Smart cellular gadgets final yr represented 46% of our income,” Caulfield stated. “While 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, quite than having such a excessive publicity to sensible cellular gadgets.”