Why it issues: On Monday, GlobalFoundries and Qualcomm signed a multi-billion greenback income settlement that greater than doubles their current long-term semiconductor partnership. The announcement got here in the course of the one-day CEO Summit in Washington being co-hosted by Ford Motor Company, GlobalFoundries, and Applied Materials.
The deal means Qualcomm will stick round as a GlobalFoundries buyer via a minimum of 2028, and secures wafer provide and commitments via capability enlargement at GlobalFoundries’ most superior fab in Malta, New York.
Qualcomm will use GlobalFoundries’ FinFET platform to construct 5G transceivers in addition to chips for automotive, Wi-Fi and Internet of Things (IoT) functions.
The deal was introduced shortly after the passage of the CHIPS and Science Act, which offers round $52 billion in subsidies for chipmakers. The laws additionally contains an funding tax credit score for chipmakers value roughly $24 billion.
Senate Majority Leader Chuck Schumer stated the deal proves that the semiconductor business will develop within the US when the nation turns into aggressive with Asia and Europe. “With main new federal incentives for microchip manufacturing within the US, I sit up for many extra bulletins like this to return,” Schumer added.
GlobalFoundries was linked to a buyout rumor from Intel round this time final 12 months. Nothing ever materialized, nonetheless, and the corporate moved ahead with plans to go public. The AMD spinoff went public on the finish of October and at the moment has a market cap of $31.79 billion. The inventory is up greater than 11 p.c on as we speak’s information as of this writing.
The Covid-19 pandemic triggered a worldwide semiconductor scarcity, and now native governments and tech titans alike are doing all the things of their energy to assist create a extra resilient provide chain. In addition to GlobalFoundries, powerhouses like Samsung, TSMC and Intel are pouring billions into capability enlargement to fulfill hovering chip demand.
While it appears unlikely at this level, there is a very actual risk that each one of this heavy investing might result in market saturation the place there may be an excessive amount of capability and never sufficient demand. That, in flip, might end in manufacturing facility closures, job losses and extra, however let’s not get too far forward of ourselves.