GlobalFoundries Invests $10 Billion to Build Plant in China

Diverging from recent announcements from Foxconn and Intel of building plants in the United States and bringing more manufacturing jobs in North America, California-based chip maker GlobalFoundries has announced a $10 billion project to build an advanced semiconductor factory in the central Chinese city of Chengdu. Just as many US companies are feeling the pressure to invest more state-side after President Donald Trump got elected, the Chinese government is equally applying matching pressure and enticing companies with large investments and subsidies to counter. Earlier in October, talks between GlobalFoundries and the Chinese government have led to a stalemate since GlobalFoundries wanted 51% controlling interest to their joint venture while the government was not convinced that the proposed investment in equipment was sufficient enough to justify that claim even after acquiring IMB microelectronics for $1.5B.

Semiconductor development itself is one of the key points in China’s “Made in China 2025” strategy and have heavily courted semiconductor manufacturers to their side of the pond. Despite Intel’s and Foxcon’s investment in the west, the factories they are building in China greatly outnumber these investments. Estimates suggest that the Chinese government is spending $100 billion in bringing chip factories and research facilities to their side within the next ten years, $10 billion annually. From 2004 through 2014 alone, China invested $70 billion already.

“Such spending momentum will drive China to the top-tier bracket for fab equipment and is paving the way to establish China’s position on the global semiconductor stage,” according to a recent report by SEMI, a global Microelectronics Industry Association. GlobalFoundries declined to provide financial details about the deal when New York Times reached out, nor how much of the investment is from the Chengdu government.