The U.S. Dept. of Commerce signed a preliminary deal with computer chip maker GlobalFoundries to supply $1.5 billion in incentives for three manufacturing plants, officials announced Feb. 19. The company plans to build a plant and expand another in New York state, and to modernize a plant in Vermont.

The projects are expected to involve about 9,000 construction jobs over 10 years. The work is subject to project labor agreements, as officials encourage when companies seek CHIPS Act funding. A PLA is already in place with GlobalFoundries for the work, said Mark McManus, general president of the United Association of Union Plumbers and Pipefitters, in a statement. 

GlobalFoundries plans to triple the capacity of its manufacturing campus in Malta, N.Y., with an expansion of its 1.2-million-sq-ft fabrication plant, or “fab.” Construction of a second fab is also planned. It would produce 300-mm chips, which are not currently manufactured domestically but are needed for cutting-edge technologies. The company also plans to upgrade its fab in Burlington, Vt., to make it capable of high-volume manufacturing for chips used in electric vehicles, power grid equipment and smartphones. 

Records indicate GlobalFoundries hired JE Dunn Construction Co. for the new 633,000-sq-ft fab. The contractor deferred comment to the owner, which did not immediately respond to inquiries. 

GlobalFoundries said it plans to spend more than $12 billion on the projects over 10 years. The same day of the Commerce Dept. announcement, New York Gov. Kathy Hochul said the state would provide GlobalFoundries with $575 million in performance-based tax credits. In addition, the New York State Power Authority plans to provide $30 million for infrastructure upgrades associated with the project.

The Commerce Dept. money comes from $52 billion included in the 2022 CHIPS and Science Act aimed at boosting U.S. semiconductor chip manufacturing. Officials will next work through a due diligence process with GlobalFoundries before finalizing the $1.5-billion award. 

The preliminary deal with GlobalFoundries is the third announced by Commerce Dept. officials so far and is the largest amount of funding to date under the program. In December, officials said they planned to provide $35 million in incentives to BAE Systems Inc. for modernization of a New Hampshire plant that produces chips used in F-35 fighter jets, and last month it announced $162 million for Microchip Technology Inc. to expand two chip fabrication plants, one in Colorado and the other in Oregon.

The U.S. once accounted for 37% of global semiconductor manufacturing, but that has dropped to 12% as of 2021, according to the Semiconductor Industry Association. Biden administration officials have highlighted the effort to grow domestic chip manufacturing as being crucial not only for the economy in light of supply chain shortages that followed the outbreak of the COVID-19 pandemic, but also for national security, given the chips’ widespread uses ranging from telecommunications to military equipment.

“We’re working to onshore these critical technologies in order to bolster the supply of domestic chips that are essential to manufacturing cars, electronics and national defense systems in New York, Vermont and states across the country,” said Gina Raimondo, Commerce Secretary, in a statement. 

GlobalFoundries is one of just four companies outside China that can provide chip foundry services on this scale, and the only one based in the U.S., according to Commerce Dept. officials. The company supplies manufacturers including tech company AMD, aerospace firm Lockheed Martin and communications tech maker Qualcomm Technologies Inc. The expansion of its existing Malta plant is planned as part of an agreement to supply General Motors. 

The Commerce Dept. has received more than 160 applications for the first round of CHIPS Act funding and another 160 for a second round aimed at smaller projects. Officials say they expect to announce more preliminary agreements with chip manufacturers throughout this year.