Globalfoundries to Spend $3 Billion on Chip Expansion
Douglas Grose, chief executive officer of Globalfoundries Inc., attends a news conference at the Computex Taipei 2010 in Taipei. Photographer: Maurice Tsai/Bloomberg
June 1 (Bloomberg) -- Doug Grose, chief executive officer of Globalfoundries Inc., talks about the company's plans to spend more than $3 billion to boost production at its factories in New York and Germany. He speaks with Bloomberg's Linzie Janis from Taipei. (Source: Bloomberg)
Globalfoundries Inc., seeking to challenge Taiwan Semiconductor Manufacturing Co. in the made-to- order chip market, will spend more than $3 billion to boost production at its factories in New York and Germany.
The company will increase the size of a new plant in upstate New York and add a production line to existing factories in Dresden, Germany, said Chief Executive Officer Doug Grose. The investment is in addition to the $6 billion already promised by the company’s owners, he said.
Sunnyvale, California-based Globalfoundries was created last year when Advanced Micro Devices Inc. spun off its chipmaking plants into a venture with Advanced Technology Investment Co., the Abu Dhabi government’s investment arm. After taking majority control, Advanced Technology bought Singapore’s Chartered Semiconductor Manufacturing Ltd. and is merging that company with Globalfoundries, creating one of the world’s largest contract manufacturers of chips.
“We are here, we are serious and we are a player,” Grose said in a telephone interview from Taipei. “This foundry segment only has a couple of players who are serious and we are one of them.”
Advanced Technology also said that it has chosen the site of a technology park in Abu Dhabi. When the investment firm announced its original deal with AMD, it said it would eventually build a factory in the Middle Eastern emirate. The timing of that project has yet to be determined, said Ibrahim Ajami, chief executive officer of Advanced Technology.
Want to Win
“We are very committed to bringing this industry to Abu Dhabi,” said Ajami. The increased investment in Dresden and New York shows that “we entered this business because we wanted to win.”
Globalfoundries intends to capture 30 percent of the chip contract-making market, which would vault it past United Microelectronics Corp. ATIC has no intention of buying UMC, Ajami said yesterday. Taiwan Semiconductor Manufacturing, known as TSMC, leads the market with about 50 percent share.
Chip foundries such as TSMC make semiconductors to the designs of other companies, including Qualcomm Inc., Texas Instruments Inc. and Broadcom Corp. The increasing cost of building chip plants has led companies to farm out more of their production.
Lower Price
“What the investment allows us to do in this industry is get to a critical size where the larger you are, the lower your costs are,” Grose said in a Bloomberg Television interview today. The expansion will also allow the company “to be competitive in the marketplace on things like price.”
Expenditure this year will be $2.7 billion to $2.8 billion, Grose said without providing a figure for next year.
Globalfoundries’ customers include AMD and Qualcomm, the world’s largest maker of mobile-phone chips. ARM Holdings Plc., which develops components for Apple Inc.’s iPhones, is in talks with Globalfoundries about semiconductor production.
The company will add 90,000 square feet to the manufacturing room of its Saratoga County, New York, plant, bringing the total to about 300,000 square feet -- the size of six soccer fields. The factory will begin mass production in 2013.
In Dresden, Globalfoundries will add a new building to increase production at Europe’s largest chip plant. The addition hinges on getting local-government aid from German and European Commission authorities.
The expansions will create hundreds of extra jobs, Grose said.
To contact the reporter on this story: Ian King in San Francisco at ianking@bloomberg.net
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