Globalfoundries Forms Joint Venture to Make More Chips in China

Globalfoundries Inc., one of the largest contract manufacturers of semiconductors, is forming a joint venture with the government of Chongqing to get greater access to the Chinese chip market.

Globalfoundries will re-equip an older plant in the inland Chinese city with production aimed for 2017, the company and the local government said Monday in a statement. Chongqing is furnishing land and the existing facility, while the company will provide tools to upgrade it to 300-millimeter from 200-millimeter wafer production, making it more efficient. It won’t get the most up-to-date technology the Silicon Valley-based company uses in its U.S. facility.

Chip companies are moving production to the world’s largest market for semiconductors, responding to China’s push to domesticate manufacturing and replace imports that rival oil in the amount of money they suck out of the country. By shifting plants there, overseas chipmakers are hoping to keep access to important customers such as Chinese electronics makers.

“China is the fastest-growing semiconductor market, with more than half of the world’s semiconductor consumption and a growing ecosystem of fabless companies competing on a global scale,” Globalfoundries Chief Executive Officer Sanjay Jha said in the statement. “We are pleased to partner with the Chongqing leadership to expand our investment in support of our growing Chinese customer base.”

Created from elements of Advanced Micro Devices Inc., Chartered Semiconductor Manufacturing and International Business Machines Corp., Globalfoundries is owned by the investment arm of the government of Abu Dhabi.

Before it's here, it's on the Bloomberg Terminal.