GlobalFoundries CEO urges Europe to support chip manufacturing

SAN FRANCISCO (Reuters) - Contract chipmaker GlobalFoundries' chief executive said European governments should offer incentives to build multibillion-dollar advanced manufacturing plants and help keep Asia from reaping the benefits of European innovations.

Speaking at an event in San Francisco on Tuesday, Ajit Manocha said he has tried to convince policymakers to invest more to stimulate chip manufacturing in Europe.

Some local governments in the United States as well as countries in Asia have offered incentives to chipmakers as they plan where to build a new generation of fabrication plants, or fabs, expected to cost over $10 billion each.

"This is a competitive world. If I go to Asia they'll roll out the red carpet for us, they'll do lots of subsidies. The State of New York does a good job," Manocha said. "Europe is not playing that role properly."

In the United Sates, New York State has pledged to invest $400 million in an engineering college as part of a wider deal for a consortium of Intel, TSMC, Samsung Electronics, IBM and GlobalFoundries to invest $4.4 billion there over five years to develop next-generation chip manufacturing technology.

ASML, based in the Netherlands, is designing new equipment to use in the upcoming chip plants.

Taiwan, Singapore, Israel and other countries keen to woo foreign investors have offered a range of tax breaks and R&D tax credits.

Privately-held GlobalFoundries, whose largest shareholder is Mubadala Development Co, has plants in Singapore, Germany and New York. Top chipmaker Intel also has a fab in Germany.

STMicroelectronics, Europe's largest chipmaker, manufactures chips in France and Italy, and also has operations in Singapore and other parts of Asia.

Advanced fabs provide relatively few jobs but the ones they do provide pay well. Executives have said the best reason to attract cutting-edge chip fabs is because the very act of manufacturing leads to invention and new ideas that reverberate beyond the semiconductor industry.

"We will focus on what is good for the company and good for the customers, but Europe will benefit more if they play a role like the other governments play with us in other countries," Manocha said.

(Reporting By Noel Randewich)