GlobalFoundries CEO: New York chip factory likely delayed if U.S. subsidy bill fails

Screen displays the company logo for semiconductor and chipmaker, GlobalFoundries Inc. during the company's IPO at the Nasdaq MarketSite in Times Square in New York
A screen displays the company logo for semiconductor and chipmaker GlobalFoundries Inc. during the company's IPO at the Nasdaq MarketSite in Times Square in New York City, U.S., October 28, 2021. REUTERS/Brendan McDermid

July 19 (Reuters) - A planned semiconductor factory in upstate New York will likely be delayed if a bill to bolster the U.S. computer chip industry fails to pass in the coming weeks, the chief executive of GlobalFoundries Inc (GFS.O) told Reuters on Tuesday.

The U.S. Senate is due to vote later on Tuesday on a slimmed-down version of legislation to provide $52 billion in subsidies and tax credits for the industry more than a year after passing its first version of a bill. read more

The bill, which aims to counter rising competition from China, would provide payments to companies like Intel Corp (INTC.O), Samsung Electronics Co Ltd (005930.KS), Taiwan Semiconductor Manufacturing Co (2330.TW) and GlobalFoundries to construct chip factories in the United States.

Last year, GlobalFoundries, which makes chips for the U.S. military and other customers, said it would build a second factory at its headquarters in Malta, New York. GlobalFoundries has not given a price tag or timeline for the new plant, but Chief Executive Tom Caulfield said the project will take much longer without U.S. subsidies.

"To do it sooner rather than later, we would need government co-investment with us," Caulfield told Reuters in an interview. "We have good free cash flow generation, but we'd have to build up the balance sheet to go make those investments."

By contrast, GlobalFoundries moved forward earlier this month with a plan to build a $5.7 billion factory in France in cooperation with STMicroelectronics (STM.BN) that will be fully operational in 2026. read more

Caulfield said talks for that plant began just before the start of this year and came together in about six months because the French government moved quickly with subsidies.

If U.S. subsidies had passed last year when first attempted, GlobalFoundries might have pressed forward with the New York plant sooner, but instead has turned its attention to France and expanding a Singapore factory, he said.

"We might have had to defer something in France to later because we wouldn't have had the bandwidth to do three things at once. But we didn't have an option in the U.S., and we had an option in France," Caulfield said.

Reporting by Stephen Nellis and Jane Lanhee Lee in San Francisco; Editing by Lincoln Feast.

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Reports on global trends in computing from covering semiconductors and tools to manufacture them to quantum computing. Has 27 years of experience reporting from South Korea, China, and the U.S. and previously worked at the Asian Wall Street Journal, Dow Jones Newswires and Reuters TV. In her free time, she studies math and physics with the goal of grasping quantum physics.