On Tuesday, the world’s third-largest contract chipmaker opened a $4 billion semiconductor fabrication plant in Singapore as part of a major global manufacturing expansion. GlobalFoundries (GF) said its new 23,000 square meters (248,000 square feet) facility would produce 450,000 300 millimeter wafers per year at total capacity, expected by 2025 to 2026. The new fab will boost GF’s Singapore campus’s annual production of 300mm wafers to 1.5 million, which it said would create 1,000 high-skilled jobs.
The company said the fab aimed to use chips in applications such as RF (radio frequency), analog power, non-volatile memory, and 5G mobility. It was built despite weak customer demand, which it expects to recover as the economy grows. The new fab is GF’s most significant investment since the start of its reorganization and restructuring in 2016, which slashed capital expenditure and lowered operating expenses.
Founded in 2009, GF is owned by Mubadala Investment Group – the Abu Dhabi government’s sovereign wealth fund – and Advanced Micro Devices. It has a footprint in the US, Germany, and Singapore, where it is building its fourth 300mm factory.
A global shortage of microchips triggered by surging demand from a broad range of industries, along with supply chain disruptions brought about by COVID-19 lockdowns, led to the collapse of several large manufacturers over the past few quarters. The shortage is expected to end soon amidst forecasts that the industry will grow this year and next.
As the industry recovers from the shortage, companies, including TSMC and Samsung Electronics, have ramped production. The global semiconductor market is expected to hit $573 billion in 2022, according to TrendForce.
Singapore is often called the “Silicon Island” for its vibrant chipmaking sector, and it contributes 11% of the world’s output. It will continue growing as many chipmakers plan to expand or open new plants in the city-state in the coming months.
The launch of GF’s new plant, supported by the Singapore government and some of its customers, is a further testament to how critical the local chipmaking ecosystem has become for multinationals like GF to anchor their operations here. Singapore’s infrastructure caters to a wide range of chipmakers of different sizes and supports them with a wide array of services that help them innovate, collaborate, and build new products.
The GF deal highlights how multibillion-dollar manufacturing investments can only be made with firm, long-term financial commitments from committed customers. As the time needed to build and equip a new fab can take years, chipmakers are increasingly looking for partners to support their growth as they scale up. As the GF expansion illustrates, government leaders recognize this reality and introduce incentives to encourage chipmakers to make their facilities in their territories.
