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STMicroelectronics, GlobalFoundries Building New Chip Plant

The News: STMicroelectronics (NYSE: STM) and GlobalFoundries Inc. (Nasdaq: GFS) will build a new chip plant in a partnership that will add about 620,000 more 300mm chip wafers to their production lines by 2026. The plant will bolster their chip-making capacity as a wide range of industries around the world continue to scramble for semiconductor supplies for their products. The new chip plant will be built next to an existing STMicroelectronics plant in Crolles, France, with about 42 percent of its eventual full wafer production going to STMicroelectronics and about 58 percent of its wafer production going to GlobalFoundries. Read the full Press Release from STMicroelectronics and GlobalFoundries.

STMicroelectronics, GlobalFoundries Building New Chip Plant

Analyst Take: This new chip plant to be built by STMicroelectronics and GlobalFoundries is big news for both companies — and for the customers they serve and follows similar announcements by other chip makers, including Intel. Since the Covid-19 pandemic began in March of 2020, semiconductor supplies for a wide range of industries, including vehicles computers, consumer products and more have continued to be in tight supply after chip makers idled factories due to pandemic shutdowns around the world.

Those chip shortages were compounded by pandemic-related supply chain slowdowns, consumer buying sprees that put products in short supply without hope of new production, and by tight labor markets which has made it difficult for companies to expand their production of goods.

So, when news pops about new chip plants and expanded chipmaking opportunities, the world is watching, listening, and applauding.

In this case, the new facility, which is slated to open by 2026, will target the European market specifically, while also serving customers around the globe. Plans for the new chip plant are coming at a good time for STMicroelectronics and GlobalFoundries to help them both support and advance Fully Depleted Silicon On Insulator (FD-SOI)-based chip design technologies. FD-SOI is a planar process technology that features an ultra-thin layer of insulator, called the buried oxide, which is placed on top of the base silicon. Next, a very thin silicon film implements the transistor channel. FD-SOI offers substantial benefits for designers and customers, including ultra-low power consumption as well as easier integration of additional features such as RF connectivity, mmWave and security, according to STMicroelectronics.

This new chip plant will help both companies grow their production and their markets in IoT, automotive, mobile, and other markets around the world, which is good for both device makers and consumers.

The new chip plant is also a success for Europe at a time when new chip factory efforts are being stalled in the United States due to politics and congressional inaction on the proposed $52 billion CHIPS Act that is currently awaiting government approval. The CHIPS Act would provide grants and tax incentives to encourage chip makers to expand their operations in the U.S. to help resolve the global shortages of chips.

The new STMicroelectronics and GlobalFoundries chip plant will receive contributions for construction from France and will contribute to the objectives of the European Chips Act. That Act includes a goal of Europe reaching 20 percent of worldwide semiconductor production by 2030, the companies announced.

It will be fascinating to watch this new France-based chip plant come together and go into operation to expand Europe’s chip making capabilities, especially when America’s own chip making expansion is being stalled by inaction on the U.S. CHIPS Act. We can only hope that this is resolved quickly, and that America will soon be able to make more announcements about similar chip expansion efforts of its own.

Disclosure: Futurum Research is a research and advisory firm that engages or has engaged in research, analysis, and advisory services with many technology companies, including those mentioned in this article. The author does not hold any equity positions with any company mentioned in this article.

Analysis and opinions expressed herein are specific to the analyst individually and data and other information that might have been provided for validation, not those of Futurum Research as a whole.

Other insights from Futurum Research:

GlobalFoundries Announces New Solutions for 5G and Wi-Fi 6/6e Enabled Devices

GlobalFoundries files for an IPO, But Don’t Rule Intel Out Just Yet

GlobalFoundries Rebrands at the Right Time

Image Credit: Nikkei Asia

Author Information

Daniel is the CEO of The Futurum Group. Living his life at the intersection of people and technology, Daniel works with the world’s largest technology brands exploring Digital Transformation and how it is influencing the enterprise.

From the leading edge of AI to global technology policy, Daniel makes the connections between business, people and tech that are required for companies to benefit most from their technology investments. Daniel is a top 5 globally ranked industry analyst and his ideas are regularly cited or shared in television appearances by CNBC, Bloomberg, Wall Street Journal and hundreds of other sites around the world.

A 7x Best-Selling Author including his most recent book “Human/Machine.” Daniel is also a Forbes and MarketWatch (Dow Jones) contributor.

An MBA and Former Graduate Adjunct Faculty, Daniel is an Austin Texas transplant after 40 years in Chicago. His speaking takes him around the world each year as he shares his vision of the role technology will play in our future.

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