U.S. chipmaker invests $4 billion in Singapore, even as Congress tries to lure manufacturers home

June 23, 2021, 6:56 AM UTC

U.S. semiconductor manufacturer GlobalFoundries—the third-largest contract chipmaker in the world—is investing $4 billion to build a new production site in Singapore, where the company currently manufactures 40% of its chips.

The investment is the latest bid by a leader in the semiconductor industry to ease the chip shortage throttling automakers and electronics manufacturers worldwide.

“GlobalFoundries is meeting the challenge of the global semiconductor shortage by accelerating our investments around the world,” CEO Tom Caulfield said during a virtual groundbreaking ceremony for the new fabrication plant on Tuesday. The fab is scheduled to begin production in 2023 and will primarily serve “automotive, 5G mobility, and secure device” industries.

Singapore doesn’t have much of an automotive industry, but the city-state’s electronics manufacturing, which accounts for 7% of total GDP, is heavily dependent on semiconductor supplies. Pandemic-era demand for laptops and other home gadgets has increased production on Singapore’s electronics line 21.7% in the first four months of 2021.

“The semiconductor industry is a key pillar of Singapore’s manufacturing sector, and GlobalFoundries’ new fab investment is testament to Singapore’s attractiveness as a global node for advanced manufacturing and innovation,” said Beh Swan Gin, chairman of the Singapore Economic Development Board. Beh also said that the new fab will help GlobalFoundries’ customers “strengthen the resilience” of their supply chains.

Competition for semiconductor supplies has been tense since January, when demand from primarily U.S. and EU automakers suddenly outstripped supply, leading to what has been dubbed a global chip shortage. Governments in both the EU and the U.S. have since determined that overseas dominance in semiconductor manufacturing is a strategic risk to domestic industries.

In February, U.S. President Joe Biden ordered an executive committee to investigate “bottlenecks” in global semiconductor supply chains. The team determined that the U.S. “reliance on imported chips introduces new vulnerabilities into the critical semiconductor supply chain.” Over 90% of the world’s most advanced chips are produced in Asia—mostly in Taiwan, then South Korea and Japan.

Facing rising geopolitical tensions and strained supply chains, Western governments are attempting to lure chipmakers back west. The U.S. is poised to unlock $52 billion of funding to bolster domestic chip manufacturing, and GlobalFoundries says it will expand its production sites in the U.S. and Germany, investing $1 billion in each.

But the company’s larger investment in Singapore—where GlobalFoundries has its oldest manufacturing sites—shows Asia’s enduring appeal as a semiconductor powerhouse.

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