Updated at 9:53 p.m.
GlobalFoundries plans to use some of a $1.5 billion federal award to modernize its manufacturing hub in Essex Junction, the company announced Monday morning.
The funding, a result of the 2022 federal CHIPS and Science Act, is expected to help upgrade and expand the semiconductor giant’s Vermont facility, where GlobalFoundries prints microchips for consumer and commercial electronics and, as of last fall, employs more than 1,800 people.
The new investment would make GlobalFoundries’ plant the first in the country to mass-produce a new type of chip used in electric vehicles, power grids, data centers and 5G and 6G smartphones, according to a company press release.
During a press call the White House and the U.S. Department of Commerce held in advance of Monday’s announcement, a senior administration official said that, without the federal cash infusion, the Essex Junction plant would “likely eventually have to close.” The official, speaking on background, continued, “So this is really putting that facility on a sustainable trajectory for the decades to come.”
A closure of the plant would be a major blow to Vermont’s economy, since GlobalFoundries is the state’s largest for-profit employer.
The federal funding is also expected to build out manufacturing capacity at GlobalFoundries’ larger campus in Malta, New York, the press release stated.
In total, according to the White House, the new investment would create 1,500 new manufacturing jobs in the two states, but the senior administration official said those would be “very significantly weighted towards New York.”
Joan Goldstein, commissioner of the Vermont Department of Economic Development, lauded the award in an interview Monday afternoon, saying “it’s not often that we have such positive economic development news.” She said the state was not expecting the plant to shut down, but said that officials would have been worried about its “longevity” if the federal funding had not come through.
“This type of CHIPS (Act) investment was just critical,” Goldstein said. “I don’t think they ever said to us, ‘No, without this, we’re going.’ But if this didn’t happen, we would be extremely concerned.”
Of the $1.5 billion award, the feds are set to hand down $125 million to renovate the plant in Essex Junction, according to Goldstein. The state, for its part, has appropriated $5 million that GlobalFoundries needed to help access the federal cash, she said.
Overall, the Vermont plant modernization is slated to cost $900 million, Goldstein said.
GlobalFoundries did not immediately confirm those figures.
The government’s support for GlobalFoundries is part of a sweeping effort by federal officials, using the $50 billion CHIPS Act, to bolster domestic production of a technology that many U.S. companies have sourced from China in recent decades.
Shortages of semiconductors caused major disruptions early on in the Covid-19 pandemic, officials said, including a significant impact on U.S. car manufacturing.
“With new onshore capacity and technology on the horizon, as an industry we now need to turn our attention to increasing the demand for U.S.-made chips, and to growing our talented U.S. semiconductor workforce,” Thomas Caulfield, GlobalFoundries’ CEO, said in the press release.
The type of chip set to be manufactured on a large scale in Vermont uses gallium nitride, a material that offers numerous performance benefits over traditional silicon. Last year, China — which controls nearly all of the world’s gallium — announced that it was restricting exports of the precious metal.
“GlobalFoundries has been a national leader in semiconductor and chips innovation, putting Vermont at the forefront of this emerging technology,” said U.S. Sen. Peter Welch, D-Vt., in Monday’s release. “This is a well-deserved recognition of GlobalFoundries’ commitment to bolstering the on-shore growth of U.S.-made chips.”
Sen. Bernie Sanders, I-Vt., also praised the funding in a statement Monday, saying that it would create “hundreds” of jobs and new apprenticeship programs in Vermont.
But while Welch, then a member of the U.S. House, and former U.S. Sen. Patrick Leahy, D-Vt., supported the CHIPS Act, Sanders in 2022 vocally opposed it — and ultimately voted against it. At the time, Sanders criticized the legislation as a “blank check” to an industry that has shuttered manufacturing plants and laid off many American workers in recent decades.
In late 2022, GlobalFoundries told the state it planned to lay off 148 workers from its plant in Essex Junction, citing a lull in semiconductor demand at the time. The company says that it employs about 13,000 people worldwide today.
The Vermont plant was owned by IBM for decades until GlobalFoundries, which is headquartered in New York, purchased the facility in 2015.
