GlobalFoundries, a major semiconductor manufacturer, has secured $1.5 billion in funding from the U.S. government under the CHIPS and Science Act to bolster its domestic chip production capabilities. The funding is part of a larger $39 billion initiative by the Biden administration aimed at strengthening U.S. semiconductor manufacturing and reducing reliance on foreign suppliers.

The agreement, finalized after initial negotiations, will support significant projects in New York and Vermont, involving over $13 billion in total investment. Additional backing includes $550 million from New York state, primarily through tax credits, and more financial support from Vermont.

GlobalFoundries plans to use the funding to expand and modernize its chip production facilities. In New York, the Malta fab will see an expansion utilizing advanced technology currently used in the company’s Singapore and Germany sites, focusing on automotive chips. In Vermont, the Essex Junction facility will be upgraded to increase production of gallium nitride (GaN) semiconductors, essential for electric vehicles, data centers, and critical applications. A new high-tech fab will also be built at the Malta campus, targeting automotive, AI, and defense markets.

The investment highlights the strategic role GlobalFoundries plays in the U.S. semiconductor landscape. The Department of Commerce emphasized that GlobalFoundries is one of the few companies outside China capable of producing mature node semiconductors at scale, and the only one headquartered in the United States. This funding is intended to secure a stable domestic supply of essential chips used in everything from consumer electronics to advanced defense systems.

Recently, GlobalFoundries faced a $500,000 penalty for violating U.S. sanctions. The company was found to have made 74 unauthorized shipments to a Chinese affiliate of Semiconductor Manufacturing International Corporation (SMIC) due to a data entry error. Despite this, GlobalFoundries remains a crucial player in the U.S. chip manufacturing industry, emphasizing its commitment to domestic production and national security.

The investment is expected to create nearly 1,000 new manufacturing jobs and employ 9,000 construction workers, boosting the local economy in the process. As GlobalFoundries moves forward, the Biden administration continues to secure similar agreements with other industry leaders like Intel, Samsung, and Micron, aiming to solidify U.S. dominance in semiconductor production before a potential policy shift with President-elect Donald Trump.