European chips also for defense: Merz visits Globalfoundries

Chip contract manufacturer Globalfoundries (GF) is providing insight into the construction work at its Dresden semiconductor plant. The manufacturer plans to invest 1.1 billion euros in the expansion, bringing total investments over the decades to a good 11 billion euros. GF expects subsidies for part of the expansion. However, it began at its own risk even before approval.

With the expansion called Sprint, GF is increasing its production capacity in Dresden from the current approximately 950,000 exposed wafers per year to 1.1 million. The expansion is expected to reach its full capacity by the end of 2028. The expanded production could start up as early as 2027.

Chancellor Friedrich Merz traveled to Dresden at the invitation of his CDU colleague and Saxon Prime Minister Michael Kretschmer. The discussion there also includes the assurance that GF is to receive "significant" funding as part of the EU Chips Act. Only the EU Commission still needs to approve. The officials are not yet revealing how high the funding share could be.

Nexperia also a topic in Dresden

Meanwhile, GF is seizing the opportunity: GF can also manufacture components that are currently scarce due to the Nexperia blockade. The Dutch government has taken control of the local chip manufacturer under an emergency law. The Chinese parent company Wingtech subsequently stopped deliveries from its Chinese packaging plants to Europe. Since the chips are only packaged in these Chinese plants, Europe is left without usable Nexperia components. This affects, among others, the automotive industry.

Kretschmer also addresses the non-European dependencies using Nexperia as an example, without elaborating that the dependencies are self-inflicted: The supplier was only sold to China in 2016 for 2.75 billion US dollars.

GF can step in, but it takes time: According to the manufacturer, the production process alone takes an average of three months, involving around 1500 steps. Customers then sometimes have to certify or qualify the new semiconductors and their chip packages, for example, for use in cars.

Special technology instead of finest transistors

GF specializes in microcontrollers with integrated memory, analog circuits, and high-frequency technology. The manufacturer's most important manufacturing process is called 22FDX: a 22-nanometer class process with the so-called Fully Depleted Silicon-on-Insulator (FD-SOI). The chips are usually tiny, so thousands can fit on a single wafer. With a capacity of over a million wafers per year, it quickly amounts to billions of chips.

Apart from car manufacturers, GF explicitly targets the aerospace, defense industry, and critical infrastructure. For this purpose, the chip contract manufacturer wants to build completely European supply chains, including packaging plants, for example with the service provider Amkor in Portugal. GF itself is headquartered in the USA and is majority-owned by Mubadala Investment Company, a sovereign wealth fund of the United Arab Emirates.

Customers of GF's 22-nanometer FD-SOI technology also include European chip companies such as STMicroelectronics and NXP. GF has recently expanded its technology portfolio with MIPS' RISC-V technology. The planned construction of a chip factory in France by GF together with STMicro, however, was again called off by the cooperation partners.

(mma)