GlobalFoundries to make military chips at Fab 8 in Malta

GlobalFoundries to make military chips at Fab 8 in Malta

Photo of Larry Rulison

MALTA — GlobalFoundries has received approval to make computer chips for the U.S. military at its Fab 8 factory in Saratoga County, a certification that could one day lead to an expansion of the plant, which employs 3,000 people.

GlobalFoundries says the first chips under the arrangement — which is likely to expand — will be shipped starting in 2023.

GlobalFoundries already makes chips for the U.S. military at its two former IBM factories in East Fishkill in Dutchess County and outside Burlington, Vt.

Those two facilities had the required security certifications needed to make such sensitive chips before GlobalFoundries acquired them in 2015.

But Fab 8, the most advanced of all of GlobalFoundries' factories worldwide, will provide the Defense Department with a new source of the most advanced chips available.

“GlobalFoundries is a critical part of a domestic semiconductor manufacturing industry that is a requirement for our national security and economic competitiveness,” said U.S. Senate Majority Leader Charles Schumer. “I have long advocated for GlobalFoundries as a key supplier of chips to our military and intelligence community, including pressing the new Secretary of Defense, Lloyd Austin, to further expand the Department of Defense’s business with GlobalFoundries."

In order to obtain this first level of military manufacturing certification, Fab 8 had to become compliant with U.S. International Traffic in Arms Regulations.

The next step would be to achieve so-called Trusted Foundry status that requires more security verifications, although GlobalFoundries is working toward that goal.

IBM's Vermont factory — located in Essex Junction — was the first-ever chip factory to achieve Trusted Foundry status, which allows it to make the military's most sensitive chips. The East Fishkill fab, in Dutchess County, also has Trusted Foundry status.

Last year, the Defense Department significantly increased the potential ceiling on its current chip contract with GlobalFoundries by $400 million to $1.1 billion, some of which accounts for the additional output from Fab 8, which will be installing a new production line just for military orders.

Fab 8's addition to the Defense Department's capabilities is not just a huge win for GlobalFoundries but a very important step for the federal government's efforts to maintain a long-term supply of chips for its weapon and defense systems.

Maintaining that chip supply has become more problematic over the past decade as the chip industry has consolidated and companies like IBM, and before that Advanced Micro Devices, have decided to exit the massive expense of manufacturing in favor of outsourcing their supply to so-called foundries — like GlobalFoundries — that make chips for a variety of customers, including AMD and IBM.

And although military orders are lucrative work, they represent only a small fraction of the orders that GlobalFoundries and others receive from commercial customers, which still drive innovation in the industry.

The Defense Department wants to reverse that trend, especially since most of the foundry market is dominated by Asian companies like Samsung and Taiwan Semiconductor Manufacturing Co., although both are considering building new factories in the United States. Samsung is reportedly looking at a site in western New York.

The coronavirus pandemic has exacerbated this troubling U.S. chip supply dynamic by putting a squeeze on the global supply chain and causing shortages in the auto industry, for instance. That led Congress late last year to pass the CHIPS for America Act, a $25 billion program that would subsidize new chip factories on U.S. soil and fund new semiconductor research programs to maintain the longtime technological advantage that the U.S. risks losing to China and other parts of Asia.

The CHIPS program, which was passed as part of the latest federal defense bill with the backing of Schumer, could be used by GlobalFoundries to potentially build a second factory at its Fab 8 campus that it might otherwise not justify building. Current chip fabs cost about $15 billion apiece.

Although expensive, the industry subsidies would be cheaper than the federal government building its own factories to make chips as it rolls out a new policy called "zero trust" in which the Defense Department ensures complete control and oversight of every chip used in every weapon and military system. Just one compromised chip could be used to infiltrate entire networks, the military reasons.

“This agreement with GlobalFoundries is just one step the Department of Defense is taking to ensure the U.S. sustains the microelectronics manufacturing capability necessary for national and economic security," the Defense Department said in a rare statement about the GlobalFoundries contract. "This is a pre-cursor to major efforts (by Schumer and others to pass the CHIPS Act) which will allow for the sustainment and on-shoring of U.S. microelectronics capability.”