GlobalFoundries joins other chip makers in expansion plans

IDG News Service - GlobalFoundries today followed several other chip makers in announcing new plans to expand factory spending amid a global chip industry boom. GlobalFoundries will spend an additional $3 billion, it said.

The contract chip manufacturer, a joint venture between AMD and Abu Dhabi's Advanced Technology Investment Co. (ATIC), had already announced plans to spend $6 billion to build itself into a powerhouse capable of knocking Taiwan Semiconductor Manufacturing (TSMC) off the top of the contract chip industry. The $3 billion is in addition to that figure.

The latest announcement puts GlobalFoundries in the company of other chip makers that have raised spending plans this year. TSMC surprised analysts early this year by announcing a plan to spend $4.8 billion this year on new plants and production equipment, while Samsung Electronics and Hynix Semiconductor both raised their chip spending plans last month. Samsung doubled its capital spending plan to 11 trillion Korean won ($9.15 billion) from 5.5 trillion won previously, while Hynix raised its 2010 spending target to 3.05 trillion won from 2.3 trillion won.

The new investment by GlobalFoundries is aimed at boosting capacity in leading technologies and keeping the company nimble enough to raise production if needed, CEO Douglas Gross said at a news conference in Taipei.

GlobalFoundries will build an additional chip factory alongside one it already owns in Dresden, Germany, which will increase output capacity by 20,000 wafers per month to a total of 80,000, the company said. Thousands of chips can be etched on a single wafer.

The increased spending will put the total output capacity of a facility planned in New York at 60,000 wafers, up from a previous 42,000 wafers. GlobalFoundries broke ground on the New York facility in July of last year and expects it to be in production in 2012.

Gross said part of the new spending plan is to support near-term customer demand, while some will be for longer-term projects. Not all of the new factory space will be filled with production lines immediately, he added, but could quickly be used if needed.

The new spending plan highlights a global boom in the chip industry.

Sales in the global chip industry will expand 30.6% this year to an all-time high of $300.3 billion, the best growth in a decade, according to iSuppli. Growth in the contract chip-manufacturing segment will be even better, at 40%, pushing it to a total of $24.8 billion, the market researcher said.

GlobalFoundries was formed from AMD's manufacturing operations, with additional investment from ATIC. Over the past year, it has completed its separation from AMD and integrated Singaporean contract chip maker Chartered Semiconductor into its fold. Chartered was previously the third-largest contract chip-maker in the world behind TSMC and United Microelectronics (UMC).