GLOFOUNDRIES-EQUITY/ (PIX):Chipmaker GlobalFoundries says CHIPS Act framework does not involve equity

Chipmaker GlobalFoundries says CHIPS Act framework does not involve equity

GlobalFoundries Reassures Investors: CHIPS Act Funding Secure, No Equity Stake Involved

GlobalFoundries has moved to quell concerns regarding its CHIPS Act funding, emphatically stating that its agreement remains "well intact" and notably does not include any equity component. This announcement comes just days after the U.S. government acquired a 10% stake in Intel, sparking considerable debate about the implications for corporate America.

John Hollister, GlobalFoundries' CFO, made the clarification during the Deutsche Bank Technology Conference. He confirmed that the company is receiving funding according to its predetermined milestones. This contrasts sharply with Intel's arrangement, which saw government grants converted into equity.

The Intel Deal: The government's acquisition of a 10% stake in Intel, alongside similar deals with Nvidia and AMD (15% of China sales revenue from certain advanced chips), highlights the Trump administration's increasing involvement in corporate America.
CHIPS Act Context: The CHIPS and Science Act, signed into law by President Biden in 2022, aims to bolster domestic semiconductor production and counter China's technological influence. However, the Act's implementation has been marked by varying interpretations and deal structures.
GlobalFoundries' Focus: GlobalFoundries' funding is directed toward expanding its manufacturing capacity across multiple fabrication plants. This aligns with their recent significant investment increase to $16 billion, including additional capital expenditure and research funding in cutting-edge chip technologies.

Hollister emphasized that this substantial investment – exceeding $16 billion and projected to cover more than a decade of spending – is securely funded through the CHIPS Act framework. The differing approaches to funding between GlobalFoundries and Intel underscore the individualized nature of the CHIPS Act agreements, with each recipient operating under unique terms and milestones.