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Semiconductors

GlobalFoundries CEO: Chip industry output must double in 10 years

Regions compete for manufacturing capacity as geopolitical awareness increases

 Employees of Globalfoundries hold silicon wafers.   © EPA/Jiji

TAIPEI -- The chip industry will need to double its production capacity in the next eight to 10 years to address shortages and growing government concerns over supply chain security, the CEO of the biggest U.S. contract chipmaker said on Monday.

"[There has been] a recent acceleration of geopolitical awareness of just how critically important semiconductors, and in particular semiconductor manufacturing, is to supply chain security, sovereign security and economic security," GlobalFoundries CEO Tom Caulfield said in an online speech at Semicon Southeast Asia, an annual chip industry fair.

Caulfield said regions around the world are vying for chip manufacturing capacity, and the industry needs to catch up with the trend. "It needs our industry to double capacity in the next eight to 10 years," the CEO said. "It took 50 years for the semiconductor industry to grow to half a-trillion-dollar industry, and we will need to do about the same in about a decade."

To achieve this, the industry needs a new economic model based "on bold public-private partnerships with governments, partnerships with customers, manufacturers and suppliers," he said.

GlobalFoundries CEO Tom Caulfield gives an online speech at Semicon Southeast Asia on Aug. 23.

The CEO said due to industry consolidation over the years, the world now has just five viable players in the contract chipmaking, or foundry, business: Taiwan Semiconductor Manufacturing Co., Samsung Electronics, GlobalFoundries, United Microelectronics Corp. and Semiconductor Manufacturing International Co. in contract chipmaking.

"TSMC [is] substantially larger, larger than the sum of the four remaining foundries," he said. Samsung, which is the world's biggest memory chipmaker, can "be both a competitor and a supplier simultaneously," he said.

Caufield said most competitors' production capacity -- namely that of TSMC, UMC and SMIC -- is located in the Greater China region, which gives GlobalFoundries opportunities to launch "bold" expansion campaigns worldwide to help solve the unprecedented global supply crunch.

GlobalFoundries, which counts Qualcomm, Advanced Micro Devices and Mediatek as key clients, is headquartered in Malta, New York, but owned by the sovereign wealth fund of Abu Dhabi's Mubadala Investment Co.

Caulfield's remarks come as GlobalFoundries looks to expand production capacity in multiple countries to address the chip shortage and attract support from various governments.

GlobalFoundries in June announced it will spend over $4 billion to expand its chipmaking facilities in Singapore. In July, it said it will invest $1 billion to boost production capacity in New York and seek investment from the federal and state governments as well as its customers to build an additional chip plant locally. Meanwhile, it plans to pour an additional $1 billion into enlarging production capacity in Dresden, Germany.

Many of GlobalFoundries' rivals are also adding capacity. TSMC said it will spend $100 billion over the next three years to increase production output in response to robust demand and the chip crunch. Top American microprocessor chipmaker Intel announced it will spend $20 billion for two chip plants in Arizona as it steps up efforts to reenter the foundry business. UMC, meanwhile, plans to spend 150 billion New Taiwan dollars ($5.36 billion) over the next three years to increase capacity in the southern Taiwanese city of Tainan.

The massive expansion plans in the semiconductor industry come as the U.S., Europe, China, Japan and South Korea are all pouring money into their respective semiconductor industries and urging companies to bring chip production onshore.

National security concerns over chips -- the heart and brain behind everything from smartphones and self-driving cars to space and military technologies -- have been on the rise recently. The U.S., for instance, passed a bipartisan bill earmarking $52 billion over the next five years to strengthen the country's semiconductor production and research and development.

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