ESSEX JUNCTION, Vt. - GlobalFoundries (NASDAQ:GFS), a leading semiconductor manufacturer, announced today it has received an additional $9.5 million in funding from the U.S. Department of Defense’s Trusted Access Program Office (TAPO) to expand its gallium nitride (GaN) on silicon semiconductor manufacturing capabilities. This investment is aimed at advancing the company's move towards large-scale production of GaN chips at its facility in Vermont.
GaN technology is noted for its ability to operate at high voltages and temperatures, making it ideal for a variety of applications including automotive, data centers, the Internet of Things (IoT), and aerospace and defense sectors. With trailing twelve-month revenues of $6.77 billion and a healthy current ratio of 2.42, GlobalFoundries demonstrates the financial stability needed to support such technological advancement. InvestingPro subscribers can access 14 additional analyst insights and detailed financial metrics about GFS's market position and growth potential. The chips are expected to deliver higher performance and greater energy efficiency, which could transform a range of industries by enabling more energy-efficient RF performance and the creation of devices with faster-charging, longer-lasting batteries.
Nicholas Sergeant, vice president of IoT and aerospace and defense at GF, expressed gratitude for the government's support and emphasized the significance of realizing full-scale GaN chip manufacturing for innovation and strengthening the semiconductor supply chain.
The recent funding is part of over $80 million that the company has received from the U.S. government since 2020 to support its GaN program. Vermont's facility is a U.S.-accredited Trusted Foundry and has been at the forefront of 200mm semiconductor manufacturing. In July 2024, GlobalFoundries further bolstered its GaN capabilities by acquiring Tagore Technology's Gallium Nitride Power portfolio and establishing the GF Kolkata Power Center in India to support its Vermont operations.
Dr. Nicholas Martin, Director at Defense Microelectronics Activity, highlighted the strategic investment's role in enhancing the domestic technology ecosystem and national security. The funding is expected to ensure the availability and security of these critical technologies for Department of Defense utilization.
GlobalFoundries is recognized for its innovation and partnership with customers across various markets, including automotive, smart mobile devices, and communications infrastructure. The company has a global manufacturing presence and is committed to delivering secure and sustainable semiconductor solutions.
This announcement is based on a press release statement from GlobalFoundries Inc. and reflects the company's ongoing efforts to advance semiconductor technology and its contribution to national security and technological innovation. For investors seeking comprehensive analysis, InvestingPro offers a detailed research report on GlobalFoundries, one of 1,400+ companies covered in-depth, providing crucial insights into the company's financial health, market position, and growth prospects.
In other recent news, GlobalFoundries has secured a substantial $1.5 billion for the expansion of its U.S. operations. This funding, granted through the CHIPS and Science Act by the U.S. Department of Commerce, is earmarked for the expansion of its New York facilities and the modernization of its Vermont plant. The company aims to utilize the funds to support the U.S. automotive industry, increase production capacity for next-generation semiconductors, and construct a new state-of-the-art fab in Malta, New York.
GlobalFoundries recently reported a 7% increase in revenue from the previous quarter to $1.739 billion in its third-quarter results for fiscal year 2024, despite a 6% decline year-over-year. The non-IFRS gross margin stood at 24.7%, and diluted earnings per share were reported at $0.41, both exceeding the company's guidance. Despite the year-over-year revenue decline, the company anticipates growth in the fourth quarter and aims for significant growth in free cash flow for the full year.
UBS has initiated coverage of GlobalFoundries with a Neutral rating, citing concerns about potential oversupply in the markets for mature node technologies. The firm anticipates that GlobalFoundries will exhibit lower growth and gross margins compared to other companies in the sector, contributing to projections for the company's financial results in 2025 and 2026 that are below the broader market consensus. Despite these concerns, UBS acknowledges GlobalFoundries' strong positioning and diverse technology offerings.
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