In its short 14-year history, GlobalFoundries has risen to become the world’s third-largest chip foundry. Based in upstate New York, GlobalFoundries isn’t a household name because it’s manufacturing semiconductors that are designed and sold by other companies.
But it’s quietly helping power nearly every connected device.
“Look at every electronic device in your house, and I would bet you money that every one of those devices has at least one GlobalFoundries chip in it,” Thomas Caulfield, GlobalFoundries CEO, told CNBC.
GlobalFoundries chips are inside everything from smartphones and cars to smart speakers and Bluetooth-enabled dishwashers. They’re also in the servers running generative artificial intelligence models, a market that’s booming so quickly that chipmakerNvidia has surpassed a $1 trillion market cap and is forecasting 170% sales growth this quarter.
Within generative AI, GlobalFoundries isn’t focused on making the powerful graphics processing units (GPUs) used to train large language models like ChatGPT. Instead, the company is manufacturing chips that perform functions like power management, connecting to displays, or enabling wireless connections.
Caulfield says AI is “the catalyst for our industry to double in the next eight years and GF will have its fair share, if not more, of that opportunity.”
Now, as tensions with China raise concerns over the world’s reliance on TSMC, and the U.S. and China play technological tug-of-war with export controls, GlobalFoundries finds itself positioned well outside the geopolitical crosshairs. The company has spent about $7 billion to expandproduction in Singapore, Germany, France and upstate New York.
CNBC went to Malta, New York, for a firsthand look at the fabrication plant where GlobalFoundries is adding 800 acres, to ask how the company plans to stay ahead while developing the older chips still essential for everyday devices.
‘It worked out for everybody’
The story began in 2009, when Advanced Micro Devices decided to break off its manufacturing operations into a separate company and focus entirely on designing chips. The newly formed GlobalFoundries took over AMD’s chip fabrication plant, or fab, in Dresden, Germany. At the time, it was a joint venture between AMD and the government of Abu Dhabi’s tech investment arm. Moorhead was working at AMD.
“Our founder, Jerry Sanders, at AMD said, ‘real men have fabs.’ So the thought of spinning out the fab from AMD into its own company was a really big deal,” Moorhead said. AMD “had to do it,” he added, because “the expenses for a leading edge fab were doubling every two or three years. And right now we’re looking at investments of campuses upwards of $100 billion.”
“I think it worked out for everybody,” Moorhead said.
GlobalFoundries started building its new fab, and future headquarters, in Malta in 2009. The next year, it expanded into Singapore with the purchase of Chartered Semiconductor. By 2015, it had acquired IBM‘s in-house semiconductor division, taking over production sites in Vermont and New York. By 2018, GlobalFoundries was a $6 billion business.
“Unfortunately, it had a strategy that was not able to produce profitability or free cash flow,” said Caulfield. “So in 2018, when I became the CEO of GlobalFoundries, we decided to make a strategic pivot to focus all our energy, all our R&D, all of our capital deployment to go be the very best at these essential chips. And that began a journey to turning our company around to profitability.”
To this day, GlobalFoundries only makes 12-nanometer chips and above, or what it calls “essential” chips.
GlobalFoundries CEO Thomas Caulfield shows a 300mm wafer to CNBC’s Katie Tarasov at Fab 8 in Malta, New York, on September 5, 2023.
Carlos Waters
“If you do secure pay transactions, whether it’s on your credit card or on your smart mobile device, we make the chip that does that,” Caulfield said. “Do you like the photographs your camera takes? Well, we make image sensor processors that drive that camera. Do you like the battery life on your phone? We make the PMICs, the power management ICs that make sure that power is managed on these devices.”
During the 2021 chip shortage, GlobalFoundries told CNBC it sold out entirely. That same year, the company went public on the Nasdaq.
“Ultimately, we really need these chips,” said Daniel Newman, CEO of research firm Futurum Group. “We found that out because we had parking lots full of pickup trucks that couldn’t be shipped because they couldn’t put the ECU in or they couldn’t install power seats. So GlobalFoundries had a really strong market requirement.”
“Not only do we have a high concentration of semiconductor manufacturing in Taiwan between TSMC and UMC, but TSMC is twice the size of the other four companies combined,” Caulfield said.
TSMC makes more than 90% of the world’s most-advanced microchips, creating vulnerability during supply chain backlogs as well as risks tied to China’s continued threats to invade Taiwan. Like GlobalFoundries, TSMC also makes older nodes. Caulfield said GlobalFoundries is absolutely going after TSMC.
“Not only do we have aspirations, we think in certain areas we’ve won,” Caulfield said. He pointed to his company’s radio frequency chips and silicon on insulator technology.
“Silicon on insulator is a huge differentiator when it comes to power, and TSMC doesn’t use that,” Moorhead said.
At a time of geopolitical turmoil, GlobalFoundries is investing about $7 billion to add capacity in parts of the world with lower risk.
In Singapore, the company just completed a $4 billion expansion that it says makes it the country’s most-advanced fab. In June, it finalized a deal with STMicroelectronics to build a jointly owned fab in Crolles, France.
Not all global expansion endeavors have gone smoothly, however. In 2017, GlobalFoundries made big plans for a fab in Chengdu, China. In 2020, it backed out.
“It turned out we had three relatively large facilities around the world already that were severely underloaded,” Caulfield said. “Adding more capacity at a time when we couldn’t fill our existing capacity was just going to create a bigger economic hole for us.”
The U.S. has recently enacted a series of export bans on chip companies sending advanced tech to China. By only producing older nodes, GlobalFoundries says it’s been “very minimally” impacted.
Making chips in the U.S.
Although GlobalFoundries’ chips are considered legacy nodes, the process and resources needed are still incredibly complex. Caulfield said each silicon wafer goes through at least 1,000 steps over 90 days in the Malta fab. The process requires extensive cleaning, cooling and chemical treatment, which uses a lot of water. GlobalFoundries says Fab 8 uses about 4 million gallons of water a day, reclaiming 65% of that.
“Upstate New York is a very good place for access to high-quality and abundant water,” Caulfield said.
All the heavy machinery also requires about 2 gigawatts of power per day, according to Hui Peng Koh, who heads up the Malta fab. She said it’s enough power to “run a small city.”
“I would say our lowest-cost power is in the U.S.,” Caulfield said. “A lot of our power in upstate New York, where this facility is at, comes from hydroelectric, so it’s a greener power. In both Europe and Singapore, much of that power comes off of natural gas.”
Then there’s the manpower. GlobalFoundries has 13,000 employees worldwide. About 1,500 people report to Koh in Malta. She told CNBC it’s “challenging to attract talent to this part of the world.”
The high cost of materials and construction work also make building a fab in the U.S. more expensive than in much of Asia, so public subsidies have been key for reshoring production. GlobalFoundries said New York pitched in more than $2 billion for the Malta fab. The company also applied for funds from the $52 billion national CHIPS and Science Act. Focusing on 12-nanometer and above also helps the company keep costs down.
GlobalFoundries’ Fab 8 in Malta, New York, where Equipment Engineering Manager Chris Belfi led CNBC’s Katie Tarasov on a tour on September 5, 2023.
GlobalFoundries said it’s putting out 400,000 wafers per year from its Malta fab. While Caulfield wouldn’t put a dollar figure on the wafers, he said at any given time, there’s “about a half-billion dollars worth of inventory that’s running over those 90 days to create product.”
GlobalFoundries’ main customers for this massive output of essential chips are the world’s largest fabless chip companies, including Qualcomm, AMD, NXP and Infineon.
Eventually, many of its chips end up in the auto, aerospace, and U.S. defense industries.
GlobalFoundries is known for making “specialty chips” in big, exclusive deals, like one with Lockheed Martin in June for onshoring production of certain chips, and a recent $3 billion agreement with the U.S. Department of Defense.
Newman said GlobalFoundries has around 50 such long-term agreements.
“Effectively they’re saying, ‘We will create a stable margin commitment capacity and if the market shifts, we’re going to stand by the letter of our agreement,'” he said.
For companies hit hardest by the chip shortage, a deal with GlobalFoundries is a hedge against it happening again. In February, General Motors set aside exclusive production capacity at the Malta fab.
“GM, their lines got held up for very low-cost components because they couldn’t get enough,” Moorhead said. “What GM decided is that this is too much supply chain risk. We’re going to go directly to GF.”
GlobalFoundries says automotive is one of its fastest-growing segments. It makes many different kinds of chips for cars: the microcontrollers for power seats, airbags and braking; the sensing chips for cameras and Lidar; and battery management chips for electric vehicles.
Meanwhile, the growth of GlobalFoundries’ smartphone business is decelerating, alongside an industrywide slowdown. GlobalFoundries laid off 800 employees in December and January, and issued weaker-than-expected revenue guidance for the third quarter.
“Smart mobile devices last year represented 46% of our revenue,” Caulfield said. “While it grew last year, it was 50% the year before. So we’ve been trying to build our other business and to get more balanced, rather than having such a high exposure to smart mobile devices.”
The founder of the company behind the IRL social media app was charged with defrauding investors of $170 million in the company’s 2021 funding round, the Department of Justice said Wednesday.
A federal grand jury in Oakland federal court indicted Abraham Shafi, 38 of Hawaii, with wire fraud, securities fraud and obstruction in connection with the scheme, the DOJ said.
Shafi was the CEO of Get Together, the parent company of IRL. The company was valued at $1 billion after its 2021 Series C funding round. IRL, which shuttered in June 2023, was a platform for users to organize events and offline activities. It found some traction in 2018, ranking among Apple’s top social apps.
Shafi allegedly spent millions on incentive advertising to boost installs of the app leading up to the Series C while maintaining to investors that the company spent “very little” on getting new users, the DOJ said.
He then concealed the expense by invoicing it to another firm, the DOJ said.
The indictment also alleges that the CEO and his fiancée used investor funds for “luxury hotel stays, luxury clothing, purchases from home furnishing retailers, thousands of dollars for art classes, and hundreds of thousands of dollars for SHAFI’s wedding, including payments for wedding guests’ airfare and luxury hotels.”
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Shafi told CNBC in February 2018 that investors backed the company on its potential to compete with Facebook and Snapchat. Investors in IRL included Peter Thiel’s Founders Fund and the venture firm Floodgate.
Shafi’s co-founders at IRL included Scott Banister, the first board member of PayPal and an early investor in Facebook, among others.
Only Shafi was named in the DOJ indictment. He faces a max of 20 years in prison on each count, the DOJ said.
“Shafi took advantage of investors’ appetite for investments in the pre-IPO technology space and fraudulently raised approximately $170 million by lying about IRL’s business practices,” Monique Winkler, director of the SEC’s San Francisco Regional Office, said in a release at the time.
A news ticker outside Fox News headquarters reads: Grand jury votes to indict former President Donald Trump, at the News Corporation building in New York City, U.S., March 31, 2023.
Brendan Mcdermid | Reuters
In less than three days, college football will be showcasing one of its most-highly anticipated week one matchups ever, with top-ranked Texas heading on the road to play reigning national champion and third-ranked Ohio State.
Fox is airing the much-hyped game. YouTube TV subscribers may be out of luck.
Google‘s YouTube said on Monday it may remove channels like Fox Broadcast Network, Fox News and Fox Sports if the company is unable to reach a new agreement with Fox Corp. by 5 p.m. ET on Wednesday. The two sides are still in a standoff, putting YouTube TV customers at risk of missing out on major sporting events and hefty ad dollars in limbo.
For Google, the issue is how much Fox is charging for its content.
“Fox is asking for payments that are far higher than what partners with comparable content offerings receive,” YouTube wrote in its Monday blog post.
YouTube TV has roughly 9.4 million subscribers. Most notably for sports fans, Fox is the home for many upcoming football games, both college and pro. The NFL season begins next week, with Fox set to air games starting on Sunday, Sept. 7
YouTube pays broadcasters like Fox to carry their channels.
In addition to football, Fox shows Major League Baseball games, and the MLB regular season is entering its final stretch. Fox will be airing some playoff games that follow, as well as the World Series, which is scheduled to start in late October.
Brendan Carr, chair of the Federal Communications Commission, weighed in on Tuesday.
“Google removing Fox channels from YouTube TV would be a terrible outcome,” he said on X. “Millions of Americans are relying on YouTube to resolve this dispute so they can keep watching the news and sports they want — including this week’s Big Game: Texas @ Ohio State. Get a deal done Google!”
The Texas – Ohio State game has added intrigue as its Arch Manning’s first marquee start as quarterback for the top-ranked Longhorns.
The hefty roster of Fox programs may be enough for sports fans to turn off YouTube TV in favor of other options. One place subscribers could turn to is Fox One, Fox’s standalone streaming service, which just launched last week, ahead of the NFL season. Fox One costs $19.99 per month or $199.99 annually.
The base plan for YouTube TV costs $82.99 per month and includes over 100 live channels and unlimited cloud DVR. If Fox does go offline for an extended period of time, YouTube will give members a $10 credit, the Google company said.
YouTube recently overtook Netflix, which has a market cap of $518 billion, as the top streaming platform in terms of audience engagement.
While YouTube and Fox have set a deadline of Wednesday to reach a deal, it’s common for carriage disputes to result in a deadline extension that would give the parties more time to negotiate.
Alphabet CEO Sundar Pichai during the Google I/O developers conference in Mountain View, California, on May 10, 2023.
David Paul Morris | Bloomberg | Getty Images
Google has eliminated more than one-third of its managers overseeing small teams, an executive told employees last week, as the company continues its focus on efficiencies across the organization.
“Right now, we have 35% fewer managers, with fewer direct reports” than at this time a year ago, said Brian Welle, vice president of people analytics and performance, according to audio of an all-hands meeting reviewed by CNBC. “So a lot of fast progress there.”
At the meeting, employees asked Welle and other executives about job security, “internal barriers” and Google’s culture after several recent rounds of layoffs, buyouts and reorganizations.
Welle said the idea is to reduce bureaucracy and run the company more efficiently.
“When we look across our entire leadership population, that’s mangers, directors and VPs, we want them to be a smaller percentage of our overall workforce over time,” he said.
The 35% reduction refers to the number of managers who oversee fewer than three people, according to a person familiar with the matter. Many of those managers stayed with the company as individual contributors, said the person, who asked not to be named because the details are private.
Google CEO Sundar Pichai weighed in at the meeting, reiterating the need for the company “to be more efficient as we scale up so we don’t solve everything with headcount.”
Google eliminated about 6% of its workforce in 2023, and has implemented cuts in various divisions since then. Alphabet finance chief Anat Ashkenazi, who joined the company last year, said in October that she would push cost cuts “a little further.” Google has offered buyouts to employees since January, and the company has slowed hiring, asking employees to do more with less.
Regarding the buyouts, executives at the town hall said that a total of 10 product areas have presented “Voluntary Exit Program” offers. They’ve applied to U.S.-based employees in search, marketing, hardware and people operations teams this year.
Fiona Cicconi, Google’s chief people officer, said at last week’s meeting that between 3% and 5% of employees on those teams have accepted the buyouts.
“This has been actually quite successful,” she said, adding “I think we can continue it.”
Pichai said the company executed the voluntary buyouts after listening to employees, who said they preferred that route to blanket layoffs.
“It’s a lot of work that’s gone into implementing the VEP program, and I’m glad we’ve done it,” Pichai said. “It gives people agency, and I’m glad to see it’s worked out well.”
‘Wanting a career break’
Cicconi said one of the main reasons employees are taking the buyouts is because they want to take time off from work.
“It’s actually quite interesting to see who’s taking a VEP, and it’s people sort of wanting a career break, sometimes to take care of family members,” she said.
CNBC previously reported that the layoffs hurt morale as the company was downsizing while at the same time issuing blowout earnings and seeing its stock price jump. Alphabet’s shares are up 10% this year after climbing 36% in 2024 and 58% the year prior.
At another point in the town hall, employees asked if Google would consider a policy similar to Meta’s “recharge,” a month-long sabbatical that employees earn after five years at the company.
“We have a lot of leaves, not least our vacation, which is there for exactly that — resting and recharging,” said Alexandra Maddison, Google’s senior director of benefits.
She said the company is not going to offer paid sabbatical.
“We’re very confident that our current offering is competitive,” Maddison said.
Meta didn’t immediately respond to a request for comment.
Other executives jumped in to compare the two companies’ benefits.
“I don’t think they have a VEP at Meta by the way,” Cicconi said.
Pichai then asked, to some laughs from the audience, “Should we incorporate all policies of Meta while we’re at it? Or should we only pick and choose the few policies we like?”
“Maybe I should try running the company with all of Meta’s policies,” he continued. “No, probably not.”