U.S. semiconductor company GlobalFoundries (GFS.US) announced on Tuesday that it will invest $4 billion to expand its factory in Singapore, and the wafer foundry expects "demand for basic semiconductor chips to grow." "I believe this industry will double again in the next ten years," GF President and CEO Thomas Caulfield said in an interview on Tuesday.
Some catalysts include "new important applications, artificial intelligence as a whole and how it's going to change society" -- which will require chips and create demand, he explained.
"The automotive industry seems to be staying strong. The AI cloud also seems to be strong. Industrial is finding its footing, while anything consumer-related remains weak," Caulfield said.
It is understood that a fab refers to a company that signs a contract with a semiconductor company to manufacture chips. GlobalFoundries makes semiconductors designed by companies such as Qualcomm (QCOM), MediaTek and NXP (NXPI) and serves about 200 customers around the world.
Chips from these companies are used in smartphones, laptops, cars, virtual reality systems, video game consoles, smart speakers, as well as in artificial intelligence and 5G.
According to the Singapore Semiconductor Industry Association, Singapore supplies 11% of the world's semiconductors.
According to market intelligence provider TrendForce, GF is the world's third-largest wafer foundry by revenue, behind Taiwan Semiconductor Manufacturing Co (TSM.US) and Samsung (SSNLF.US).
According to GF's statement, the 23,000 square meter wafer fab in Singapore will increase the company's global foundry footprint and enhance its ability to serve customers from manufacturing sites on three continents.
"As the most advanced semiconductor fab in Singapore to date, the expanded fab will produce an additional 450,000 wafers (300mm) per year, increasing GF's total production capacity in Singapore to approximately 1.5 million wafers per year," the company added.
It is reported that GlobalFoundries acquired Singapore's Chartered Semiconductor Manufacturing in 2010 and took over its wafer fab.
The factory's current annual production capacity is 720,000 (300mm) wafers and 692,000 (200mm) wafers. This wafer is the basic material for making chips.
The company said the new factory will create about 1,000 "high-value" jobs in Singapore, 95% of which will include equipment technicians, process technicians and engineers. GF currently employs approximately 4,500 people at its Singapore facility.
As early as June 2021, GF announced that it would cooperate with the Singapore Economic Development Board to build a new wafer fab in its existing Singapore campus to meet the global demand for semiconductor chips at that time.
The following June, the Nasdaq-listed semiconductor maker said its first tools had been transferred to a Singapore factory. The company also has manufacturing facilities in the United States and Germany.
"GF has a long-standing relationship with the Singapore government. The Singapore government has industrial policies that bring high-tech manufacturing and high-tech innovation to the region. That's why you see so many great companies producing here," Caulfield said.
"What is happening now is that when other countries realize the importance of semiconductor manufacturing to their regions, to sovereign security, to supply chains, to economic security, they will also want to have semiconductor manufacturing, and they need to adjust their industrial policies to help create a competitive landscape in which manufacturing and these regions are economically competitive," he added.
GF also said the expansion will also employ artificial intelligence tools to improve productivity, such as wafer pattern recognition to automatically classify and find defects in wafers.
However, the chip industry is still experiencing an inventory glut, as smartphone and PC manufacturers stockpiled a large number of chips during the boom caused by the epidemic. And as inflation soars, consumers have been cutting back on spending on these goods, causing the price of memory chips to continue to fall.
Companies including TSMC and Samsung also previously reported second-quarter profit declines as demand for memory chips continued to weaken.
In this regard, Caulfield said: "We have seen that in the second quarter of this year, the inventories of semiconductor companies are still climbing, but at a much slower rate. The good news is that we are also seeing inventories starting to decline downstream in the supply chain, such as systems companies. So maybe there is a little sign that inventories are starting to adjust."
However, he also pointed out that global inflation must first be brought under control before interest rates can fall and consumer spending can return to health.
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