GFS - Globalfoundries stock jumps on US govt's $1.5-billion grant to boost chip production

2024-02-20 07:31:03 ET

Globalfoundries Inc (NASDAQ:GFS) closed at $53.38, marking a significant pre-market surge of $3.88.

Pre-market trading tends to exhibit heightened volatility due to lower trading volume outside standard hours.

US govt grant of $1.5 billion to Globalfoundries

The recent news of the U.S. government awarding a $1.5 billion grant to GlobalFoundaries to bolster semiconductor production and fortify the supply chain in the U.S. has impacted the stock’s trajectory.

In addition to the sizable grant, the administration will provide an additional $1.6 billion in federal loans, further fortifying GlobalFoundries’ position. These investments are projected to triple the company’s production capacity in New York over a span of 10 years.

This funding underscores a concerted effort by the Biden administration and bipartisan lawmakers to rejuvenate American semiconductor manufacturing.

US’ dependence on foreign chips

Presently, only 12 percent of chips are produced in the United States, with the majority manufactured in Asia. The nation’s dependence on foreign chip sources became glaringly evident in the early stages of the pandemic when automakers and other industries faced disruptions or closures due to a shortage of vital chips.

The award granted to GlobalFoundries will facilitate the expansion of its existing facility in Malta, New York, empowering it to meet the demands of a contract with General Motors, ensuring dedicated chip production for automotive purposes.

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