Business & Economy

GlobalFoundries plant in Essex Junction likely to benefit from bill passed by Congress

GlobalFoundries
GlobalFoundries in Essex Junction. File photo by Sam Heller/VTDigger

GlobalFoundries’ Essex Junction plant is likely to benefit from the $52 billion investment in chip-making technology Congress passed Thursday.

The investment is part of a $280 billion bill aimed at helping American manufacturing compete with China. 

Precisely how much GlobalFoundries would receive and how much it would direct to its Vermont operations is not clear, but a spokesperson for the company said it would lead to investments in the Vermont plant.

“Once CHIPS Act funding legislation is signed into law, investments GlobalFoundries receives from the $52 billion in the legislation will be combined with similar investments being made by GF and its customers to expand the company’s manufacturing, research and development at its manufacturing sites in New York and Vermont,” GlobalFoundries spokesperson Julie Moynehan said in a written statement.

The measure, known as the CHIPS and Science Act, passed the U.S. Senate 64-33 on Wednesday and 243-187 in the House on Thursday. It now goes to President Joe Biden for his signature. 

Vermont’s two U.S. senators found themselves on opposing sides of the matter. Sen. Patrick Leahy, D-Vt., supported the bill, though he was absent for the vote because he is recovering from hip surgery, while Sen. Bernie Sanders, I-Vt., opposed it. 

Speaking about an earlier version of the legislation last year, Leahy said it was critical to countering the national security threat posed by key technology being produced overseas. 

“This bill is for the brilliant men and women who make chips in Vermont,” Leahy tweeted Wednesday.

Speaking on the Senate floor earlier this month, Sanders said there was “no doubt” that a global microchip shortage posed problems for manufacturers. 

“But the question we should be asking,” he continued, “is this: Should American taxpayers provide the microchip industry with a blank check of over $50 billion at a time when semiconductor companies are making tens of billions of dollars in profits and paying their executives exorbitant compensation packages?”

Sanders said that over the past 20 years, chip-makers have shut down more than 780 manufacturing plants in the United States and eliminated 150,000 jobs while moving most production overseas, despite having received $9.2 billion in government subsidies and loans. 

Among the House members to support the bill was Vermont’s lone member, U.S. Rep. Peter Welch, D-Vt. He cited the fact that so many advanced chips are now made in Taiwan as one reason to bring manufacturing back to the United States.

“There is major turmoil potentially on the horizon between China and Taiwan,” Welch told VTDigger. “It’s a necessary step so that we don’t find ourselves extraordinarily vulnerable if things heat up between China and Taiwan.”

Although Sanders opposed the bill in the end, Welch gave him credit for putting in safeguards to ensure that the funds are spent on research. 

“The work that Bernie did was extremely effective in improving the guarantees and protections of this becoming a windfall for the chip companies,” Welch said. “None of the money can be used for stock buybacks. None of the money can be used for the payment of dividends. Any workers hired in the chip construction projects have to be paid prevailing wage. None of the money can be invested in countries of concern, places like China, North Korea, Iran and Russia.”

How much the bill would benefit GlobalFoundries’ plant in Essex Junction is unknown. Companies will have to apply for subsidies and tax credits that will be awarded by the Department of Commerce and overseen by Congress. 

“I don’t think we have the final numbers yet,” said Frank Cioffi, president of the Greater Burlington Industrial Corporation, a nonprofit that works to attract jobs to Chittenden County. “I understood that there will be some funding to some aspects of what we do here.”

Cioffi said that because the funding will affect GlobalFoundries in a positive way, it will have a positive effect on the Essex Junction plant. 

In 2015, GlobalFoundries acquired the plant from IBM. At the time, the factory employed about 4,000 people. In 2018, the company announced that it would cut 5% of its workforce, including at the plant in Essex Junction, which at the time employed 2,500 people. The factory now employs 2,300 people, according to Cioffi.

Senate Majority Leader Chuck Schumer, D-N.Y., has been a leading proponent of the legislation. GlobalFoundries is planning to expand a plant in Malta, New York, and to build another plant there. 

The $52 billion bill will create a larger federal program to invest in microelectronics, according to Sherman Patrick, a senior policy adviser to Leahy, adding that GlobalFoundries is one the largest manufacturers of microelectronics in the U.S.

Some of the funds could go to upgrading GlobalFoundries’ facility in Essex Junction, Patrick said. The factory makes 5G chips. The money could fund commercialization of research into improving networking technology and what can be done with it, revitalizing fabrication techniques so more power can go through chips, Patrick said. 

Many of the chips cars need are made at GlobalFoundries in Vermont, Patrick said, but the plant also makes chips like those used in new iPhones. 

The plant in Essex Junction has a commercial side and a defense side. Patrick said the Department of Defense is interested in processes that apply gallium nitride to silicon wafers to increase power, which would have huge commercial applications. The department has been working with GlobalFoundries on such technology.

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Fred Thys

About Fred

Fred Thys covers business and the economy for VTDigger. He is originally from Bethesda, Maryland, and graduated from Williams College with a degree in political science. He is the recipient of the Radio, Television, and Digital News Association's Edward R. Murrow Award for Investigative Reporting and for Enterprise Reporting. Fred has worked at The Journal of Commerce, ABC News, CBS News, CNN, NBC News, and WBUR, and has written for Le Matin, The Dallas Morning News, and The American Homefront Project.

Email: [email protected]

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