On Monday, Sen. Patrick Leahy joined leaders of GlobalFoundries to announce a $30 million award to help the company manufacture a new type of semiconductor at its facility in Essex Junction. If the company gets its way, there could soon be much more government money infused into the 65-year-old computer chip plant.
To help put this news in context, Vermont Public’s business and economy reporter Henry Epp spoke to Anna Van Dine on our daily news podcast, The Frequency.
Anna Van Dine: Henry, you were at the event where GlobalFoundries’ CEO made this announcement. Why are they getting this money, and what did they say its going to be used for?
Henry Epp: So, this is $30 million from last year’s federal budget. It's going to be used to scale up manufacturing of what are known as gallium nitride (GaN) semiconductors at the Essex plant. To remind folks, semiconductors are small chips that are the foundation of all kinds of technology, like smartphones, computers, wireless infrastructure and cars. Basically, this funding is going to help GlobalFoundries make a new kind of chip that the company says will go into things like new smartphones, electric vehicles and solar arrays.
Semiconductors are made on wafers, which are classified by their size. And the size of wafer that's made in Essex is smaller than a lot of other semiconductor plants around the world. But that will actually work well for these GaN chips, according to the company. The bottom line is that this $30 million in federal funding could allow the Essex plant to fill a new niche, which could keep this plant productive. It won't necessarily expand the workforce a great deal, but it could preserve existing jobs there.
Okay, so it sounds like some upgrades are coming to the plant, which has been around since the late 1950s. Can you remind us how the place has changed in recent decades?
Yeah, so it was owned by IBM for a very long time and had a peak workforce of about 8,500 people in the early 2000s. It was an innovator in semiconductor technology for years and a huge economic driver for this state.
But it saw years of decline in recent decades, to the point that IBM actually paid GlobalFoundries to take the plant off its hands about seven years ago. And when that happened, there was a lot of uncertainty about the plant's future. You know, would GlobalFoundries be committed to Vermont in the way that IBM had been?
Despite some initial layoffs, GlobalFoundries has stuck around, though the headcount is much lower than it once was. There are about 2,000 employees there now. But recently, the dynamics in the semiconductor industry have changed. We've all heard about the chip shortage in recent years, and there's been this big emphasis from the federal government under the Biden administration on bolstering domestic manufacturing of semiconductors. And that gives new value even to older chip plants, like the one in Essex.
Overall, this sounds like pretty good news for GlobalFoundries. The company is based in upstate New York and has other plans around the globe. So, how much might this solidify their commitment to Vermont?
Well, you know, it's been years since their CEO, Tom Caulfield, has held a public event at the Essex Junction plant. So just the fact that he made the trip up here feels significant. And, you know, he said the right things: That GlobalFoundries has invested $750 million into this facility, and that it plans to do even more. I asked Sen. Patrick Leahy about whether he feels confident in GlobalFoundries commitment to Vermont, and here was his response:
"The amount of money they put in here, they certainly didn't do that just to make us feel good. They are committed," Leahy said.
CEO Tom Caulfield wants to make more upgrades in Essex with funding from the recent CHIPS Act, which President Joe Biden signed over the summer. This will invest $52 billion in the domestic semiconductor industry, and Caulfield hopes some of that is going to come to Essex.
"The CHIPS bill will help us modernize, get some upgrades on equipment that will make it more productive," he said. "It would create more competitiveness.”
It's not clear how much Essex could receive but Leahy said it could be in the 10s of millions of dollars. That funding will start to get doled out in the coming months, so we'll learn more soon.
More from Vermont Public: What the federal semiconductor bill could mean for GlobalFoundries
Speaking of Sen. Leahy, he was hospitalized just last week. So, aside from excited about semiconductors, how did he seem?
You know, he seemed pretty good. He spoke for about 10 minutes. He also took questions from reporters and hung around for a long time to speak with other folks who were at this event. He noted that he's had to relearn how to walk, in his words, after undergoing hip surgery back in June. On Monday, he was walking and standing when he spoke. It's hard to say for sure, but he appeared to be doing well.
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