GlobalFoundries (GFS) Stock Gets Premarket Boost with $1.5B Federal Investment
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GlobalFoundries (GFS) Stock Gets Premarket Boost with $1.5B Federal Investment

The U.S. Department of Commerce's decision to allocate $1.5 billion to GFS marks a pivotal move to enhance US semiconductor production.
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Through the CHIPS and Science Act, the U.S. Department of Commerce plans to invest $1.5 billion in GlobalFoundries Inc. (NASDAQ: GFS) to expand domestic semiconductor manufacturing. The funding will support new fab construction and facility upgrades in New York and Vermont to boost production capacity. Shares of GlobalFoundries rose 6.78% in premarket trading on Wednesday.

GlobalFoundries Inc. Gets Funding as part of CHIPS and Science Act

On Monday, the U.S. Department of Commerce announced plans to invest $1.5 billion in GlobalFoundries Inc. as part of the CHIPS and Science Act. The funding aims to expand the semiconductor manufacturer’s operations and enhance chip production capabilities domestically. GlobalFoundries will use the investment to construct a new state-of-the-art fab and modernize its facility in Vermont.

The federal funding and over $600 million in incentives from New York State over a decade will support GlobalFoundries’ projects in New York and Vermont. The company plans to increase its wafer production capacity to 1 million annually at its Malta campus.

A key focus is adding technologies critical for the auto industry and establishing a fab dedicated to meeting the demand for essential chips across sectors like automotive, aerospace, defense, and artificial intelligence.

In addition to bolstering manufacturing, the over $12 billion that GlobalFoundries plans to invest across its U.S. sites over ten years will create jobs and fuel workforce development. Estimates indicate over 1,500 manufacturing jobs and approximately 9,000 construction roles throughout the project lifecycle.

GFS Up 6.7% in Premarket Trading

Shares of GlobalFoundries Inc. closed at $53.38 last Friday, down $0.95 or 1.75%, though pre-market trading Wednesday indicated an upward movement of $3.62 or 6.7%. The semiconductor manufacturer, which reported earnings on February 13th, has a market cap of $29.53 billion, a beta of 1.71, a PE ratio of 29.17, and an EPS of $1.83. Analysts have set a 1-year target estimate of $63.50 for GFS stock.

The CHIPS Act funding for GlobalFoundries underscores the vital role of semiconductors across industries like automotive, electronics, and defense. The investment aims to strengthen America’s competitive edge and supply chain resilience in this critical sector by enhancing U.S. chip manufacturing capabilities. The strategic move comes as the nation seeks to reduce reliance on overseas suppliers.

Do you think the CHIPS and Science Act would lead to a stronger and more secure economy for the US? Let us know in the comments below.

Disclaimer: The author does not hold or have a position in any securities discussed in the article.