GlobalFoundries (GFS) is increasing its investment in expanding domestic chip manufacturing by an additional $4 billion, bringing its total commitment to $16 billion. The company is one of the largest multinational contract chip manufacturers and designers. This added investment comes on the heels of the Trump administration’s push to boost domestic production of artificial intelligence (AI) hardware and software and reduce reliance on China.
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The company is a critical supplier to, and has partnered with, major tech companies including Apple (AAPL), SpaceX, AMD (AMD), Qualcomm (QCOM), and General Motors (GM) to reshore semiconductor manufacturing in the U.S. by producing their required chips domestically. GFS stock rose 2.3% on the news yesterday.
Here’s How GFS Plans to Allocate the Funds
Of the additional commitment, $1 billion will go towards capital expenditures for factory expansions in Malta, New York, and Essex Junction, Vermont. This is in addition to the $12 billion allocated for such projects to be deployed over the next decade. The company is already working to produce gallium nitride chips in Vermont. These chips are expected to offer better power efficiency for certain applications compared to conventional silicon chips.
Meanwhile, the other $3 billion will be directed toward research and development of new chip technologies. The funds will support the exploration of advanced chip packaging solutions for multi-chip assemblies, silicon photonics to enable next-generation quantum computing applications, and gallium nitride initiatives aimed at boosting power efficiency in electric vehicles, AI servers, and energy markets.
Commenting on the enhanced outlay, GlobalFoundries CEO Tim Breen noted that the company’s timeline for capital expenditures will be flexible and dependent on hardware demand and market conditions, thus reducing risk and ensuring optimal capital deployment. Overall, GlobalFoundries’ increased investment positions the company to benefit from the rapid adoption and growth of AI and high-performance computing markets.
Is GFS a Good Stock to Buy?
On TipRanks, GFS stock has a Moderate Buy consensus rating based on five Buys versus five Hold ratings. The average GlobalFoundries price target of $41.15 implies 9.1% upside potential from current levels. Year-to-date, GFS stock has lost 12.1%.
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