GlobalFoundries to Sell Dutchess County Semiconductor Plant for $430M

John Jordan | April 2019

The plant known as “Fab 10” will be sold at the end of 2022 for $430 million.

EAST FISHKILL, NY—In a blockbuster deal that will save about 1,000 jobs in Dutchess County, GlobalFoundries of Santa Clara, CA has reached an agreement to sell its 300mm chip fab plant in East Fishkill to Phoenix-based ON Semiconductor for $430 million.

The two firms announced on April 22 they had reached a definitive agreement on the “Fab 10” plant sale that had GlobalFoundries pay ON Semiconductor $100 million at the signing of the agreement. The remaining $330 million will be paid at the end of 2022 when ON Semiconductor will take over full operational control of the site.

ONSemiconductor, which according to its corporate website operates a plant in Rochester, NY, will expand its operations in New York with the deal and could receive up to $40 million in grants and tax credits from the State of New York for the deal that will preserve the East Fishkill plant and nearly 1,000 positions at the former IBM facility.

Gov. Andrew Cuomo announced that ON Semiconductor has committed to invest more than $720 million over 10 years at the East Fishkill facility to establish its first 300mm chip manufacturing plant, further fueling the company’s strategic growth in the areas of power management including automotive electrification, 5G mobile networks, cloud computing and alternative energy.

“ON Semiconductor’s decision to expand and grow its operations in New York State is proof positive that smart investments in our innovation economy are working and fueling New York’s unprecedented growth,” Gov. Cuomo said. “We’re glad ON Semiconductor is choosing to deepen its roots here and its commitment to New York State.”

The agreement between GlobalFoundries and On Semiconductor calls for a three-year transition to increase the 300mm production at the East Fishkill plant, while allowing GlobalFoundries to transition its technologies to the company’s three other at-scale 300mm sites. Under the terms of the agreement, GlobalFoundries will manufacture 300mm wafers for ON Semiconductor until the end of 2022. First production of 300mm wafers for ON Semiconductor is expected to start in 2020.

At the end of the transition period, ON Semiconductor has committed to hiring from GlobalFoundries a minimum of the site’s 950 employees that directly support Fab 10 operations. ON Semiconductor also intends to create approximately 150 new jobs in the Mid-Hudson region.

Empire State Development has offered to provide ON Semiconductor up to $17.5 million in grants toward the purchase of the Fab 10 property, facilities and certain manufacturing equipment, and $22.5 million in Excelsior Jobs Program tax credits related to its investment, new hiring and research and development over 10 years.

“We are pleased to welcome the GlobalFoundries Fab10 team to ON Semiconductor’s team. The acquisition of 300 mm East Fishkill fab is another major step in our progress towards leadership in power and analog semiconductors,” states Keith Jackson, president and chief executive officer of ON Semiconductor.

He adds, “The acquisition adds additional capacity over the next few years to support growth in our power and analog products, enables incremental manufacturing efficiencies, and accelerates progress towards our target financial model. I am very excited about the opportunity this acquisition creates for customers, shareholders, and employees of the two companies and look forward to a successful partnership with GlobalFoundries in the coming years.”

The agreement also includes a technology transfer and development agreement and a technology license agreement. This provides a world class, experienced 300mm manufacturing and development team to enable conversion of ON Semiconductor wafer processes from 200mm to 300mm. ON Semiconductor will also have immediate access to advanced CMOS capability including 45nm and 65nm technology nodes. These processes will form the basis for future technology development at ON Semiconductor, the company states.

GlobalFoundries will be shifting production from the Fab 10 to their other facilities including Fab 8 located in Malta, NY. The firm acquired the semiconductor technology business of IBM in 2014, which included the East Fishkill plant, for $1.5 billion.

 

John Jordan
Editor, Real Estate In-Depth