GlobalWafers signs accord to obtain US$400 million in subsidies

Washington, July 17 (CNA) Taiwan-based GlobalWafers Co., the world's third-largest silicon wafer supplier, has signed a non-binding preliminary memorandum of terms (PMT) with the U.S. Department of Commerce (DOC) to obtain direct funding of up to US$400 million under the CHIPS and Science Act.

The DOC said on Wednesday in a statement that it had reached an agreement with the Taiwanese company through its subsidiaries GlobalWafers America, LLC (GWA) and MEMC LLC.

The agreement means the U.S. government will provide direct funding for the silicon wafer supplier to build a 12-inch wafer plant in Sherman, Texas and another focusing on silicon-on-insulator (SOI) wafers in St. Peters, Missouri.

According to the DOC, silicon wafers are critical components in the semiconductor ecosystem and are used in every chip.

The DOC said 12-inch silicon wafers are a key input used by foundries and integrated device manufacturers to roll out leading-edge, mature-node and memory chips.

The DOC added that SOI wafers allow for higher performance in challenging environments and are commonly used in defense and aerospace.

Five leading companies, including GlobalWafers, currently hold more than 80 percent of the manufacturing market, the DOC noted. Around 90 percent of silicon wafers are sourced from East Asia, the DOC added.

"President Biden is restoring our leadership in the entire semiconductor supply chain -- from materials to manufacturing to R&D. With this proposed investment, GlobalWafers will play a crucial role in bolstering America's semiconductor supply chain by providing a domestic source of silicon wafers that are the backbone of advanced chips," U.S. Secretary of Commerce Gina Raimondo said in the statement.

"As a result of this proposed investment, the Biden-Harris Administration is helping to secure our supply chains, which will create over 2,000 jobs across Texas and Missouri and ultimately lower costs and improve economic and national security for Americans," Raimondo said.

In Hsinchu, Taiwan, where GlobalWafers is headquartered, Chairwoman and CEO of the company Doris Hsu (徐秀蘭) expressed her gratitude in a separate statement to the U.S. Congress, the DOC and the Department of Treasury for CHIPS Act support.

"GlobalWafers is pleased to be a key node in the U.S. semiconductor supply chain," Hsu said.

In the statement, GlobalWafers said its US$5 billion investment in Sherman would include a 12-inch silicon wafer plant and a research and development center. It is expected to create 1,200 construction-related jobs and 750 jobs for production line workers, technicians and engineers by the end of 2026.

GlobalWafers said the US$2.2 billion investment in St. Peters is expected to create about 500 construction-related jobs and 130 high-pay manufacturing jobs.

In addition to the US$400 million direct funding, GlobalWafers said it plans to apply for the U.S. Treasury Department's Advanced Manufacturing Investment Credit (AMIC) worth up to 25 percent of qualified expenditures at the GWA and MEMC facilities.

According to Hsu, GlobalWafers will operate four facilities in the U.S. after the expansion; two in Texas and two in Missouri.

GlobalWafers has expanded through mergers and acquisitions in recent years, which has helped its global ranking rise to third.

On its website, GlobalWafers said it runs 18 sites in nine countries -- Taiwan, China, the U.S., Japan, Denmark, Korea, Italy, Malaysia and Singapore.

GlobalWafers is one of Taiwan's prominent semiconductor companies seeking subsidies for their investments in the U.S. under the CHIPS and Science Act.

In early April, Taiwan Semiconductor Manufacturing Co. (TSMC), the world's largest contract chipmaker, announced it has signed a non-binding PTM with the DOC for direct funding of up to US$6.6 billion for its investments in the U.S. state of Arizona, where it is investing US$65 billion to build three sophisticated wafer fabs.