January 13, 2010 GlocalFoundries to spend $3.4 Billion on "tools" for chip fab By LARRY RULISON, Business writer
MALTA -- GlobalFoundries Inc. is beginning the most expensive and critical part of its $4.2 billion computer chip factory in Malta -- outfitting it with costly manufacturing equipment that will turn 12-inch silicon disks into computer chips.
Even though construction of the building itself, known as Fab 8, is fairly expensive at $800 million. the manufacturing equipment, or tools, as they are known in the industry, will cost more than four times that amount at $3.4 billion.
The companies that make the tools, which essentially use a mixture of chemicals, water and metals to build chips on silicon, are located all over the world. Many of them, including Applied Materials Inc. of Santa Clara, Calif. and Tokyo Electron Ltd. of Japan, have significant research operations at the University at Albany's College of Nanoscale Science and Engineering.
GlobalFoundries spokesman Travis Bullard said Tuesday an internal task force is being put together to start the tool selection process, with decisions to be made in the second half of the year. The first tools are expected to be installed by the summer of 2011.
"This will be the start of a very long process," Bullard said. "We're quite a long way off from purchasing any tools."
Norm Armour, the general manager for Fab 8, revealed that the process was about to begin during a semiconductor manufacturing conference held this week in Silicon Valley.
Armour didn't say which tool companies GlobalFoundries would use. But EE Times, an industry publication, said many of the lithography tools that are an important part of the manufacturing process would come from the Dutch company ASML Holding NV. Nikon Corp. of Japan may also supply some of the tools, as could Applied Materials and Tokyo Electron.
Bullard said that is merely "conjecture" by the semiconductor industry.
"ASML is a major global vendor for lithography tools, but there are other companies, like Nikon, who are also potential vendors," he said. "No tool decisions have been made yet."
Fab 8 is the largest economic development project in New York state history. Expected to be completed by 2012, the factory will employ 1,465 people. But it also is expected to support 1,200 construction jobs and thousands of additional vendor jobs.
It's widely expected that many of those vendor jobs would come from companies like ASML, Applied Materials and Tokyo Electron, which might have to open offices here to support Fab 8. Such clustering has generally occurred in other areas, like Austin, Texas, and Portland, Ore., that are home to other chip fabs.
GlobalFoundries is building the Fab 8 structure largely with $650 million in cash promised from New York state as part of a $1.3 billion incentive package that also includes $700 million in tax breaks.
But the company is footing the bill for the tools, which carry the most risk because the technology used to run the machines, which can each cost tens of millions of dollars, changes so quickly.
Roger Kay, president of Endpoint Technologies Associates Inc., a consulting company outside Boston, says it was rumored at the International Consumer Electronics Show in Las Vegas last week that Fab 8's future manufacturing capacity has already been filled, especially after the latest news that Qualcomm Inc. became GlobalFoundries' latest customer.
"It looks like New York is going to get a return on its investment," Kay said. "It was a bold step for the state government to put so much money into this consortium when the chips were down, but all signs point to its working out for the best."
