GlobalFoundries flogs its New York fab to ON Semiconductor for $430 million

Posted on Tuesday, Apr 23 2019 @ 14:43 CEST by Thomas De Maesschalck
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GlobalFoundries announced the sale of its Fab 10 in East Fishkill, New York. The foundry sold the former IBM fab to ON Semi, which will use the plant for the production of MOSFET and IGBT turnkey solutions, as well as advanced CMOS capability. This is ON's first 300mm fab and the company will have immediate access to the 45nm and 65nm production technology.

As part of the deal, GlobalFoundries received $100 million at the signing of the contract, with another $330 million to follow at the end of 2022, after which ON Semiconductor will gain full operation control of the fab.

This deal propels GlobalFoundries further on the path to becoming a specialty process provider. Last year, the former manufacturing arm of AMD abandoned its plan to compete in the cutting-edge process technology market as it could not compete with TSMC and Samsung.

EE Times writes analysts believe this deal may spark further consolidation in the foundry industry. With the former IBM fabs out of the picture, a sale of GlobalFoundries may be easier:
“This could be a move to simplify things if GF’s parent wanted to sell the company to TSMC, UMC, etc.,” said Bill McClean, president of IC Insights. “I have always believed that owning the IBM fabs would make it nearly impossible to sell GF to a foreign entity, especially these days.”
ON Semiconductor Corporation (Nasdaq: ON) (“ON Semiconductor”) and GLOBALFOUNDRIES today announced that they have entered into a definitive agreement for ON Semiconductor to acquire a 300mm fab located in East Fishkill, New York. The total consideration for the acquisition is $430 million, of which $100 million has been paid at signing of the definitive agreement, and $330 million will be paid at the end of 2022, after which ON Semiconductor will gain full operational control of the fab, and the site’s employees will transition to ON Semiconductor. Completion of the transaction is subject to regulatory approval and other customary closing conditions.

The agreement allows ON Semiconductor to increase its 300mm production at the East Fishkill fab over several years, and allows for GLOBALFOUNDRIES to transition its numerous 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.

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.

“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,” said Keith Jackson, president and chief executive officer of ON Semiconductor. “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.”

"ON Semiconductor is an ideal partner for GLOBALFOUNDRIES and this agreement is a transformative step in our journey to build GLOBALFOUNDRIES into the world's leading specialty foundry,” said Tom Caulfield, CEO at GLOBALFOUNDRIES. “This partnership enables GLOBALFOUNDRIES to further optimize our assets globally and intensify our investments in the differentiated technologies that fuel our growth while securing a long-term future for the Fab 10 facility and our employees.”

“We are excited to support ON Semiconductor’s expansion to the Mid-Hudson Region, which will keep high paying manufacturing jobs in New York State and support the company’s plan for future growth and development,” said Howard Zemsky, president and CEO at Empire State Development.

About the Author

Thomas De Maesschalck

Thomas has been messing with computer since early childhood and firmly believes the Internet is the best thing since sliced bread. Enjoys playing with new tech, is fascinated by science, and passionate about financial markets. When not behind a computer, he can be found with running shoes on or lifting heavy weights in the weight room.

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