The US government reportedly is awarding US$1.5bn to GlobalFoundries to subsidise semiconductor production, the first major award from a $39bn fund approved by Congress in 2022 to bolster domestic chip production.

Reuters said GlobalFoundries, the world’s third largest contract chipmaker, would build a new semiconductor production facility in Malta, New York, and expand existing operations there and in Burlington, Vermont, according to a preliminary agreement with the Commerce Department.

The department said the $1.5bn grant would be accompanied by $1.6bn in available loans, with the funding expected to generate $12.5bn in overall potential investment across the two states, Reuters reported.

Commerce secretary Gina Raimondo was quoted as saying: “The kind of facilities that TSMC, Samsung, Intel, are proposing to do in the United States – these are new generation investments – size, scale complexity that’s never been done before in this country.”

Among other applications, the GlobalFoundries chips are used in blind spot detection and collision warnings in vehicles, Reuters said.

The Malta expansion would secure a stable supply of chips for auto suppliers and manufacturers, including General Motors, Raimondo said.

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Reuters noted GlobalFoundries and GM on 9 February has announced a long term deal for the automaker to secure US made processors which would help it avoid factory halting chip shortages like ones during the COVID-19 pandemic.

The new facility in Malta will produce high value chips that are not currently made anywhere in the United States, Raimondo said.