ON Semiconductor buys GlobalFoundries' NY 300mm plant for $430M; will invest $720M

ON Semiconductor and GlobalFoundries co-announced Monday that they have reached an agreement for ON Semiconductor to acquire GlobalFoundries' 300mm fabrication facility in East Fishkill, NY. The total acquisition cost is $430 million, to be paid by the end of 2022, at which point ON Semiconductor will gain full operational control of the fab and the site's employees will transition to ON Semiconductor.

A press release from New York Governor Andrew Cuomo's office said that ON Semiconductor has committed to invest a total of $720 million in the plant over the next 10 years as the company establishes its first 300mm chip manufacturing plant. ON's first production of 300mm wafers is expected to start in 2020.Under the agreement, GlobalFoundries is allowed to transition its technologies and employees to the company's three other at-scale 300mm sites.

GlobalFoundries will produce 300mm wafers for ON until the end of 2022. The deal 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's press release stated. "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."

ON added that the acquisition provides the company with a path for high-volume MOSFET and IGBT turnkey capacity

Gov. Cuomo's office release stated that GlobalFoundries will be shifting production from Fab 10 (East Fishkill) to their other facilities, including Fab 8 in Malta, NY. The state of New York has helped secure a 3.5-year transition plan between GlobalFoundries and ON Semiconductor to ensure Fab 10's continued operation and $720 million in new capital spending at the East Fishkill plant. The release said that following the transition period, ON has committed to hiring a minimum of 950 GlobalFoundries employees that directly support Fab 10 operations, and plans to create about 150 new, well-paying jobs in the Mid-Hudson region.

In exchange for those commitments, 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, along with $22.5 million in Excelsior Jobs Program tax credits related to its investment, new hiring, and research and development over 10 years. Both the grant and tax credit awards are contingent on ON Semiconductor meeting its job and investment commitments.

“We are pleased to welcome the GlobalFoundries Fab10 team to ON Semiconductor’s team," ON Semiconductor president and CEO Keith Jackson said in the companies' co-press release. "The acquisition of 300 mm East Fishkill fab is another major step in our progress towards leadership in power and analog semiconductors. 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.”

GlobalFoundries assumed ownership of the East Fishkill plant from IBM less than four years ago.