GLOBALFOUNDRIES Inc. (GFS.US), a veteran US chip foundry, announced on Wednesday it has signed a memorandum of intent with the US Department of Commerce to receive up to $300 million in federal funding to accelerate the development of next-generation silicon photonics technology.
Buoyed by the news, shares of GLOBALFOUNDRIES Inc. (GFS.US) surged over 16% in pre-market trading. This funding, sourced from the research and development incentives portion of the US CHIPS and Science Act, marks the latest move by the Trump administration to direct chip research funds toward key frontier technologies. Prior to this, the US government had committed $150 million for semiconductor manufacturing equipment and $2 billion for quantum computing.
Notably, as part of this funding arrangement, the US Department of Commerce will receive approximately a 1% equity stake in GLOBALFOUNDRIES Inc. (GFS.US).
The funding is primarily focused on "silicon photonics" and the closely related "co-packaged optics" (CPO). Traditional chip-to-chip communication relies on copper wires for electrical signals. However, with the explosive growth in computing power demand from AI large models, the bandwidth and power consumption bottlenecks of copper interconnects are becoming increasingly apparent. Silicon photonics technology uses laser beams instead of electrical signals to move data between chips, enabling extremely high bandwidth while significantly reducing power consumption. It is seen as a key breakthrough for high-speed interconnects in next-generation AI and high-performance computing data centers.
In its announcement, GLOBALFOUNDRIES Inc. (GFS.US) stated it will use the funds to advance the development of silicon photonics wafer technology, new optical materials, and advanced optical packaging processes. The company's goal is to achieve data transfer rates of 400 Gbps (gigabits per second) while improving energy efficiency by up to five times compared to current mainstream solutions. Related research and development will take place at the company's two core US-based facilities in Malta, New York, and Burlington, Vermont.
"GLOBALFOUNDRIES Inc. (GFS.US) has spent over a decade building the technology, manufacturing footprint, and ecosystem needed to lead this transformation, and we have the mature manufacturing base to achieve scaled production right here in the United States," emphasized Tim Breen, CEO of GLOBALFOUNDRIES Inc. (GFS.US), in a statement. Bill Frauenhofer, Executive Director for Semiconductor Innovation and Investment at the US Department of Commerce, said the chip R&D incentives will support a "breakthrough in computing and communications networks," helping the industry overcome traditional copper interconnect bottlenecks and providing robust support for next-generation AI. "Accelerating domestic photonics capabilities and advanced packaging R&D will provide the US industry with the extreme bandwidth and energy efficiency needed to handle complex AI workloads, securely and quickly," Frauenhofer noted.
From an industry security perspective, the funding also carries a strong "localization" intent. Currently, the supply chain for silicon photonics and advanced optical packaging is highly concentrated outside the US, with major manufacturers including Taiwan Semiconductor Manufacturing Company (TSM.US) in Taiwan and Tower Semiconductor (TSEM.US) in Israel. The US aims to use federal funding to build a complete ecosystem from fundamental research to advanced manufacturing domestically, enhancing strategic autonomy in the global semiconductor competition.