GlobalFoundries, the third-largest foundry, is planning to invest$ 1.4 billion in its chips factories this year and will likely double this investment next year, CEO Tom Caulfield told CNBC in an interview. Caufield said the company's manufacturing capacity is completely booked and that industrywide semiconductor supply could lag behind demand until 2022 or later. Right now all of our fabs are not only used 100%, we are adding capacity as fast as we can, Caulfield said. A shortage of semiconductor microchips is causing havoc around the world, affecting car production and affecting the operations of some of the largest consumer electronics manufacturers. The shortage has highlighted the role of a handful of foundries, which are the factories contracted by semiconductor firms to build chips. Many companies, like GlobalFoundries, are investing billions in new production lines and upgraded equipment to keep up with the surge in demand and shortages in supply. GlobalFoundries is the largest U.S. pure foundry in the United States and has factories in Singapore and Germany. It produces semiconductors designed by companies like AMD, Qualcomm and Broadcom. It is currently owned by Abu Dhabi Government as a private company. The company is considering an IPO in the first half of 2022 or sooner, Caulfield said.
According to GlobalFoundries, GlobalFoundries is still a relatively small player, with only 7% share of the foundry market according to Trendforce. Other foundries are investing big money too: Taiwan-based TSMC, the largest company in the space with a 54% market share, said on Thursday it plans to invest$ 100 billion over the next three years to meet demand. On March 23, Intel, which makes and designs its chips, announced it plans to become a metals factory and make chips for other companies. It is investing$ 20 billion in American chipmaking plants; Caulfield said he welcomes Intel's shift and does n't see the company as a new competitor. One key difference is that Intel is skilled at producing edge manufacturing or chips with the smallest and most dense transistors, which are needed for powerful CPU chips at the heart of a computer or smartphone. However, Caulfield says the industry shortages, specifically for the automotive world, are not because of demand for leading node chips. The shortages are for other parts cars need, like radar chips, which do n't necessarily require the most advanced manufacturing available at the time. The auto industry does not have a chip shortage because it does n't have a CPU. No one is saying that I ca n't build enough computers. It's all the other chips, said Caulfield. Chips designed to enable specific features are what GlobalFoundries specializes in. GlobalFoundries manufactures contactless chips for secure payments, battery power management and touch display drivers. These chips were first included in large quantities for smartphones, but are now used in a broad range of products from cars to appliances, which has caused a surge in demand. However, most of the investments in the foundry world have been for building high-tech, bleeding edge chips. All that changed last year when the pandemic hit, and sales of electronics including laptops, monitors and gaming consoles rose when people bought equipment to work from home or go to school. Those products require a lot of extra chips beyond the CPU, seeding the start of the chip shortage and highlighting the need for more capacity to build what Caulfield calls feature-rich chips. Smartphones and computers also increasingly need additional node chips to connect to 5G networks or connect to non-leading cameras. GlobalFoundries warned that it would take months before it can increase the number of chips on the market, but that the capacity boost makes sense for long-term investments. The minute you say, I want to make more capacity, it's a 12 month cycle, said Caulfield. The industry covid was planning on maintaining a 5% annual growth rate for five years. We 're projecting that already to double, Caulfield said. It is not a one-time thing; it's a pervasive shift that the structural need for semiconductors is accelerating.