Germany - European Commission Loan Boosts Global Foundries' Expansion Plan in Dresden

10 Aug 2011 • by Natalie Aster

The European Commission (EC) agreed to provide investment aid totalling EUR219mn to Abu Dhabi-based Global Foundries to assist in its EUR2bn plan to expand its semiconductor fabrication plant in Dresden, Germany. While the funding will help Global Foundries rapidly diversify its product portfolio and attract a broader range of customers, BMI believes the expanded plant in Dresden will benefit the area, where unemployment levels are high.

The company, which primarily produces computer microprocessors for semiconductor manufacturer Advanced Micro Devices (AMD) at the Dresden plant, plans to produce a complete range of semiconductor processed wafers as a result of the expansion. This is part of a broader plan to double investment in microprocessor production to US$5.5bn in 2011, which will also result in the expansion of manufacturing facilities in the US and Singapore.

Dresden's low living standards and high unemployment rates (GDP per capita is well below the EU average) make it eligible for regional aid from the EU and BMI welcomes the prospect that Global Foundries' expansion will create new jobs. The company's increased visibility and growing network of international partners could also result in some of those partners setting up offices in the region. BMI has an above-consensus German GDP growth forecast of 3% for 2011, although a slowdown from H211 will mean GDP is likely to expand by only 2% in 2012. This may mean recovery in poorer regions will be slow to be realised.


Banking On Rocketing Demand For Processors

Global Annual Semiconductor Revenues (US$bn)

Source: SIA

Global Foundries, which has headquarters in the US, works with many of the semiconductors industry's leading players including IBM, Infineon, Samsung Electronics and AMD to develop new products and applications.

Driven by increasing demand for more advanced multi-functional multimedia devices for home, mobile and office use; the global semiconductor industry is growing in value at its fastest ever pace. The global market was valued at nearly US$300bn in 2010, rising from US$211bn in 2004, according to the Semiconductors Industry Association (SIA). BMI believes it could grow by a further 11% in 2011 due to rapidly growing demand from smartphone and tablet manufacturers. We therefore welcome Global Foundries' increased investment in an industry where the prevailing trend is for growth through scale as well as technological expertise and patents.

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