GlobalFoundries Licenses TSMC Tech to Boost US Power Chip Output
Deal for advanced Gallium Nitride (GaN) technology aims to capture growing EV and data center markets as TSMC exits the sector.
GlobalFoundries is set to significantly expand its US production of next-generation power chips after securing a technology licensing deal with Taiwan Semiconductor Manufacturing Co., a strategic move designed to capture a larger share of the burgeoning electric vehicle and data center markets.
The agreement gives GlobalFoundries (GFS) access to TSMC's advanced 650V and 80V Gallium Nitride (GaN) technology, which it plans to implement at its facility in Burlington, Vermont. The deal positions GFS to capitalize on a market segment that TSMC is gradually vacating due to intense price competition, while simultaneously bolstering the domestic US semiconductor supply chain for critical components.
Shares of GlobalFoundries rose approximately 1.5% to $34.60 in morning trading following the announcement, reflecting investor optimism about the company's enhanced competitive positioning. The company, with a market capitalization of nearly $19 billion, is making a focused bet on GaN technology, which offers superior power efficiency and heat resistance compared to traditional silicon.
This partnership comes as TSMC, the world's largest contract chipmaker, has confirmed plans to phase out its GaN chip production by mid-2027. According to industry analysis, TSMC's decision was driven by aggressive pricing from Chinese competitors, making the segment less attractive as it prioritizes investment in leading-edge AI silicon. TSMC's exit creates a significant opening for other foundries, and GlobalFoundries is moving swiftly to fill the void.
For GlobalFoundries, the licensing agreement is a critical step in its strategy to diversify its portfolio beyond traditional silicon. GaN-based semiconductors are increasingly vital for high-growth applications. In electric vehicles, they enable more efficient power conversion, leading to longer range and faster charging. In data centers and AI infrastructure, GaN chips reduce energy consumption and improve thermal management, addressing key operational costs.
"This technology licensing agreement will advance the development of GF’s next-generation GaN technologies," the company stated in a press release, noting that products based on the newly licensed tech are expected to be available in late 2026.
The initiative aligns with Washington's broader goal of reshoring critical semiconductor manufacturing. GlobalFoundries' Vermont facility has already been a recipient of federal funding to advance GaN-on-silicon production. In December 2024, the company secured $9.5 million in federal funds aimed at accelerating the development and manufacturing of this very technology.
By manufacturing these advanced power chips in the United States, GlobalFoundries can offer customers a more resilient supply chain, a key selling point amid ongoing geopolitical tensions and logistics disruptions. The deal allows the company to serve high-demand sectors with domestically produced, high-performance components.
Despite the strategic advantages, GlobalFoundries will still navigate the competitive landscape that prompted TSMC's departure. The market for GaN technology remains subject to significant price pressure, and success will depend on GFS's ability to scale production efficiently and secure long-term contracts with major automotive and technology clients. Analysts have set an average 12-month price target of $39.63 for GFS stock, suggesting room for growth if the company executes its strategy effectively.