Semiconductor manufacturers reach deal to supply U.S. defense chips

By Stephen Nellis

June 18 (Reuters) - Globalfoundries and SkyWater Technology have reached a deal to supply semiconductor chips to the U.S. defense industry and work on new technology, the companies said on Thursday, as the industry moves toward more U.S. manufacturing.

Globalfoundries, a California-based semiconductor manufacturing firm owned by the United Arab Emirates' sovereign wealth fund, already supplies defense chips through a number of factories in the United States it acquired in 2015. It purchased the chip-manufacturing unit of International Business Machines Corp.

Minnesota-based Skywater was divested from U.S.-based Cypress Semiconductor in 2017 and is fully U.S.-owned. Last year, SkyWater received up to $170 million https://www.reuters.com/article/us-skywater-defense/minnesota-chip-maker-gets-up-to-170-million-from-us-defense-dept-idUSKBN1X025E from the U.S. Defense Department to develop chips designed to withstand radiation from nuclear attacks and space travel.

Each chip factory is unique, which can make it hard to have the same chip made by two different factories. Under a memorandum of agreement announced on Thursday, the two companies said they would align their technologies to give defense customers reliable access to high-volume manufacturing.

“This (agreement) shows proactive industry cooperation that can complement developing government policy focused on restoring American leadership for semiconductor manufacturing," Brad Ferguson, SkyWater's chief technology officer and head of government relations, said in a statement.

The move comes at a time of renewed interest in making chips in the United States. Taiwan Semiconductor Manufacturing Co , the world's biggest chip contract manufacturer, said last month it wants to build a factory in Arizona. Intel Corp proposed creating a consortium of American chipmakers to bolster U.S. manufacturing.

Last week, both houses of the U.S. Congress introduced bills that would give the industry at least $22.8 billion in subsidies, most of which would be aimed at encouraging the construction of chip factories. (Reporting by Stephen Nellis in San Francisco; Editing by Dan Grebler)