BAE Systems and GlobalFoundries Collaborate to Strengthen Supply of Essential Semiconductors for National Security Programs

Rhea-AI Summary

BAE Systems and GlobalFoundries (GF) have entered a strategic collaboration to enhance the supply of essential semiconductors for U.S. national security programs. The partnership will focus on U.S. chip manufacturing and joint R&D for advanced chip technologies, targeting improvements in semiconductor innovation, packaging, and secure solutions for aerospace and defense systems. This initiative builds on a long-standing relationship and aligns with their receipt of funding from the CHIPS and Science Act. The collaboration aims to bolster the U.S. semiconductor ecosystem, ensuring a reliable and secure microelectronics supply chain for critical defense applications.

Positive

• Strategic partnership with BAE Systems to boost U.S. semiconductor supply.
• Focus on advanced semiconductor technologies, including packaging and integration.
• Collaboration aligns with CHIPS and Science Act funding received by both companies.
• New $3.1 billion, 10-year contract with the DoD for secure U.S.-made semiconductors.
• Strengthening of the supply chain for national security applications.

Negative

• None.

Insights

Financial Analyst

The announced collaboration between BAE Systems and GlobalFoundries is a strategic move that leverages the strengths of both companies. BAE Systems’ stronghold in aerospace and defense aligns well with GlobalFoundries’ high-volume semiconductor manufacturing capabilities. This partnership is likely to bring significant financial benefits to both entities, primarily driven by the increased demand for reliable and secure semiconductors in defense applications.

The recent $3.1 billion, 10-year contract awarded to GlobalFoundries by the DoD underscores the financial strength and long-term revenue streams secured by GF. Such contracts not only provide a steady revenue flow but also enhance the company's reputation and reliability in supplying critical components for national security. From an investor’s perspective, this collaboration could lead to enhanced financial stability and growth potential for both companies, especially considering the U.S. government's backing through the CHIPS and Science Act.

Short-term: Investors can expect a positive market reaction due to the announcement, potentially boosting the stock prices of both BAE Systems and GlobalFoundries. The secured contracts and government funding further mitigate risks associated with revenue fluctuations.

Long-term: The collaboration positions both companies to capitalize on future advancements in semiconductor technologies and defense applications, potentially leading to sustained revenue growth and innovation leadership.

Tech Expert

This collaboration highlights the importance of advancing semiconductor technology for critical defense applications. The emphasis on gallium nitride on silicon chips, silicon photonics and advanced technology process development indicates a focus on cutting-edge technologies that are essential for modern aerospace and defense systems. Gallium nitride (GaN) chips, for example, are known for their efficiency and ability to operate at higher temperatures and voltages than traditional silicon chips, making them ideal for high-power, high-frequency applications.

The integration of these advanced technologies will likely lead to higher performance and more secure defense systems. This collaboration also underscores the critical need for a secure supply chain for semiconductors, which is vital for national security. By aligning their technology roadmaps, BAE Systems and GlobalFoundries can ensure that they are at the forefront of semiconductor innovation, addressing both current and future needs of the defense sector.

Short-term: Increased focus on R&D in advanced semiconductor technologies could lead to new product developments and improvements in existing products, enhancing their competitive edge.

Long-term: Sustained innovation and technological advancements could cement the companies’ positions as leaders in secure and efficient semiconductor solutions, important for national defense.

Collaboration to focus on U.S. chip manufacturing and joint research and development for advanced chip technologies

MALTA, N.Y., June 20, 2024 (GLOBE NEWSWIRE) -- BAE Systems (LON: BA) and GlobalFoundries (Nasdaq: GFS) (GF) today announced a new collaboration to strengthen the supply of critical semiconductors for national security programs. Under the strategic agreement, the companies will align technology roadmaps and collaborate on long-term strategies for increasing U.S. semiconductor innovation and manufacturing, with the joint goal of advancing the ecosystem for domestic fabrication and packaging of secure chips and solutions for use in aerospace and defense systems.

Together, the companies will engage in long-term planning for emerging technologies and collaborate on research and development in a range of areas, including advanced semiconductor packaging and integration, gallium nitride on silicon chips, silicon photonics and advanced technology process development. The new non-exclusive collaboration builds upon the longtime relationship between BAE Systems and GF, and further brings together BAE Systems’ expertise in microelectronics for critical defense systems with GF’s expertise as one of the world’s leading high-volume semiconductor manufacturers and the most advanced supplier of secure, essential chips to the U.S. Department of Defense (DoD).

Both BAE Systems and GF were recently named as recipients of planned direct funding from the U.S. government as part of the CHIPS and Science Act.

“Our leadership in microelectronics for critical defense systems is predicated on a reliable and secure supply chain and the availability of trusted, uncompromised semiconductors,” said Terry Crimmins, president of BAE Systems’ Electronic Systems sector. “This new collaboration with GlobalFoundries, with its expertise in secure chip manufacturing, is imperative for BAE Systems to advance the overmatch thresholds of technologies, stay ahead of the increasingly complex defense environment, and enable creative solutions to mitigate the growing challenges to both the integrity of microelectronics and their associated supply chains.”

“GF is committed to strengthening the semiconductor supply chain for national security and innovating to meet the future needs of the aerospace and defense sector,” said Dr. Thomas Caulfield, president and CEO of GF. “We are proud to deepen our strategic relationship with BAE Systems, and further strengthen supply chain resiliency. Together, we will accelerate the research and development of a new generation of essential technologies and securely manufacture essential chips for a diverse range of critical defense applications.”

A recent example of successful collaboration between the two companies, BAE Systems leveraged GF’s 12LP and 12S0 technology platforms for custom radiation-hardened by design semiconductor solutions for sensitive space applications. These highly differentiated U.S.-made chips enable electronic systems to withstand the harsh environment of space, while offering power efficiency, area benefits, and a robust design ecosystem to enable cost-efficient and quick-turn prototyping. These chips deliver the performance, reliability and yield of GF’s high-volume commercial sector offerings, tailored to the needs of the aerospace and defense industry by BAE Systems, and manufactured by GF with the right level of security – up to the DoD’s highest security level, Trusted Supplier Category 1A.

GF’s U.S. manufacturing facilities have Trusted Foundry accreditation from the U.S. government to securely manufacture chips in partnership with the DoD Defense Microelectronics Activity (DMEA) for use in some of the nation’s sensitive national security and critical infrastructure systems on land, air, sea and in space. In 2023, the DoD awarded GF a new $3.1 billion, 10-year contract for a supply of securely manufactured, U.S.-made semiconductors for use across a wide range of critical aerospace and defense applications. The new contract was the third sequential 10-year contract of its kind between the DoD and the Trusted Foundry business team at GF.

About BAE Systems

BAE Systems, Inc. and its nearly 41,000 people are part of a global defense, aerospace, and security company with approximately 100,000 employees worldwide. We deliver products and services for air, land, sea, and space, as well as advanced electronics, intelligence, security, and IT solutions and support services. Our dedication shows in everything we design, produce and deliver— to protect those who protect us in a high-performance, innovative culture. We push the limits of possibility to provide a critical advantage to our customers where it counts.

About GF

GlobalFoundries (GF) is one of the world’s leading semiconductor manufacturers. GF is redefining innovation and semiconductor manufacturing by developing and delivering feature-rich process technology solutions that provide leadership performance in pervasive high growth markets. GF offers a unique mix of design, development, and fabrication services. With a talented and diverse workforce and an at-scale manufacturing footprint spanning the U.S., Europe and Asia, GF is a trusted technology source to its worldwide customers. For more information, visit www.gf.com.

©GlobalFoundries Inc., GF, GlobalFoundries, the GF logos and other GF marks are trademarks of GlobalFoundries Inc. or its subsidiaries. All other trademarks are the property of their respective owners.

Forward-looking Information

This news release may contain forward-looking statements, which involve risks and uncertainties. Readers are cautioned not to place undue reliance on any of these forward-looking statements. These forward-looking statements speak only as of the date hereof. GF undertakes no obligation to update any of these forward-looking statements to reflect events or circumstances after the date of this news release or to reflect actual outcomes, unless required by law.

Media Contacts:
BAE Systems
Paul Roberts
Paul.a.roberts@baesystems.us

GlobalFoundries
Michael Mullaney
michael.mullaney@gf.com

FAQ

What is the focus of the collaboration between BAE Systems and GlobalFoundries announced on June 20, 2024?

The focus is on U.S. chip manufacturing and joint R&D for advanced semiconductor technologies to support national security programs.

How does the collaboration between BAE Systems and GlobalFoundries affect the semiconductor supply chain?

The collaboration aims to strengthen the supply chain by ensuring a reliable and secure supply of semiconductors for critical defense applications.

What funding have BAE Systems and GlobalFoundries received for their collaboration?

Both companies received direct funding from the U.S. government as part of the CHIPS and Science Act.

What is the value of the new contract awarded to GlobalFoundries by the DoD in 2023?

The new contract is valued at $3.1 billion over 10 years for the supply of securely manufactured U.S.-made semiconductors.

What technologies will BAE Systems and GlobalFoundries focus on in their collaboration?

They will focus on advanced semiconductor packaging and integration, gallium nitride on silicon chips, silicon photonics, and advanced technology process development.