GlobalFoundries Sells 45nm Fab to ON Semiconductor for $430 Million

GlobalFoundries and ON Semiconductor have entered an agreement in which ON Semiconductor will acquire a 300mm fab (indicating the diameter of the wafers produced) from GlobalFoundries, Fab 10 located in East Fishkill, New York. By the completion of the transaction at the end of 2022, ON Semiconductor will have full operational control of the fab, and the employees will also transition to the new owner of the fab. The deal also gives ON Semiconductor access to GlobalFoundries’ 65nm and 45nm technology via a technology transfer and license agreement.

This agreement will allow ON Semiconductor to gradually increase its production at the site over several years. GlobalFoundries will also produce wafers for the company at the fab until the end of 2022, starting in 2020. GlobalFoundries meanwhile will transfer its technology to its three other 300mm fabs.

For ON Semiconductor, this deal marks a large leap in its manufacturing capabilities, as its current most advanced fab is a 110nm facility in Oregon. Since this is a 300mm plant, this will provide ON access to 300mm technology. The experienced technology and manufacturing team that ON Semiconductor acquires with this deal will also help the company with the transition to 300mm technology.

The transaction is valued at $430 million, of which $100 million was paid at the signing of the deal on Monday, but it is still subject to regulatory approval. In 2018, ON Semiconductor reported revenue of $5.9 billion.

GlobalFoundries received Fab 10 as part of its 2015 deal with IBM in which IBM paid GF $1.5 billion to transfer ownership of its semiconductor process activities to GlobalFoundries. However, last year GlobalFoundries sent shockwaves through the semiconductor foundry industry with the announcement that it had halted development of 7nm and beyond process technology, removing one player from the leading edge. That leaves only Samsung, TSMC and Intel at the forefront.

Meanwhile, GlobalFoundries reorganized to focus on 14nm class nodes. Earlier this year, the company also sold off a 200mm fab.