Text size:

  • Small
  • Normal
  • Large
Globalfoundries's facility in Germany. Jeff Topping / The National
Globalfoundries's facility in Germany. Jeff Topping / The National

Chip maker delays plan for factory in capital

Globalfoundries postpones its plan to start work on the Gulf's first microprocessor-fabrication plant in Abu Dhabi.

Globalfoundries, the chip manufacturer, has postponed its plan to start building the Gulf's first microprocessor-fabrication plant in Abu Dhabi next year.

The company, which is 91 per cent owned by Abu Dhabi's Advanced Technology Investment Company (Atic), will not start construction of the facility next year because of the uncertain global economic outlook.

"We will not be engaging in any ground breaking in Abu Dhabi in 2012," said Ibrahim Ajami, the chief executive of Atic.

"Against the backdrop of a global economy still very volatile, we took a decision from a board level that we should not have another facility right now, but we should assess what happens before the end of 2012 on our growth strategy."

Atic, which is a wholly owned subsidiary of Mubadala Development, a strategic investment company owned by the Abu Dhabi Government, helped to set up Globalfoundries with the US-based semiconductor company Advanced Micro Devices (AMD) in 2009.

Since then, Atic has steadily increased its investment in Globalfoundries with the two companies having announced in June last year that they had selected a site for a fabrication factory near Abu Dhabi International Airport. The factory was planned to be operational by 2015.

The plant would join other Globalfoundries facilities in Germany and Singapore to build chip components for clients such as AMD, Broadcom and Qualcomm.

Globalfoundries and Atic have put the project on hold for now as they shift their focus next year to their plant under construction in Saratoga county, New York state.

"We have a state-of-the-art facility in New York state that has cost Atic over US$4 billion[Dh14.6bn]," said Mr Ajami.

He said Globalfoundries and Atic were still committed to Abu Dhabi, and the companies would decide towards the end of next year when they would restart plans to construct a plant in the capital.

Currently, the foundries market has enough capacity as companies such as Samsung enter the industry.

Also, the decline in demand for laptop and desktop computers means the world has enough microprocessor makers, analysts say.

The research company Gartner has cut its forecast for growth in the global PC industry to 3.8 per cent from 9.3 per cent, citing slower growth in Europe and the US.

"There's plenty of capacity coming online, plus in the same time, you have a deterioration of the end-demand. So the equation is not good," said Jerome Ramel, a semiconductor analyst at Exane BNP Paribas, based in London.

But Mr Ramel said more competitors still needed to enter the industry and build more plants as the foundries market was dominated by Taiwan Semiconductor Manufacturing Company, which had a 50 per cent share of the market.

Also, these foundries across the globe need to increase their capacity to handle future growth, he said.

"In this industry when you have a new partner for a foundry, you want to make sure that your partner is really there for the next four to five years. You want to see the technology roadmap, you want to see the capacity," said Mr Ramel.

"Globalfoundries has to show something to their clients, to show a roadmap for the next five years, they have to show milestones they have achieved."


Back to the top

More articles

Editor's Picks

 The Greens, villas: Q1 no change. 3BR - Dh210-250,000. 4BR - Dh210-260,000. 5BR - Dh220-300,000. Q1 2013-Q1 2014 5% rise. Pawan Singh / The National

In pictures: Where Dubai rents have risen and fallen, Q1 2014

Find out how rental prices in the prime locations in Dubai have altered during the first three months of the year and the current rates you will pay according to data provided by Asteco.

 Above, the private pool of Ocean Heights' five-bedroom penthouse flat. Courtesy Christie’s International Real Estate

In pictures: Penthouse flat is height of Dubai luxury living

A five-bedroom penthouse in Ocean Heights in Dubai Marina is on sale for Dh25 million and comes with a private pool and an unparalleled view of Dubai.

 The cooling towers of the Temelin nuclear power plant near the Tyn nad Vltavou in Czech Republic. The country wants to continue expanding nuclear energy capacity despite cancelling a tender to build two new units. David W Cerny / Reuters

In pictures: Best business images for the week to April 17, 2014

Here are some of the best business images for the week to April 17, 2014.

 A sign points the way to an outdoor market popular with German visitors on the Polish side of the German-Polish border. Sean Gallup / Getty Images

In pictures: A decade since the European Union went east

May 1 will mark 10 years since the European Union expanded east, taking in countries like Poland, the Czech Republic and the Baltic states as new members. And though the border region between Germany and Poland is flourishing with trade and cultural exchange, the open border has also brought a sharp rise in crime.

 The Wind, Energy, Technology and Environment Exhibition takes place from April 14 to April 16. Above, the Dewa showroom during last year’s Wetex. Jaime Puebla / The National

April corporate and economic calendar for the UAE and overseas

From Cityscape to Wetex to stock-market holidays to nations reporting first-quarter GDP figures, here is our helpful calendar of April's business events in the UAE and internationally.

 Get the latest information on credit cards, bank accounts and loan products in the UAE. Mark Lennihan / AP Photo

Rates report: Latest on UAE loans, accounts and credit cards

Souqamal.com brings you the latest interest rates on banking products in the UAE.


To add your event to The National listings, click here

Get the most from The National