The Biden administration said Monday the government is providing $1.5 billion to the computer chip company GlobalFoundries to expand its domestic production in New York and Vermont.

The announcement is the third award of direct financial support for a semiconductor company under the 2022 CHIPS and Science Act. The law enables the government to invest more than $52 billion to revitalize the manufacturing of computer chips in the United States as well as advance research and development.

“The chips that GlobalFoundries will make in these new facilities are essential,” Commerce Secretary Gina Raimondo said on a call with reporters. “They power sophisticated military equipment, electric vehicles. They assure smartphones have the latest features, enable faster Internet connections for Americans.”

In addition to the direct funding, the government would also provide loans worth up to $1.6 billion, with a total combination of public and private investment expected to equal roughly $12.5 billion.

GlobalFoundries intends to use the funding to help pay for the construction of a new advanced chip factory in Malta, New York, increase production at its existing plant in Malta as part of a strategic agreement with General Motors, and revitalize its plant in Burlington, Vermont.

The projects are expected to create 1,500 manufacturing jobs and 9,000 construction jobs over the next decade. As part of the terms of the deal, $10 million would be dedicated to training workers and GlobalFoundries will extend its existing $1,000 annual subsidy for child care and child care support services to construction workers.

Senate Majority Leader Chuck Schumer, D-N.Y., who also announced the billion-dollar grant on X, was an architect of the law that enables the funding of chips factories, a technology that he said was as essential to the U.S. economy and national security as food. Semiconductors, or microchips, are needed for a wide range of products and devices, from laptops and cars to home appliances and medical equipment.

Schumer said in an interview with The Associated Press that the United States could be vulnerable to disruptions as it was during the coronavirus pandemic when auto plants lacked enough chips to keep making vehicles. That shortage cost the U.S. economy $240 billion, according to experts, awakening lawmakers and industries to the country’s almost total dependence on foreign manufacturers for such a crucial component. 

The U.S. produces just around 12% of the world’s supply and it has relied heavily on chips produced in Asia, CBS News reported at the time of the global chip shortage. Today, one company in Taiwan called the Taiwan Semiconductor Manufacturing Company (TSMC), supplies 90% of the world with computer chips for its most advanced processors.

“The Democrats are going to do what it takes to see that other countries — China, Russia and others — don’t gain economic advantage over all of us,” Schumer said.

Key economic issue

With a major election this year that puts control of the White House and Congress on the line, the health of the U.S. economy has been a serious concern. Republican lawmakers have stressed that inflation rates that peaked in 2022 have hurt family’s buying power, an immediate pressure point that has hurt President Joe Biden’s approval.

But Democrats have stressed their efforts to ease inflation and the long-term investments that they say will drive growth forward, such as the investments in computer chip production and infrastructure.

Schumer also said that these investments — which had a degree of bipartisan support — reflected the Democrats’ emphasis on investing in the country’s in ways that could potentially pay off in the coming decades.

“People want to see we have a future,” Schumer said. “It makes a huge impression on the American people.”