The U.S.-based semiconductor manufacturer GlobalFoundries is pumping US$4 billion (S$5.4 billion) to expand its wafer plant in Singapore and construct a new fab to raise production while the world faces a microchip shortage.

The firm is owned by Abu Dhabi's state-owned fund Mubadala, according to Reuters.

The investment is expected to allow the Singapore facility to make 450,000 more wafers than it's currently producing, which is around 1.2 million a year, the firm said in a press release on Tuesday, June 22.

The expansion, which will be fully operational by 2024, will add around 1,000 "high-value" jobs here, such as technicians and engineers, the firm said.

Singapore's operations contribute to one-third of its revenue.

Boost to economy

The company's investment here is in partnership with Singapore's Economic Development Board (EDB) and "committed customers".

Minister for Transport and Minister-in-charge of Trade Relations S. Iswaran was present at the virtual groundbreaking ceremony.

Beh Swan Gin, Chairman of EDB, said the semiconductor industry is a key pillar of Singapore's manufacturing sector, and that the investment will add to the "vibrancy" of the country's economy though the "creation of good jobs for Singaporeans and business opportunities" for local enterprises.

Besides Singapore, GlobalFoundries has planned further investments in its manufacturing plants in the U.S. and Germany.

Chip crisis

The ongoing global chip shortage was partly caused by manufacturers underestimating the demand for semiconductors during the pandemic.

As the world shifts to work-from-home arrangements, the sales of computers and other devices surged, resulting in a larger number of chip orders, according to Reuters. 

The pandemic also resulted in temporary closures of plants, halting production, and disrupting global supply chains.

Experts predicted that the current short supply is likely to last for some time, even till 2023, CNBC reported.

To make up for the shortfall, semiconductor makers have planned greater investments to increase production capacity, including Taiwan's TSMC.

The firm, which dominates the advanced semiconductors industry as it makes almost all the sophisticated chips used by consumers in the world, said it will invest US$100 billion (S$134.6 billion) over three years to boost its capacity.

Top image via GlobalFoundries