Uncle Sam sees the light, offers GlobalFoundries $300M to pursue silicon photonics while taking 1% stake
The US Commerce Department has signed a letter of intent to give GlobalFoundries $300 million in CHIPS Act funding, in exchange for a roughly one percent equity stake in the chipmaker. The funding is aimed at accelerating development of silicon photonics networking technology, which the AI industry increasingly needs to connect the growing numbers of accelerators packed into modern datacentre systems, as copper interconnects struggle at higher speeds and larger scales.
The one percent stake is valued at around $269 million, and Commerce Secretary Howard Lutnick framed the deal as boosting domestic semiconductor capability and jobs rather than a straightforward trade. The money will support GlobalFoundries' existing Silicon Photonics Co-Packaged Advanced Light Engine (SCALE) programme, aimed at 400 Gb/s per-lane connectivity, alongside new optical materials and 3D hybrid bonding packaging for co-packaged and near-packaged optics. This follows a similar move last year in which Washington converted $8.9 billion of CHIPS Act and Secure Enclave awards into a roughly 10 percent stake in Intel, which separately this week concluded its RAMP-C defence test chip programme as it shifts focus to the new Secure Enclave initiative.
In short
- US government to invest $300m in GlobalFoundries for a 1% stake
- Funding targets silicon photonics tech for AI datacentre networking
- Echoes Washington's earlier ~10% equity stake deal with Intel
Steelman: both sides, in good faith
The strongest fair case each way — we don't pick a winner.
The case for
The investment could help build US capacity in a strategically important technology as demand for faster data-centre connections grows and copper links face limits. Taking an equity stake may also give taxpayers a potential return while tying public support to domestic production, jobs and expertise.
The case against
The deal uses public money to support a private company in a fast-changing market, where the technology’s eventual value and commercial prospects are uncertain. An equity stake exposes taxpayers to business risk, and critics could question whether selecting one firm is the best use of funds or gives it an advantage over competitors.
Explained simply
Silicon photonics is a technology that uses light instead of electrical currents to transmit data between computers. Data centres that power artificial intelligence and cloud services need to move enormous amounts of information between machines very quickly, and traditional copper wiring cannot handle the required speed and volume.
The US government has pledged $300 million to GlobalFoundries, an American chipmaker, to develop this technology. In return, it will receive a roughly one percent ownership stake in the company, giving it a financial interest in the venture's success rather than simply providing a subsidy.
This reflects a broader American strategy to invest in advanced semiconductor technology and reduce dependence on foreign suppliers. Last year, the government made a similar deal with Intel, and as countries worldwide compete for dominance in semiconductor technology—crucial to artificial intelligence and modern computing—the US is signalling strong backing for its domestic companies.