Malta

GlobalFoundries told employees Monday it will lay off about 900 workers worldwide as it sheds costs to become more competitive against its computer chip manufacturing rivals, especially Taiwan Semiconductor Manufacturing Co.

Although the company won't specify how many people will lose their jobs at each site, it would appear that the company's Fab 8 factory in Saratoga County, home to about 3,400 workers, will be somewhat insulated.

GlobalFoundries employs 18,000 people at 14 sites across the globe, including 10 computer chip factories. CEO Tom Caulfield is targeting 5 percent of the total workforce.

If five percent of Fab 8's staff were laid off, that would equate to 170 people losing their jobs, although the company would not specify the exact local impact.

The layoffs are specifically targeting "redundancies" created from previous acquisitions of IBM and Chartered Semiconductor after GlobalFoundries was spun off from Advanced Micro Devices in 2009. Those facilities are in Vermont, Dutchess County, Germany and Singapore.

Fab 8, a $12 billion factory and campus located at the Luther Forest Technology Campus in the town of Malta, is the only site that GlobalFoundries built itself from the ground up.

The cuts will not touch GlobalFoundries' core chip manufacturing operations or its current move into next-generation, 7 nanometer chip making, which is taking place at Fab 8, the company's most sophisticated factory.

"In the coming weeks, we will be initiating a targeted workforce reduction specifically designed to improve our global cost structure and minimize redundancies that have accrued from previous mergers and acquisitions," GlobalFoundries spokesman Steve Grasso said in a statement released after the cuts were announced internally. "This limited action will impact approximately five percent of our global headcount, with a significant portion expected to come from a voluntary separation program. The program is part of a companywide initiative to improve the competitiveness of our cost structure relative to industry peers."

GlobalFoundries is a so-called "foundry" that makes chips for other companies that don't have their own factories or that need additional manufacturing capacity. Although GlobalFoundries is the No. 2 foundry in the world with $6 billion in revenue in 2017, TSMC as Taiwan Semiconductor Manufacturing is called, is a behemoth with $32 billion in revenue.

That's five times what GlobalFoundries makes and more than half the total foundry market of $62 billion.

Luckily for GlobalFoundries, the chip industry is experiencing a renaissance and what many expect to be a golden age of chip manufacturing as artificial intelligence begins to enter every facet of the electronic world, from cars to household appliances and healthcare.

The layoffs are not expected to impact Fab 8's 80-person research team at SUNY Polytechnic Institute in Albany, which is working on 7 nanometer chips and beyond.

That SUNY Poly team has been critical to GlobalFoundries' recent success making chips for AMD and others that have outperformed rival Intel's chips.

Fab 8 also has dozens of jobs it is trying to fill as it ramps up 7 nanometer chips at the factory, which GlobalFoundries is expanding into unused portions of its clean room. The company is also looking at the possibility of building a second factory at the Fab 8 site in the future, a move that would create hundreds, if not thousands, of additional local jobs.

As of Monday afternoon there were 89 job openings in Malta and one in Albany at SUNY Poly that GlobalFoundries had listed on its web site.

That means any layoffs now at Fab 8 will be offset by new hires, although Grasso, the GlobalFoundries spokesman, said it's tough for company officials to tell people they are losing their jobs. Workers at Fab 8 make between $80,000 and $90,000 on average, which is on the high end for the Capital Region, making them coveted jobs.

"A workforce reduction is challenging for any organization and we do not take this action lightly," Grasso said. "We are confident that these changes will position us to build a solid foundation for sustainable growth and continue investing for the future."

Demand for new and more sophisticated chips is also expected to soar in the next decade. And Caulfield, who was recently appointed CEO of the company after leading Fab 8 and turning it into a huge success story in the industry, is trying to position GlobalFoundries to get more of that growth than TSMC.

That can't be done, he has said in recent interviews, without improving the company's financial performance.

And Monday's move appears to be part of a larger move by Caulfield, who had a long career at IBM before being named general manager of Fab 8 in 2014, to reshape GlobalFoundries in his image.

Caulfield was named CEO of GlobalFoundries on March 9. In a TV interview with Bloomberg last month, Caulfield said his goal was to double the company's pre-tax earnings, something that will require greater efficiencies and getting rid of less profitable chip product lines.

Caulfield said that could mean exiting "mature nodes," meaning older chip technology that is being made in places like Singapore, as compared to Malta and Germany, where the more cutting-edge chips are made.

"The priority for this team is, let's really take advantage of these assets we have deployed around the world and make sure we're filling them with the best products for us and our customers and turn the crank up on our financial return," Caulfield said in the Bloomberg interview, which was filmed at Fab 8 the same day that GlobalFoundries' Abu Dhabi ownership group visited the plant.

Caulfield also hinted during that interview that the company had not yet achieved the organic growth that it needed to become sustainable and that integrating IBM, Chartered and AMD into GlobalFoundries was still an ongoing project that requires a lot of more work.

AMD, after all, spun off its manufacturing operations in 2009 because it was too small to carry the enormous cost of chip factories compared to its main rival Intel, which is double the size of TSMC.

"On Day 1, just because you spun it out, it doesn't fix the problems of scale," Caulfield told Bloomberg. "The biggest challenge for GlobalFoundries was the rate and pace of getting economies of scale. The next journey of this company, to really get it to be efficient, is to integrate these four companies like they've never been integrated before. It's a work in progress."