Globalfoundries Inc (NASDAQ:GFS) shares gave up earlier gains on Wednesday, trading down about 3% at roughly $48 after the semiconductor manufacturer announced a letter of intent with the US Department of Commerce for a potential $300 million award to accelerate silicon photonics research and development.
The agreement, announced July 29, is expected to provide funding through the Department’s CHIPS Research and Development Office to support the development of next-generation optical materials, wafer technologies and advanced packaging designed to strengthen US leadership in silicon photonics.
Silicon photonics uses light-based technology to transmit data at high speeds while improving energy efficiency compared with traditional electrical connections. The technology is becoming increasingly important for artificial intelligence and high-performance computing applications as data center workloads require greater bandwidth and lower power consumption.
GlobalFoundries said the funding would support the advancement of silicon photonics wafer technologies, optical materials and advanced packaging solutions, including its 3D hybrid bonding capabilities. The work is expected to help accelerate the adoption of near-packaged optics (NPO) and co-packaged optics (CPO), which bring optical connectivity closer to computing components to improve performance.
The company said the initiative builds on its recently launched SCALE (Silicon Photonics Co-Packaged Advanced Light Engine) platform, which targets modularity, 400Gb/s performance and a fivefold increase in energy efficiency compared with current-generation implementations.
As part of a separate agreement, the U.S. Department of Commerce will receive equity from GlobalFoundries representing approximately 1% ownership of the company as of Wednesday, allowing the public to share in potential future growth, according to GlobalFoundries.
“Silicon photonics is essential to AI infrastructure. For a decade, the industry talked about the shift from copper to optical as something that was coming, today it is here, moving data at higher bandwidth and improved power efficiency as workloads grow more complex,” GlobalFoundries CEO Tim Breen said in a statement.
“GlobalFoundries has spent more than a decade building the technology, footprint and ecosystem to lead this transition, and we have the proven manufacturing foundation to scale it in the United States, accelerating technology leadership for generations to come.”
The company said the work will leverage its existing manufacturing capabilities in Malta, New York, and Burlington, Vermont, to help accelerate a U.S.-based path to high-volume silicon photonics production.