By David Shepardson

WASHINGTON (Reuters) – The U.S. Commerce Department said Wednesday it has finalized a $1.5 billion government subsidy for GlobalFoundries to expand semiconductor production in Malta, New York and Vermont.

The binding contract for New York-based GlobalFoundries, he world’s third-largest contract chipmaker, finalizes a preliminary award announced in February after the company said it was investing $13 billion over the next 10 plus years in its U.S. manufacturing sites that serve automotive, smart mobile devices, Internet of Things, data centers, and aerospace and defense.

Commerce Secretary Gina Raimondo told Reuters last week the department is racing to complete as many final agreements with recipients under the $52.7 billion “Chips and Science” program created in 2022 as possible before the Biden administration ends on Jan. 20. “We’re working as hard as we can,” Raimondo said.

The Commerce award will support expansion of GlobalFoundries Malta, New York fab by adding technologies already in use at GF’s Singapore and Germany facilities to provide chips for the U.S. auto industry. New York state has also committed to providing another $550 million in support, GF said.

GF also plans to build a new fab in Malta, New York “in alignment with market conditions and customer demand” to produce chips for automotive, AI, aerospace and defense.

“GF’s essential chips are at the core of U.S. economic, supply chain and national security,” said GF CEO Thomas Caulfield, calling the state and federal funding key “to ensure our customers have the American-made chips they need to succeed and win.”

Commerce last week finalized its first major award — a $6.6 billion government subsidy for Taiwan Semiconductor Manufacturing Co’s U.S. unit. The first final awards come just weeks before President-elect Donald Trump, who criticized the program, takes office.

Commerce has allocated $36 billion for chips projects including $6.4 billion for Samsung in Texas, $8.5 billion for Intel and $6.1 billion for Micron Technology.

On Nov. 1, Commerce imposed a $500,000 penalty on GlobalFoundries for shipping chips without authorization to an affiliate of blacklisted Chinese chipmaker SMIC. GF said it regretted the inadvertent action.

(Reporting by David Shepardson; Editing by Chizu Nomiyama)