Globalfoundries tries to cash in tax credits

Chipmaker Globalfoundries appears to be in a bit of trouble and is trying to work out ways to make a bit of extra cash which doesn’t involve its senior executives having to take on a paper round.

According to the Times Union,  officials at the chipmaker have been trying to trade $700 million in tax credits in return for a big chunk of cash.

The outfit wants to swap part of a $1.4 billion incentive package offered by the US government to encourage building its factory in Malta in return for an immediate $165 million in cash.

The other part of that package provided to GlobalFoundries, $665 million in cash to construct its chip making facility, is being spent now.

Apparently the State Government said no to the cunning plan, but it does indicate that Globalfoundries is having financial problems or thinks that it will be difficult to make enough cash to take advantage of future tax credits.

GlobalFoundries spokesman Travis Bullard is refusing to talk about the negotiations, and said it all sounds fairly “logical” to him.

He said that the outfit wants to work on creative ways to further develop the Malta site which would be a win-win.

Globalfoundries is exploring different proposals and has not decided whether or not it will build out the site, it says. The outfit needs to fill 350 jobs as it ramps up to a total of 1,600. The hiring, according to GloFo, won’t come from the 1,400 positions being cut at AMD as part of a 10 percent reduction.

Part of those cuts were because AMD could not get parts under production by Globalfoundries at its plant in Dresden, Germany, Bullard admitted. 

*Update GlobalFoundries thinks the story’s sour. Travis Bullard sent the following statement to TechEye:

“There is no new or “second” proposal that was rejected by the State. The “swap” of tax credits for cash is not a separate proposal, but part of a long series of discussions between GlobalFoundries and the State of New York as we work together to find new ways of developing incentives for additional investment by Globalfoundries in New York.

“As the Times Union reported in late June/early July, we’ve been in talks with the State about the possibility of expanding the Fab 8 project to include additional projects. As part of those discussions, we’ve explored different scenarios that could meet our objectives and help match the State’s ability to provide the necessary incentives to support future growth and expansion. We consider these discussions to be confidential and we’re not going to disclose any details at this time, but clearly these discussions are about our desire to grow and expand in Malta. We are investing approximately $5.4 billion in capital expenditures and expansion projects in 2011 and will continue to make significant investments to support the needs of our customers around the world. The question is not whether or not we can afford to make these investments but rather the question is where we will choose to make these investments.

“The US and the State of New York are in a global competition for new manufacturing projects, especially leading-edge semiconductor fabs. Yet, the US in general and the State of New York in particular are expensive places to do business. Without economic incentives, there is little opportunity for the US and the State of NY to be competitive with other global regions. Indeed, if not for the substantial incentive package offered to us by New York in 2006 we would not be building the Fab 8 facility in New York today.

“We are committed to working with the State of New York on creative ways to further develop our Fab 8 site and we have been exploring many different proposals and ways to accomplish this. As we have also said all along, whether or not we build out the site will be a business decision based on various considerations including customer needs and New York State’s ability to continue to partner with us.

“That being said, we have not made a decision to further develop the site. We will continue to explore various options with New York State so when the time comes for us to make a decision about additional facilities, our business will have the information to do so.

“In addition, we have never said that the lay-offs announced by AMD last week were in any way related to Globalfoundries. We’ve been very open about the supply issues with AMD; however Globalfoundries and AMD have both reported that these supply issues are improving. When AMD announced their lay-offs last week, they pointed to their changes in strategy as the basis for the reduction in force. At no time have they ever stated that supply issues from Globalfoundries were the cause of their lay-offs.