GlobalFoundries wins $300 million federal award to build AI chip interconnects made of light

GlobalFoundries announced on July 29 that it has signed a letter of intent with the U.S. Department of Commerce for a $300 million CHIPS Act research and development award, aimed at accelerating silicon photonics — technology that moves data between chips using light instead of electrical signals. The deal also gives the federal government a roughly 1% equity stake in GlobalFoundries, following the same structure the Trump administration used in its earlier Intel investment.

Why light instead of copper

Every large AI cluster today moves enormous volumes of data between GPUs, memory, and networking gear over copper interconnects, and copper has a hard physical ceiling: as bandwidth demands rise, copper links need more power and generate more heat per bit moved. Silicon photonics replaces those electrical links with optical ones, transmitting data as light through the same manufacturing processes used to build conventional chips. The result is substantially higher bandwidth density at lower power draw — the two things AI data centers are running out of fastest as cluster sizes scale into the hundreds of thousands of GPUs.

The CHIPS funding will go toward next-generation optical materials, wafer technologies, and advanced packaging — specifically 3D hybrid bonding techniques that enable near-packaged optics (NPO) and co-packaged optics (CPO), where the optical components sit directly alongside the AI processor rather than as a separate pluggable module. GlobalFoundries says this work builds on its recently introduced SCALE platform (Silicon Photonics Co-Packaged Advanced Light Engine), which targets 400Gb/s performance and a 5x improvement in energy efficiency over current pluggable optical interconnects.

The equity stake precedent

The Commerce Department's roughly 1% equity position in GlobalFoundries mirrors the structure used in the administration's earlier investment in Intel, where the government took an equity stake rather than issuing funding as a pure grant. Commerce Secretary Howard Lutnick framed the approach as letting "the American public share in GF's growth" rather than simply subsidizing a private company's R&D — a model that ties federal semiconductor policy more directly to the financial upside of the companies it funds, a departure from how CHIPS Act money was typically structured when the program launched in 2022.

Industry-wide backing

This isn't a bet GlobalFoundries is making alone. Executives from AMD, Broadcom, Cisco, Meta, Microsoft, and Qualcomm all issued statements endorsing the investment — a list that spans chip designers, networking equipment makers, and two of the largest AI infrastructure buyers in the world. That breadth of support signals silicon photonics isn't a speculative bet on a niche technology; it's viewed across the industry as a near-term requirement for scaling AI infrastructure past current interconnect limits, not a decade-out research curiosity.

Part of a bigger CHIPS R&D push

The GlobalFoundries award is one piece of a larger $874 million CHIPS R&D initiative the Commerce Department is distributing across seven companies, all aimed at strengthening domestic capability in technologies considered critical to AI infrastructure and national competitiveness against China's semiconductor ambitions. GlobalFoundries will do the work at its existing fabs in Malta, New York, and Burlington, Vermont — keeping the entire supply chain for next-generation AI interconnects on U.S. soil, which is as much the point of the award as the underlying technology itself. Details were confirmed in GlobalFoundries' official announcement.