(Reuters) -U.S. chipmaker GlobalFoundries on Tuesday said it will invest 1.1 billion euros ($1.28 billion) to expand manufacturing capabilities at its German facility as it looks to increase production.
The Dresden site investment will expand the production capacity to exceed one million wafers annually by the end of 2028, the chipmaker said in a statement.
"As a part of the project, the facility will be upgraded to offer end-to-end European processes and data flows for critical semiconductor security requirements," GlobalFoundries said.
German Chancellor Friedrich Merz hailed the project as an important investment in Europe's future amid geopolitical tensions impacting the semiconductor market.
"We are bearing witness to a tectonic shift in political and economic centres of power in the world," he said, adding that Germany wanted to be a key player in microelectronics in order to secure the country's prosperity and security.
The expansion project, named SPRINT, is expected to be supported by the German federal government and the State of Saxony under the framework of the European Chips Act.
European Union approval for the full program is expected later this year, GlobalFoundries added.
The German government is expected to support the expansion of the production site with several hundred million euros, Handelsblatt had reported in June.
The chipmaker has invested more than 10 billion euros in the Dresden site since 2009.
($1 = 0.8575 euros)
(Reporting by Juby Babu in Mexico City and Rachel More in Berlin; Editing by Vijay Kishore and Nick Zieminski)
