GlobalFoundries has signed a letter of intent with the U.S. Department of Commerce for a planned award of up to $300 million, placing silicon photonics and advanced optical packaging at the center of a new federal effort to strengthen the domestic artificial-intelligence computing supply chain.

The proposed funding, announced July 29, would be provided through the Commerce Department’s CHIPS Research and Development Office. GlobalFoundries said it would use the money to advance next-generation optical materials, silicon-photonics wafer technologies and advanced packaging processes intended to move data more quickly and efficiently within increasingly large AI systems.

The transaction is not yet a final award. The department said GlobalFoundries and six other companies receiving letters of intent must undergo additional diligence and approval before definitive funding agreements are completed. The conditional status is important because project scope, milestones, disbursement schedules and other requirements may change during final negotiations.

Commerce described the GlobalFoundries project as an effort to accelerate domestic research and development of co-packaged optics by two to three years. The technology integrates optical connectivity much closer to processors and networking silicon, reducing the distance that high-speed electrical signals must travel and addressing the power and bandwidth limitations of conventional copper connections.

For AI infrastructure operators, data movement has become almost as consequential as raw computing capacity. Training and serving advanced models requires large numbers of graphics processors, custom accelerators and memory systems to exchange information continuously. As clusters expand, the electrical links connecting those components consume more power, generate additional heat and face greater signal-integrity challenges.

Silicon photonics addresses that constraint by using light to transmit data through photonic integrated circuits. Optical links can carry large volumes of information at high speeds while reducing energy consumption over distance. The technology is already widely used in pluggable optical modules connecting data-center equipment, but the industry is now working to move optical components closer to switches, accelerators and other high-performance chips.

GlobalFoundries said the federal award would support near-packaged optics and co-packaged optics, two architectures designed to shorten electrical paths and increase optical bandwidth density. Near-packaged systems position optical engines close to a processor or networking device. Co-packaged designs integrate the optics within the same package or immediately alongside the computing silicon, potentially delivering greater efficiency at the cost of higher manufacturing and thermal complexity.

The research program will build on GlobalFoundries’ recently introduced SCALE platform, whose name stands for Silicon Photonics Co-Packaged Advanced Light Engine. The company says the platform is being designed for modular deployment, 400-gigabit-per-second performance and energy efficiency five times greater than current-generation implementations.

The planned award would fund work across several stages of the technology stack rather than focusing exclusively on a single photonic device. GlobalFoundries identified novel optical materials, wafer processing and advanced packaging as core areas. It also highlighted its three-dimensional hybrid-bonding capabilities, which allow semiconductor dies with different functions to be connected through extremely dense interfaces.

Hybrid bonding is increasingly important as chipmakers combine processors, memory, input-output devices and optical components in multi-die systems. Instead of building every function on one large piece of silicon, manufacturers can optimize individual chiplets for different processes and then assemble them into a unified package. That approach can improve performance and manufacturing flexibility, but it requires precise bonding, testing and packaging technologies.

GlobalFoundries plans to use its existing capabilities in Malta, New York, and Burlington, Vermont, to establish a domestic path from photonics research to high-volume manufacturing. Malta is one of the company’s principal U.S. production sites and has become a focal point for its semiconductor manufacturing and advanced-packaging investments. Burlington contributes expertise in specialized semiconductor technologies and research.

The project therefore extends beyond laboratory experimentation. The commercial objective is to develop optical technologies that can be manufactured with reliable yields and integrated into products at data-center scale. Achieving that transition has historically been difficult in photonics because optical devices, lasers, electronic control circuits, packaging and fiber connections must operate together with tight tolerances.

GlobalFoundries has spent more than a decade building a silicon-photonics manufacturing business and supplies processes used in existing optical-interconnect products. Its current portfolio includes qualified photonic devices, integrated detectors, modulators and wavelength-management capabilities. The proposed federal funding would seek to advance that foundation toward more tightly integrated optical engines for future AI architectures.

The company expanded its photonics position in November 2025 by acquiring Singapore-based Advanced Micro Foundry. GlobalFoundries said that transaction broadened its manufacturing capacity, technical portfolio and customer reach, while complementing its U.S. capabilities. The acquired operation brought a 200-millimeter manufacturing platform and experience serving telecommunications, data-center, sensing and lidar applications.

GlobalFoundries has also said it intends to expand silicon-photonics manufacturing on 300-millimeter wafers, a format that can support higher production volumes and greater economic efficiency when yields are sufficiently mature. Moving photonics processes onto larger wafers may help the industry use more of the automation, tooling and quality controls established in conventional semiconductor manufacturing.

The Commerce Department included GlobalFoundries in a broader package of seven letters of intent totaling $874 million. The projects cover integrated photonics, advanced memory, compute architectures, semiconductor packaging, substrates, materials and supply-chain security. The initiative reflects a widening of U.S. industrial policy from fabrication capacity toward the technologies required to assemble and connect complete computing systems.

GlobalFoundries is the largest proposed recipient in the group. Other planned awards include up to $245 million for Kepler to develop high-performance AI memory using three-dimensional and ferroelectric technologies, and up to $140 million for Multibeam to develop advanced packaging systems capable of assembling and connecting multiple chips.

The Commerce Department also proposed awards for Extropic, Thintronics, OBSIDIA Semiconductors and Aeluma. Those projects address alternative computing architectures, low-loss packaging materials, component-authentication technology and new substrate processes for lasers and photodetectors. Taken together, the awards are intended to strengthen portions of the compute supply chain that sit around leading-edge processors but are essential to their performance.

The package indicates that U.S. semiconductor strategy is increasingly focused on system-level bottlenecks. Funding advanced logic manufacturing alone does not guarantee competitive AI infrastructure. Processors must be supplied with data from memory, connected through switches and optical networks, packaged with other devices and deployed in power-constrained data centers.

Industry support cited by GlobalFoundries illustrated the breadth of demand for improved optical connectivity. Executives from AMD, Broadcom, Cisco, Corning, Lumentum, Marvell, Meta, Microsoft, Nvidia and Qualcomm described silicon photonics as an important enabling technology for future AI clusters, networking platforms and data-center systems.

The endorsements do not constitute purchase commitments, but they demonstrate how photonics development spans the semiconductor, cloud-computing, networking and optical-component industries. A co-packaged optical platform requires coordination among processor designers, switch-chip suppliers, foundries, materials companies, fiber-connection specialists, packaging providers and data-center operators.

Standards and interoperability will also influence adoption. Large customers generally seek multiple suppliers and components that can operate across an established ecosystem. GlobalFoundries has positioned SCALE as supporting industry efforts around optical compute interconnects, an approach intended to give system designers a more standardized route to integrating photonic engines.

The company’s role as a contract manufacturer may be strategically significant. Unlike integrated chipmakers that principally manufacture their own products, GlobalFoundries produces semiconductors for external customers. A broadly available foundry platform could allow multiple processor, networking and optical-component companies to access similar silicon-photonics and packaging capabilities without constructing dedicated fabrication lines.

The federal arrangement includes an unusual financial element. GlobalFoundries said the Commerce Department will receive equity under a separate agreement representing approximately 1% ownership based on the company’s position on the announcement date. Commerce said each of the seven companies in the funding package would provide the department with a minority, non-controlling equity stake as a condition of receiving funds.

The equity provision is designed to give taxpayers potential participation in the growth of companies benefiting from federal investment. It also differs from traditional grants that provide public funding without direct ownership. The ultimate economic value will depend on final contractual terms, company performance, dilution and the government’s ability to hold or dispose of the interest.

For GlobalFoundries, the proposed award adds public capital to a strategy centered on specialized semiconductor technologies rather than the smallest leading-edge logic nodes. The company manufactures radio-frequency chips, power-management devices, automotive semiconductors, embedded memory products and other differentiated technologies, alongside its growing photonics business.

That positioning could become increasingly relevant as AI spending spreads beyond accelerators. While the processors used to train large models receive much of the industry’s attention, the supporting infrastructure requires networking chips, power devices, optical components, sensors, security technologies and specialized manufacturing processes. GlobalFoundries is seeking to capture that broader demand.

The commercial timing of co-packaged optics remains a central uncertainty. The technology promises significant improvements in bandwidth and energy efficiency, but manufacturers must solve challenges involving heat management, laser placement, repairability, testing, fiber attachment and long-term reliability. Pluggable optical modules remain easier to replace and upgrade, giving data-center operators flexibility even when they consume more power.

Near-packaged designs may provide an intermediate step by placing optical engines closer to compute or networking devices without fully integrating them into the same package. That pathway could allow customers to reduce electrical-link distances while preserving some modularity and serviceability. GlobalFoundries’ development program covers both near-packaged and co-packaged approaches, giving it exposure to different adoption schedules.

Execution will now depend on the final award process and the technical milestones negotiated with Commerce. Research incentives are generally tied to measurable deliverables, and moving a photonics platform into high-volume manufacturing requires sustained customer qualification and capital investment beyond early-stage development.

The planned $300 million award nevertheless establishes silicon photonics as a strategic component of U.S. AI infrastructure policy. It also gives GlobalFoundries a substantial role in the effort to move optical connectivity closer to computing silicon. Should the award be finalized and the research meet its targets, the project could shorten the route to domestically developed optical interconnects capable of supporting larger, faster and more energy-efficient AI systems.