GlobalFoundries (NASDAQ:GFS) shares rose Tuesday after the US Department of Commerce announced on Monday $1.5 billion in potential direct funding to the company as part of the CHIPS Act.
In addition, New York announced $600 million in separate funding for GFS. The funding programs and grants are intended to bolster the company's investments in Malta and New York and triple its production capacity over the next 10 years through the expansion of an existing facility and the construction of a new fab on the same campus.
GFS shares rose as much as 7% in the early part of Tuesday's session.
Reacting to the news, Deutsche Bank, which has a Buy rating and $62 price target on the stock, said it believes the CHIPS Act/NY funding will help GFS more "profitability capitalize on both geopolitical trends toward localized, reliable capacity and semi sector-wide trends requiring more lagging edge capacity for markets such as Automotive, IoT, Defense, etc."
"Overall, analysts have long expected GFS to be a primary beneficiary of the CHIPS Act (along with INTC and TXN – funding yet to be announced), and view the recent announcement favorably for the company and its share price," they added.