Taiwan's GlobalWafers Co., Ltd. (GW) announced Tuesday that it has signed an $800 million agreement with U.S.-based GlobalFoundries Inc. (GF) to increase production of 12-inch SOI (silicon-on-insulator) wafers and to expand the 8-inch SOI wafer capacity at GW's existing fab in St. Peters, Missouri.

GlobalWafers' silicon wafer is a key raw material for semiconductors and is, therefore, an integral part of GlobalFoundries' supply chain. Through GF's multibillion-dollar manufacturing facilities or fabs, precisely engineered silicon wafers are critical to the global economy.

The agreement between GW and GF will expand GW's supply of SOI silicon wafers to GW.

GlobalWafers' 12-inch SOI wafers from its Missouri plant will be used in GF's state-of-the-art Fab 8 in Malta, New York. And 8-inch SOI wafers, also from its Missouri plant, will be used in GF's Fab 9 in Vermont.

The long-term agreement is expected to cost nearly $210 million over the next few years to expand capacity at GlobalWafers' Missouri fab. And a pilot line for the 12-inch SOI wafer is expected to be completed in the fourth quarter of this year.

To meet customers and growing global demand for computer wafers, GlobalFoundries will invest $1.4 billion in capacity expansion in 2021, so GF will need more upstream wafer materials like those produced by GlobalWafers to support its growth.

GlobalWafers is one of the world's leading 8-inch SOI wafer manufacturers and an existing and long-term supplier of GF's 8-inch SOI wafers.

In February 2020, GlobalFoundries and GlobalWafers announced their intention to work closely together and significantly expand GW's existing 12-inch SOI wafer capacity, and the announcement represents a significant step forward in their collaboration.