Nicolas Mokhoff EE Times (06/09/2009 5:47 PM EST)

MANHASSET, N.Y. — Global Foundries has sent a formal commitment letter to New York state for the construction of the Fab 2 project at the Luther Forest Technology Campus in upstate New York.

The letter initiates the construction phase of the Fab 2 project and triggers the process of issuing state bonds for reimbursements payments and incentives to the company for the development of the estimated $4.2 billion wafer fab.

The purchase of 223 acres of land from the campus is set for Wednesday (June 10).

Global Foundries also has completed a development agreement with two New York townships which call for the chip maker to contribute $5 million, including $1 million towards the creation of a 32-acre public recreation complex. The remaining $4 million will be used to establish two independent foundations to establish community enrichment programs.

M+W Zander has been awarded a fab site development contract. The work will prepare the site for construction, including the official groundbreaking ceremony scheduled for July.

The construction project is expected to take approximately two years, and an additional 12 to 18 months to ramp up operations. Volume production is expected to begin around 2012.

The Fab 2 project is expected to create approximately 1,400 new manufacturing jobs once volume production begins, with an estimated annual payroll of more than $88 million. The project is expected to create approximately 5,000 indirect jobs in the region.

Construction is expected to cost about $800 million.