Why it matters: On Monday, GlobalFoundries and Qualcomm signed a multi-billion dollar revenue agreement that more than doubles their existing long-term semiconductor partnership. The announcement came during the one-day CEO Summit in Washington being co-hosted by Ford Motor Company, GlobalFoundries, and Applied Materials.

The deal means Qualcomm will stick around as a GlobalFoundries customer through at least 2028, and secures wafer supply and commitments through capacity expansion at GlobalFoundries' most advanced fab in Malta, New York.

Qualcomm will use GlobalFoundries' FinFET platform to build 5G transceivers as well as chips for automotive, Wi-Fi and Internet of Things (IoT) applications.

The deal was announced shortly after the passage of the CHIPS and Science Act, which provides around $52 billion in subsidies for chipmakers. The legislation also includes an investment tax credit for chipmakers worth approximately $24 billion.

Senate Majority Leader Chuck Schumer said the deal proves that the semiconductor industry will grow in the US when the country becomes competitive with Asia and Europe. "With major new federal incentives for microchip manufacturing in the US, I look forward to many more announcements like this to come," Schumer added.

GlobalFoundries was linked to a buyout rumor from Intel around this time last year. Nothing ever materialized, however, and the company moved forward with plans to go public. The AMD spinoff went public at the end of October and currently has a market cap of $31.79 billion. The stock is up more than 11 percent on today's news as of this writing.

The Covid-19 pandemic triggered a global semiconductor shortage, and now local governments and tech titans alike are doing everything in their power to help create a more resilient supply chain. In addition to GlobalFoundries, powerhouses like Samsung, TSMC and Intel are pouring billions into capacity expansion to meet soaring chip demand.

While it seems unlikely at this point, there's a very real possibility that all of this heavy investing could lead to market saturation where there is too much capacity and not enough demand. That, in turn, could result in manufacturing facility closures, job losses and more, but let's not get too far ahead of ourselves.