Intel is in talks to acquire Globalfoundries Semiconductor Contract Manufacturing
🟩 Candidate for acquisition is GF
Global Foundries (GF) is a semiconductor foundry business whose parent company is Advanced Micro Devices (AMD), which was spun off in 2009. It is currently part of Mubadala Investment, a sovereign wealth fund in Abu Dhabi, United Arab Emirates (UAE), and is considering an initial public offering (IPO) in the U.S. market. GF is a producer of major U.S. semiconductor companies such as AMD, Nvidia and Qualcomm, and is the world’s third largest foundry specialist.
Intel declined to comment on reports of takeover talks.
🟩 The purchase price is 3.3 trillion yen.
The largest amount of mergers and acquisitions Intel’s past mergers and acquisitions was $16.7 billion from Altera, which it acquired in 2015. Therefore, if the $30 billion (approximately 3.3 trillion yen) acquisition of GF is successful, it could be Intel’s largest acquisition ever. Intel also announced last year that it would transfer its NAND memory and storage business to South Korea’s SK hynix for $9 billion, and is restructuring under CEO Pat Gellsinger.
IDM2.0
Intel has announced that it will start a foundry business, IDM2.0, which will undertake semiconductor manufacturing from other companies. The acquisition of GLOBALFOUNDRIES is expected to build a foothold in the semiconductor contract manufacturing market.
Expansion of production in the U.S.
US>Intel is also affected by the trade friction between the U.S. and China, and is aiming to expand production in the U.S. The company has announced that it will invest $20 billion to build a new semiconductor plant in western Arizona. In addition, the acquisition of GF aims to expand production volume and strengthen the foundry business.
🟩Challenges Associated with the Acquisition of GF
Intel and AMD Relationship
Originally, GF was the production arm of Intel’s rival manufacturer AMD, and AMD is still GF’s customer. Since the company still manufactures I/O chips for AMD’s Epyc processors, it is complicated because Intel’s acquisition of GF will result in the production of rival chips.
IBM’s relationship with GF
In 2014, GF was transferred to IBM’s foundry business. It received $1.5 billion in doing so and signed a contract to exclusively provide processor processing for servers for 10 years. However, GF stopped the development of the 7nm process and later processes indefinitely in 2018, so IBM changed the foundry for 7nm and later processors to Samsung Electronics. In addition, GF sold a series of plants and design divisions transferred from IBM in 2019, so IBM is preparing to sue GF for breach of contract.
Intel is working with IBM on the development of the 7nm process and beyond, but it must make a decision on the acquisition, including the relationship between GF and IBM.
🟩Summary
Intel is considering a record acquisition of GF to expand production
The company aims to secure production of semiconductors in each country, but it will be difficult to expand easily without making bold investment decisions like Intel.
