Intel eyeing $30B acquisition of GlobalFoundries

By: Ruchi Gupta
Ruchi Gupta
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on Jul 16, 2021
  • Intel to start producing chips for other tech companies as it eyes GlobalFoundries
  • The proposed acquisition values GlobalFoundries at $30 billion
  • GlobalFoundries among top chip producers controlling around 7% of the market

Intel Corp (NASDAQ: INTC) plans to acquire GlobalFoundries Inc. in a deal that will boost the semiconductor behemoth’s plans to produce more chips for other technology companies, according to a report from The Wall Street Journal. The acquisition will be the largest in Intel’s history.

Intel planning $30 billion acquisition of GlobalFoundries

Sources familiar with the matter told WSJ that the proposed deal values GlobalFoundries at approximately $30 billion. However, it is not certain that an acquisition could materialize, and GlobalFoundries can go on with the anticipated initial public offering. Abu Dhabi government’s investment arm Mubadala Investment Corp owns GlobalFoundries, but the company is US-based.

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Any ongoing discussions about a possible deal are not involving GloalFoundries executive management. According to WSJ, a company spokeswoman indicated that the company is not in discussions with Intel regarding a deal.

In March, Intel’s new CEO, Pat Gelsinger, said that the company was planning to foray into chip manufacturing for others. Currently, it is Taiwan Semiconductor Manufacturing Co. (NYSE: TSM) which dominates chip production for other segments.  Intel, whose market value is approximately $250 billion, committed $20 billion this year in investments to expand its chip-making plants in the US. Gelsinger said that additional domestic and overseas commitments are in the works.

It is vital to note that GlobalFoundries is among the leading specialist chip-manufacturing companies in the world. The company was established in 2008 after Advanced Micro Devices Inc. (NASDAQ: AMD) chose to spun-off its chip production operations.  AMD is one of the largest GlobalFoundries customers after agreeing on a multi-year supply deal of around $1.6 billion this year.  This could complicate things on a potential Intel takeover.

GlobalFoundries controls 7%of foundry market share

According to Taiwan-headquartered research company TrendForce, GlobalFoundries controls around 7% of the foundry market share. Large companies such as Nvidia Corp and Qualcomm Inc. rely on third-party chip manufacturers to produce their products. They only focus on design instead of running their manufacturing pants. Nvidia surpassed Intel Last year as the largest US semiconductor firm by value.

Globalfoundries is moving its headquarters to Malta, and like TSMC and Intel, it’s expanding its production footprint following the global semiconductor shortage experienced currently. Last month the company broke ground in Singapore to a new chip manufacturing plant where it invested $4 billion.

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