GlobalFoundries came into spotlight last year when semiconductor industry leaders were trying to solve the ongoing chip shortage. The U.S.-based chipmaker offered something that none of its rivals could top – a global footprint – which helped ease the chip crisis throttling automakers to some extent. This may have caught the fancy of semiconductor heavyweight Intel Corp. which once said it may take several years for the global shortage of semiconductor chips to be resolved. According to The Wall Street Journal, Intel is looking to acquire GlobalFoundries for $30 billion – if successful, it could be Intel’s largest acquisition till date. The move would help Intel accelerate its plans to manufacture more chips for other companies, according to unnamed sources the Journal said were familiar with the matter.
Intel Corp.’s CEO Pat Gelsinger in March said that the Silicon Valley giant is planning to expand its use of external foundries to produce a range of products. The executive also said that Intel will significantly expand its manufacturing operations and create semiconductor chips for other companies.
The great chip crisis ushers a wave of investments
GlobalFoundries, was once a spin-off of Intel rival Advanced Micro Devices (AMD), signed an agreement with the latter to extend its capacity commitment and wafer pricing. According to an AMD SEC filing, the renewed pricing set new annual wafer purchase targets for the years 2022, 2023, and 2024, with AMD pre-paying certain amounts for those wafers in 2022 and 2023.
Intel Corp. has committed $20 billion to invest in two new chip fabrication plants in Ocotillo, Arizona. A major part of the project is Intel Foundry Services (IFS), a new semiconductor manufacturing arm that will produce silicon based on both the x86 architecture and ARM designs. IFS is a standalone unit of Intel that works alongside Amazon, IBM, CISCO and Microsoft. The unit hopes to gain the interest of Apple, which currently relies on semiconductor giant Taiwan Semiconductor Manufact uring Co.(TSMC) to produce its A- and M-series SoCs.
At the same time, the U.S. government has proposed a $52 billion boost in funding for semiconductor production and result which could result in seven to 10 new U.S. factories. The move could prevent China-based companies from gaining too much control of the market.
While GlobalFoundries’ acquisition wouldn’t boost Intel’s position against TSMC, it may help the Silicon Valley giant capture a part of Taiwan Semi’s annual revenue. If the acquisition falls apart, GlobalFoundries could proceed with an initial public offering (IPO) already on the calendar for 2022.
The ongoing chip crisis has spurred a wave of chip foundry investments to increase chip manufacturing. These investments are led by demand for chips across a range of industries including communications, healthcare, computing, automotive and online services. Semiconductor foundries worldwide are set to begin construction on 19 new high-volume fabrication plants by the end of 2021, and break ground on another 10 in 2022.
