Intel could buy a contract manufacturer for $ 30 billion

A The Wall Street Journal citing unnamed sources, Intel is currently in the process of exploring acquisition opportunities, meaning the deal has not yet been closed. At the request of the WSJ, a spokesman for GlobalFoundries denied that negotiations would be held with Intel, although it is not customary to confirm rumors in the initial stages of such deals. According to the source, if the two parties fail to reach an agreement, GloFo could go public as planned.

The rumor aired by WSJ is not surprising in light of Intel’s stated intention to become a dominant player in the contract manufacturing market, putting competition between TSMC and Samsung. Although the chip maker had previously offered such a service, very few took advantage of the opportunity. At the same time, Pat Gelsinger, who has been leading Intel since the beginning of the year, sees the future of his company in part in contract manufacturing. This is because a significant increase in production volume can contribute to recovering ever-increasing research and development costs as quickly as possible. In semiconductor manufacturing, economies of scale are extremely important factors, the importance of which has only increased in recent years. (This traditionally means that it is specifically cheaper to make 200 of something than 100.)

So Gelsinger and his team have been working for months on IFS (Intel Foundry Services), the company’s boom manufacturing business. As a first step, Intel announced in April that it was ready to bail out automakers cramped by a semiconductor shortage. The company’s president and CEO said earlier that he is in advanced negotiations with chip designers who supply various control circuits and target processors to the automotive industry, so these companies could take advantage of Intel’s manufacturing capacity in the future.

According to Intel, relocating certain production lines or relocating production to plants that have so far built mostly PC-based processors could take roughly six to ten months, which would take significantly less time than setting up new chip plants. However, with the possible acquisition of GlobalFoundries, neither existing production lines nor new plants would have to be built. GloFo also has plants in Dresden, Singapore, and New York State (Malta, East Fishkill). In these, the contractor is currently producing chips for AMD, a competitor to Intel, among others.

The two parties, AMD and GlobalFoundries, look back on a common past, as the latter was set up in 2009 with the outsourcing of AMD’s semiconductor business. Following its formation, the UAE-based Mubadala Sovereign Wealth Fund was the majority owner of AMD, which later bought the chip designer’s stake. Over the past 10 years, GlobalFoundries has made significant investments. The company first acquired Chartered Semiconductor in Singapore and subsequently acquired IBM’s semiconductor business.

However, despite billions in spending, all this has so far failed to be truly lasting. Improvements slipped in order, and then when they were finally completed, they usually did not live up to their expectations. One consequence of this was that the company was forced to license the 14-nanometer FinFET technology developed by Samsung a few years ago. After a series of failures, the contractor announced three years ago that it would exit the bandwidth competition, meaning it would suspend development and research work on its 7-nanometer or more advanced manufacturing technologies. The company then stated that in the future it would prefer to focus on simpler, less risky, unique (bb) technologies.

In November 2015, the sale of GlobalFoundries was raised once. Subsequently, in the fall of 2019, BusinessKorea brought down the sale again. According to contemporary news from the news portal, ATIC, which owns roughly 90 percent of the company’s stock, wanted to get rid of the wage maker who had been stumbling almost continuously for a decade. The company, which currently ranks third with a market share of only 7-8 percent, was reportedly interested in second-place Samsung at the time, as well as SK Hynix, which is also South Korean but not engaged in contract manufacturing.


Source: HWSW Informatikai Hírmagazin by www.hwsw.hu.

*The article has been translated based on the content of HWSW Informatikai Hírmagazin by www.hwsw.hu. If there is any problem regarding the content, copyright, please leave a report below the article. We will try to process as quickly as possible to protect the rights of the author. Thank you very much!

*We just want readers to access information more quickly and easily with other multilingual content, instead of information only available in a certain language.

*We always respect the copyright of the content of the author and always include the original link of the source article.If the author disagrees, just leave the report below the article, the article will be edited or deleted at the request of the author. Thanks very much! Best regards!