US chip giant GlobalFoundries exploring merger with Taiwan’s UMC: Sources
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GlobalFoundries’ incoming chief executive has been open to considering deal options, including a possible tie-up with UMC, as he prepares to take the helm in April.
PHOTO: REUTERS
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NEW YORK – GlobalFoundries, which has a big manufacturing base in Singapore
The move is part of a long-shot deal aimed at creating a more resilient manufacturer of older-generation semiconductors, the sources said.
Mr Tim Breen, who was named as GlobalFoundries’ incoming chief executive in February, has been open to considering deal options, including a possible tie-up with UMC, as he prepares to take the helm later in April, people familiar with the situation said.
It is not clear whether a deal will actually materialise, and a purchase of UMC might prove difficult for GlobalFoundries. The US chipmaker has a market value of roughly US$20 billion (S$26.9 billion), and the Taiwanese firm is worth about US$17 billion.
Beyond the complexities of working through how to combine the two companies and who would control the businesses, geopolitics would make the combination challenging.
A transaction of this nature would presumably require the approval of regulators, which “represents a significant hurdle”, said Bloomberg Intelligence technology analysts Charles Shum and Steven Tseng in a note on March 31.
The Taiwanese government probably would not approve a deal that puts GlobalFoundries in charge of the two businesses, which would be the most likely structure.
GlobalFoundries did not respond to a request for comment. UMC chief financial officer Liu Chi-tung declined to comment, saying the company does not discuss market rumours. Nikkei Asia first reported on talks of a potential merger.
Taiwan’s chipmakers, major suppliers to the world’s electronics makers, have sprung to the vanguard of shifting manufacturing to the US as President Donald Trump threatens more tariffs.
Access to semiconductors, which power everything from the artificial intelligence revolution to car production, has meanwhile emerged as a key priority for governments amid escalating geopolitical tensions.
The Trump administration has asked Taiwan Semiconductor Manufacturing Co to consider taking a stake in a spin-off of ailing US chipmaker Intel’s factories.
UMC has not yet responded to recent queries by GlobalFoundries for a possible combination, said one of the sources familiar with the matter.
A combination would allow GlobalFoundries to “build more significant scale, while UMC is able to diversify its capacity outside of Taiwan and China”, Wolfe Research analyst Chris Caso said in a note.
“Industry consolidation in mature node manufacturing would allow suppliers to fend off greater encroachment from China-based suppliers and improve their position with customers.” BLOOMBERG
