US-based contract chipmaker GlobalFoundries is reportedly exploring a potential merger with Taiwanese chipmaker United Microelectronics (UMC), Nikkei Asia reported, citing sources.
If realised, the combined entity would establish a larger, US-based company with production capabilities spanning Asia, the US and Europe, the news publication added, citing an assessment plan.
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This strategic move is said to be motivated by the need to ensure continued access to mature chips for the US, particularly amid rising tensions between China and Taiwan, as well as China’s increasing self-sufficiency in chip production, the plan says.
The merger could also pave the way for significant investments in research and development within the US, positioning the new company as a potential competitor to chipmaker Taiwan Semiconductor Manufacturing (TSMC).
Tim Breen, who is set to take over as GlobalFoundries’ CEO, has expressed openness to exploring various deal options including a possible tie-up with UMC, sources said.
However, it remains uncertain whether the deal will come to fruition as financial and regulatory hurdles could present significant challenges.
GlobalFoundries, with a market value of approximately $20bn, would face difficulties in financing an outright acquisition of UMC, which is valued at around $17bn.
According to industry experts, the merger would likely face regulatory scrutiny, especially from Taiwan and China.
A similar attempt by Intel to purchase Israel’s Tower Semiconductor was blocked by China due to concerns over the expansion of foundry capacity.
In January, tech giant IBM and GlobalFoundries announced a settlement, resolving all litigation matters including breach of contract, trade secrets and intellectual property claims.
The lawsuits alleged that GlobalFoundries breached a contract with IBM, while IBM was accused of misusing GlobalFoundries’ trade secrets.
In February 2024, the US Government awarded $1.5bn to GlobalFoundries to expand its semiconductor production as the country looks to boost its domestic chip manufacturing.
