According to a report from the Wall Street Journal, Intel is in talks to buy GlobalFoundries for roughly $30 billion. Intel has not confirmed the report, but if true, the plan would intercept GlobalFoundries’ widely-reported plans for an IPO later this year. The news comes on the heels of recent reports that Intel is in talks to buy RISC-V chip designer SiFive for $2 billion as it undergoes a major restructuring effort under new CEO Pat Gelsinger.
Intel’s proposed buy-out plan comes as it lobbies the US government for subsidies to boost its manufacturing capabilities, particularly to help fund its IDM 2.0 initiative that will find it producing chips for other companies through a newly-formed Intel Foundry Services (IFS). Intel has pledged $20 billion of its own money to kick-start that initiative with two fabs in Arizona, but plans to expand the program through the help of government subsidies. Acquiring GlobalFoundries would be an immediate shot in the arm for that initiative.
Even though GlobalFoundries famously abandoned the race for leading-edge node technology, it has plenty of its own existing fabs in the US with impressive production capacity. GlobalFoundries has long serviced contracts with the US government, which requires certain indigenous chip production for some of its military projects. As such, the company’s existing work with the US government makes it a shoo-in for government funding.
GlobalFoundries is headquartered in the US, but the Mubadala Investment Co, owned by the Abu Dhabi government, currently owns the company. The company has widely been reported to be seeking an IPO, but plans last year were scuttled amidst the turmoil of the pandemic. However, according to the WSJ, GlobalFoundries could move ahead with its planned IPO if talks with Intel fall through.
GlobalFoundries’ production capacity of trailing-edge nodes, which are the largest volume movers for most third-party fabs, would also fit well with Intel’s plans to begin offering its manufacturing services to other parties. Any such deal would certainly face major regulatory scrutiny, especially amidst the tensions associated with the US-China trade war.
The proposed deal would dwarf Intel’s $16.7 billion Altera acquisition, which was its largest thus far. Intel recently sold off its NAND and SSD business to SK hynix for $9 billion as it looks to focus on its core competency of manufacturing high-margin logic devices.
This is breaking news… more to come.