Reports say that Intel Corporation is pushing ahead with the plan to acquire semiconductor manufacturer GlobalFoundries Inc for a whopping $30 billion.
The news of the possible deal comes amid a raging semiconductor shortage that has crippled a broad spectrum of industries worldwide. Carmakers were the worst hit by the global chip shortage.
If the deal goes ahead, Intel will be able to beef up its capacity for the production of chips even as demand for it has reached its zenith.
Intel had said earlier this year that it was planning to boost its advanced chip manufacturing potential by pooling in about $20 billion in new investment.
Intel shares rose 0.5 percent after the news broke even as other chip stocks ended down.
GlobalFoundries is a US-based company that is owned by the investment arm of the Abu Dhabi government, Global Mubadala Investment. A previous owner of GlobalFoundries was Advanced Micro Devices (AMD) and Intel rival.
The two companies still have ties and there are active chip supply deals between the two at the moment. According to reports AMD signed a multi-year deal with GlobalFoundries worth around $1.6 billion recently.
Tough Competition With TSMC
Reuters had reported earlier that Mudabala was planning the initial public offering of GlobalFoundries in 2022. The IPO could still go ahead if the Intel acquisition plan fails.
Some major acquisitions Intel has made in the recent past include the the acquisition of chip designer Altera for $16.75 billion and the purchase of Mobileye for $15.3 billion.
Meanwhile, the a spokesperson for GlobalFoundries told Reuters that the company was not in discussions with Intel. While Intel refused to comment, Mubadala also did not respond to request for comments.
For Intel, which is tough competition with Taiwan’s Semiconductor Manufacturing Co Ltd (TSMC) and and South Korea’s Samsung Electronics Co Ltd, the deal will be of great value.
Globally, the semiconductor segment has been heating up of late, with giants like TSMC funneling whopping amounts to boost capacity.
Taiwan’s TSMC said in April that it was spending $100 billion to expand its chip fabrication capacity. The investment will be made in the span of next three years, the company added even as a high-stakes ‘semiconductor war’ is looming.
This move came after China unveiled plans to boost the firepower of its all-important chipmaker SMIC. China’s Semiconductor Manufacturing International Corp said in March that it will build a $2.35 billion plant with funding from the provincial government of Shenzhen.
US Vs China
The US has had near total control over the semiconductor industry in the last several years, maintaining nearly 50 percent of the market share in revenue terms. The country is home to more than half of the 15 largest semiconductor companies in the world.
In comparison, China has been vastly dependent on semiconductor imports in order to meet the ever growing needs of its burgeoning tech industry. China’s drive to match up with the US and Taiwan’s prowess in semiconductors is fueled by the realization that its huge tech industry needs self-reliance in chips in the long term.