Intel negotiating $30B deal for chipmaker GlobalFoundries
Intel is in talks to acquire specialist chip production company GlobalFoundries in a deal worth about $30 billion, a move that would help Intel in its plans to become a chipmaker for other companies.
Citing people familiar with the matter, The Wall Street Journal on Thursday reported that Intel is in negotiations with GlobalFoundries owner Mubadala Investment Co., an arm of the Abu Dhabi government that holds its headquarters in the U.S. GlobalFoundries itself does not appear to be part of the process, as a spokeswoman said the company is not in discussions with Intel.
The purchase, if it goes through, will be Intel's largest to date and would help support the company's plan to manufacture chips for other firms.
In March, Intel announced a $20 billion intiiative to build a pair of chip fabs in Ocotillo, Arizona, with plans to dedicate at least a portion of the output to a new foundry subsidiary.
A key part of the project is Intel Foundry Services, a new chip manufacturing arm that will produce silicon based on both the x86 architecture and ARM designs. IFS is a standalone unit within Intel that is working with Amazon, Cisco, IBM and Microsoft. The branch hopes to gain the interest of Apple, which currently relies on foundries run by TSMC to produce its A- and M-series SoCs.
GlobalFoundries is a TSMC competitor that was created in 2008 when AMD split off its manufacturing arm. AMD is still a major customer and this year agreed to a $1.6 billion chip-component supply deal that could complicate an Intel takeover, the report said.
Also muddying the waters is a 2019 legal settlement between TSMC and GlobalFoundries that has the companies cross-licensing patents related to semiconductor technology.
GlobalFoundries sued TSMC, Apple, Google and other associated companies for alleged infringement of patents covering semiconductor manufacturing. TSMC retaliated with its own set of lawsuits before the parties agreed to settle the multi-jurisdictional dispute.
Intel, TSMC, GlobalFoundries and other chipmakers are quickly building new fabs to boost capacity amid a worldwide chip shortage. Earlier today, TSMC said its Arizona plant, which will churn out silicon using a 5nm process, is expected to begin production in 2024.
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Citing people familiar with the matter, The Wall Street Journal on Thursday reported that Intel is in negotiations with GlobalFoundries owner Mubadala Investment Co., an arm of the Abu Dhabi government that holds its headquarters in the U.S. GlobalFoundries itself does not appear to be part of the process, as a spokeswoman said the company is not in discussions with Intel.
The purchase, if it goes through, will be Intel's largest to date and would help support the company's plan to manufacture chips for other firms.
In March, Intel announced a $20 billion intiiative to build a pair of chip fabs in Ocotillo, Arizona, with plans to dedicate at least a portion of the output to a new foundry subsidiary.
A key part of the project is Intel Foundry Services, a new chip manufacturing arm that will produce silicon based on both the x86 architecture and ARM designs. IFS is a standalone unit within Intel that is working with Amazon, Cisco, IBM and Microsoft. The branch hopes to gain the interest of Apple, which currently relies on foundries run by TSMC to produce its A- and M-series SoCs.
GlobalFoundries is a TSMC competitor that was created in 2008 when AMD split off its manufacturing arm. AMD is still a major customer and this year agreed to a $1.6 billion chip-component supply deal that could complicate an Intel takeover, the report said.
Also muddying the waters is a 2019 legal settlement between TSMC and GlobalFoundries that has the companies cross-licensing patents related to semiconductor technology.
GlobalFoundries sued TSMC, Apple, Google and other associated companies for alleged infringement of patents covering semiconductor manufacturing. TSMC retaliated with its own set of lawsuits before the parties agreed to settle the multi-jurisdictional dispute.
Intel, TSMC, GlobalFoundries and other chipmakers are quickly building new fabs to boost capacity amid a worldwide chip shortage. Earlier today, TSMC said its Arizona plant, which will churn out silicon using a 5nm process, is expected to begin production in 2024.
Keep up with everything Apple in the weekly AppleInsider Podcast -- and get a fast news update from AppleInsider Daily. Just say, "Hey, Siri," to your HomePod mini and ask for these podcasts, and our latest HomeKit Insider episode too.If you want an ad-free main AppleInsider Podcast experience, you can support the AppleInsider podcast by subscribing for $5 per month through Apple's Podcasts app, or via Patreon if you prefer any other podcast player.
Read on AppleInsider
Comments
GloFo decided to abandon pursuit of more advanced processes a couple of years ago https://www.extremetech.com/computing/276185-globalfoundries-radically-restructures-kills-7nm-spins-off-asic-design-team. They are now focused on clients that use older nodes (12nm and above). Other than maybe some specialty chips here or there (and I'm not sure what those would be), Apple has little use for GloFo.
If there's any kind of 'behind the scenes' negotiation here at all, I would guess it involves the US government and a desire for a more secure supply chain for defense contractors. With Intel owing GloFo assets (including old IBM assets in NY), in addition to their own, plus TSMC in Arizona, US defense contractors can be assured of a wide range of semiconductor nodes to meet all their needs.
Also, Intel is too small these days to get the attention of regulators or Congress. They're all focused on big companies like Apple.
And if my national security theory is right, then this will sail through.
Due to the increasing fixed costs of developing new manufacturing nodes, companies need massive economies of scale. GloFo already lost the economies of scale necessary to compete at the cutting edge, and so they stopped competing. Intel has either already lost, or is on the cusp of losing, the economies of scale needed to compete with TSMC and Samsung.
With this consolidation, maybe (*maybe*), the combined Intel+GloFo will have the scale needed to compete with TSMC and Sumsung. That will give the world three firms competing on cutting edge nodes.
Without this consolidation, then we will most likely have two firms competing at the cutting edge. And I wonder how long Sammy can hang in there.
2. Chip manufacturing requires capital investments and expertise that few small companies are capable of. Only 3 foundries on the planet - TSMC, Samsung, Intel - are capable of even 14nm at high volumes. The fourth will be China's SMIC in early 2022.
3. America has 3 real competitors in chipmaking: Taiwan, South Korea, China. The other 3 directly subsidize their chipmakers to a massive degree. Meanwhile America only voted to give its chipmakers their first subsidy in decades a few months ago ... and it was comparatively a very small one. So if you want "less consolidation in chipmaking" then you are asking for the federal government to get - for example - Texas Instruments from 130nm to 14nm and get GlobalFoundries' 14nm capacity from tiny to competitive, it would take more money than Intel's $78 billion in revenue last year.
4. The last one - Intels $78 billion in revenue - is why no antitrust types are going to target them. Where Intel's $78 billion 2020 was a record year for them, Apple at times makes more than that in a single quarter.
Bottom line: you can either have a bunch of tiny chip manufacturers that can't compete with TSMC or maybe 4-6 that can. But you can't have both.
The only thing keeping TSMC afloat (ahead) is Apple’s MASSIVE investment over the years, Apple gave/asked Motorola, IBM, and Intel a chance in being in TSMC position as the leader in mobile CPU’s, Apple also had time to waste 400 billion dollars on stock buybacks over the same period after Intel said no.
TSMC is the general contractor and Apple is the Architect, and the same applies to Foxconn.