Posted on 07/15/2021 6:49:52 PM PDT by blam
Thursday was another rough day for the semiconductor space as most of the biggest US-traded chipmakers traded in the red as the global chip shortage overshadowed what ended up being a solid earnings report from TSMC (which also affirmed plans to expand its production capacity in the US and Japan).
But even bigger news concerning the troubled semis space broke Thursday evening when WSJ reported that Intel has agreed to the biggest acquisition in its half-a-century existence.
According to the American business broadsheet of record, Intel has agreed to buy chip fabricator GlobalFoundaries for $30 billion. Most importantly, the deal marks the company’s biggest move yet into the foundry segment, a segment currently dominated by Taiwan Semiconductor Manufacturing – or TSMC – the world’s most important chipmaker. Put another way, the deal is the biggest volley yet in new Intel chief Pat Gelsinger’s “war” on TSMC. As we noted above, news of the deal is breaking shortly after Taiwan Semi announced its plans to expand production in the US, which is Intel’s “turf” (Intel is also investing $20 billion into expanding its production facilities in the American West).
Wowzers:
Intel is exploring a deal to buy GlobalFoundries, according to people familiar with the matter, in a move that would turbocharge the semiconductor giant’s plans to make more chips for other tech companies and rate as its largest acquisition ever. https://t.co/WaGqo3hgEX
— Mike Bird (@Birdyword) July 15, 2021
As for GlobalFoundaries, those who aren’t semiconductor experts can be forgiven for having never heard of the company. It’s presently wholly owned by Mubadala Investment Co (the Abu Dhabi sovereign wealth fund made infamous by its association with 1MDB, the Malaysian sovereign political slush fund that was pillaged by members of the former PM’s inner circle after being seeded with money raised by Goldman Sachs. The company was looking to go public, but instead of going public, or merging with a SPAC, Intel is going to buy it for $30MM).
Per WSJ, GlobalFoundaries itself doesn’t appear to be in direct talks with Intel – the deal is being negotiated by Mubadala, which clearly sees an exit opportunity in the fact that Intel and its biggest Western rivals are now going toe-to-toe with TSMC.
For all we know, one of these rivals could come through with a higher bid, stealing the deal from Intel, or sparking a bidding war.
WSJ describes GlobalFoundaries as “GlobalFoundries is one of the largest specialist chip-production companies. It was created when Intel rival Advanced Micro Devices in 2008 decided to spin off its chip-production operations.”
Interestingly, Intel rival AMD “remains a big customer for GlobalFoundries—agreeing to a multiyear, roughly $1.6 billion chip-component supply deal this year—and that could complicate a takeover by Intel. GlobalFoundries is relocating its corporate headquarters to Malta, N.Y. from Santa Clara, Calif.”
Tech analyst Patrick Moorhead tweeted following news of the deal that if it’s consumated, it would transform Intel into a “full-stack provider” with chips for critical technologies like 5G, IoT and much more. However, he expects the regulatory hurdles to be “immense” (keep in mind, President Biden is pushing sweeping antitrust policy changes by executive fiat).
On Intel acquiring GlobalFoundries: I can see why it would want to as it would make Intel a full stack provider with specialty tech for 5G, IoT and automotive. But the regulatory hurdles would be immense.
— Patrick Moorhead at #MSInspire (@PatrickMoorhead) July 15, 2021
One of the contributing factors behind the current global semiconductor shortage is that many chip designers like Nvidia and Qualcomm now prefer to outsource the fabrication of their chips to companies like TSMC and GlobalFoundaries. Just last month, GlobalFoundaries announced plans to build a new production site in Singapore for $4 billion.
Yowzers. The US is so obviously weak with feckless leadership that even TSMC is planning for the looming Chicom invasion of Taiwan.
TSMC makes roughly 70% of the (critical) chips that are used in automotive applications. Imagine what life will be like when China controls all that production. The supply chain across all tech dependent industries is gonna be lit AF.
This is probably the dumbest idea Intel has ever done.
GF has no technology worth buying.
Their 7nm process is totally broken.
Intel’s 14nm is better than GF’s.
Bizarre situation if Intel ens up doing the manufacturing for AMD.
I’ve been an Intel shareholder for nearly a quarter of a century, and though I’ve made money on the stock, it seems to me that it hasn’t been a particularly well-run company since at least when Andy Grove left as chairman in 2004. I don’t have the numbers handy, but I’d imagine that they’ve underperformed the broader market. They bombed out with modem chips for Apple. They’ve lost quite a bit of market share on CPUs not only to AMD but also to Qualcomm and now Apple silicon. My gut feeling is that, based on their recent track record, if INTC management thinks it’s a perfect time to go big into the foundry business, they’re probably buying at the peak.
They should have listened to President Trump. The multinational corporation’s afflicting America are evil. We need to anti-trust action to bust them up. we also need to re-in state the federal law that outlawed foreign ownership of American media.
TSMC manufactures for AMD
No one I know uses GF anymore.
Yup, if China invades and takes over Taiwan, the planet is in deep manure.
Forgot to add “They should’ve listen to Trump when he told them to relocate manufacturing back to the United States.”
Now these outsourcing corporate fools have had their pants pulled DOWN standing naked. Go woke go broke.
IF it’s any comfort TSMC is building a chip plant in Arizona.
Grove was an engineer first, businessman second. His replacement wasn’t. Bean counters running complex engineering and production organizations that require innovation to maintain relevance often doesn’t end well. Intel seems to have proven this once again.
Thirty billion dollars is a lot of money to pay for a chip fabricator.
There’s probably only a few companies that make leading edge chip fabricating machines.
Hello, this is the President of Intel, we’d like to expand our semiconductor production capability....
“Their 7nm process is totally broken”
It wasn’t broken. They dropped that program years ago.
“GF has no technology worth buying.”
They have foundries. AMD buys from GF.
Well, I was just going on the article’s assertion that “AMD remains a big customer for GlobalFoundries...”
We tried to get their 7nm to work for over two years.
The transistors scale very poorly.
The reason they dropped the program is no one was interested in a process 30% slower and 30% more expensive than their 14nm process.
Stranger still, Golbal Foundries was originally AMD. AMD split off their chip fabs in 2009 and created GF.
In other words, Intel has bought the old AMD fabs.
https://en.wikipedia.org/wiki/GlobalFoundries
No they don’t.
They used to make processors for AMD but that hasn’t been the case for years.
Is it Foundaries or Foundries? Somebuddies spellczecher is broken.
Doesn’t it seem strange for a chip company to manufacture in Arizona? I thought they needed lots of water.
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