Intel eyes purchase of Globalfoundries
Reportedly seeks to buy Malta foundry for $30B to “turbocharge” chipmaking industry
Company examining a deal to buy Malta foundry for $30 billion to “turbocharge” the chipmaking industry.
Intel is examining a deal to buy Globalfoundries for $30 billion, a purchase that would enable the tech giant to acquire the company that makes chips for its chief competitor.
The Wall Street Journal, which disclosed Intel’s interest, reports such a purchase would “turbocharge” Intel’s plans to make more chips for tech companies and other chipmakers as a so-called foundry for manufacturing, which Globalfoundries already is.
News of the deal is not totally unexpected, and there have been rumors for months that Intel could acquire Globalfoundries.
Globalfoundries officials have been particularly complimentary of Intel as a company lately even though they are technically rivals in the cut-throat foundry industry. Globalfoundries also makes many of the chips for Advanced Micro Devices, Intel’s main rival for desktop personal computer chips.
Globalfoundries spokeswoman Gina Derossi declined to comment on the Journal story as did Intel spokeswoman Stephanie Matthew.
“Intel declines to comment on rumors and speculation,” Matthew said.
Owned by Mubadala Investment Co., Globalfoundries operates a massive manufacturing facility known as Fab 8 in Malta, where it recently moved its headquarters and has 3,000 employees.
Officials with Mubadala could not immediately be reached for comment.
The deal described by the Journal values Globalfoundries at about $30 billion, according to the newspaper. The newspaper reports a spokeswoman for Globalfoundries said it was not in discussions with Intel, a sign,
cheaper and would carry less risk for Mubadala. And by buying an existing foundry like Globalfoundries, Intel doesn’t have to start the business from scratch.
“It’s a very interesting concept,” Jack Kelley, a local economic development consultant and commercial real estate broker who helped lure Globalfoundries to the Luther Forest Technology Campus more than a decade ago, said.
Kelley had courted Intel before that and has visited its Chandler, Ariz., campus dozens of times. He has deep ties to Intel executives. He said Intel has always been interested in Luther Forest as a manufacturing site because of the availability of limitless water from the Hudson River and reliable electric power, two of the main requirements of chip manufacturing that a factory can never be without.
Globalfoundries has said that it is looking at building a second chip factory, or “fab,” in Malta pending a $52 billion federal chip manufacturing subsidy package being promoted by U.S. Senate Majority Leader Charles Schumer and the White House.
If Intel were to buy Globalfoundries, it would likely build that second fab at Luther Forest after having already said it would consider building its own fab somewhere in upstate New York if the $52 billion were to come to fruition.
“I would say that Luther Forest is the best site in the world to do a project of this kind,” Kelley added.
Globalfoundries is scheduled to host a major announcement on Monday at its Fab 8 campus in Malta, although it does not appear that that event is related to the Intel story. It’s expected that state and federal government officials could attend the Monday event, although none of that has been confirmed.
Intel recently expressed interest in building a computer chip factory in upstate New York as part of a push by the U.S. government to encourage more domestic chip manufacturing as a way to counter China’s growing influence in the industry, especially for military purposes. The world’s largest foundry, Taiwan Semiconductor Manufacturing Co., is on the island nation of Taiwan, which the Chinese government has increasingly threatened with military action.
Intel also recently announced plans to become a major research partner with IBM at Albany Nanotech, fueling speculation that Intel would follow with a new manufacturing facility nearby.
An Intel acquisition of Globalfoundries would also help efforts by the state and IBM to land a national semiconductor manufacturing lab that the federal government is interested in building at Albany Nanotech.
Doug Grose, chairman of the board of NY CREATES, the quasistate-run nonprofit that operates Albany Nanotech, said the addition of Intel to Albany Nanotech would greatly aid the landing of the federal chip lab, known as the National Semiconductor Technology Center.
“Don’t underestimate the announcement with Intel,” Grose said. “That’s a huge step, as one of the leading players will be joining us (along with Samsung and IBM). The right players are here, and now we’ve got to make our proposal (for the NSTC) broad enough to attract the other players.”
Globalfoundries has been unusually complimentary of Intel, a rival to Globalfoundries, although Intel is much larger. In addition to Fab 8 in Malta, Globalfoundries owns chip fabs in Dutchess County, Vermont, Germany and Singapore. Intel has fabs in Arizona, New Mexico, Oregon and overseas.
“It is great to see another champion … entering the semiconductor foundry space,” said Laurie Kelly, vice president of global communications for Globalfoundries said when Intel decided to become a foundry recently, in direct competition with Globalfoundries. “The Intel announcement validates the importance and value of semiconductor manufacturing, which will only increase in importance given the rapid acceleration of demand.”
The two companies do not serve the same customers. Intel is focused on the cutting edge of chip technology. Globalfoundries makes more mainstream chips that account for 70 percent of global demand.
“Together, the combined offerings provide potentially a comprehensive domestic foundry solution, which when fueled by funding from federal and state governments will accelerate the availability of a secure local supply of a full range of semiconductors for both commercial and national security requirements,” Kelly of Globalfoundries said.