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Intel makes a $30B play for GlobalFoundries – report

What could be Intel's largest ever acquisition would put the company higher up the food chain among chip producers, but it would still lack the tech edge held by Taiwan's TSMC.

Phil Harvey

July 16, 2021

3 Min Read
Intel makes a $30B play for GlobalFoundries – report

Intel really does want to be deeper inside the business of making chips.

The Silicon Valley giant has been in talks to buy GlobalFoundries for $30 billion, according to a report on Thursday by The Wall Street Journal.

Most chip companies in the US are fabless – they design chips that go into smartphones, autos and remote controls. But chip foundries – companies like GlobalFoundries, Taiwan Semiconductor Manufacturing Co. (TSMC) and Intel – have the ability to build chips.

Intel is the world's largest chipmaker, bringing in about $78 billion in revenue during 2020 and nearly 80% of its revenue comes from outside the US. Part of the company's strategy is to expand its new Intel Foundry Services (IFS) business, where it will offer chipmaking services to other firms. In March, Intel's CEO Pat Gelsinger said Intel plans to spend roughly $20 billion building two new chipmaking factories in Arizona to kickstart IFS.

Adding GlobalFoundries to the fold would help Intel's foundry aspirations but the company will still be behind TSMC and Samsung in the ability to make smaller, more powerful chips. Apple, Amazon, Nvidia and Advanced Micro Devices have most of their chips made by either TSMC or Samsung.

"TSMC is eight times the size of GlobalFoundries, but its capital budget for 2021, at $25 billion to $28 billion, is twenty times that of GF," That's according to Coalition for a Prosperous America economist Jeff Ferry and China Tech Threat's Roslyn Layton. The duo co-wrote a paper in March that focused on the US and its place in the world of semiconductors compared to China, Japan and Taiwan.

"TSMC is able to do this because its Taiwanese government backers take a long-term view," Ferry and Layton write. "They focus not on next year's profits but on maintaining Taiwanese leadership in this industry for the next 50 years or more."

When it comes to manufacturing chips, the US is "lagging, and losing ground by the day," Ferry and Layton noted early in their paper. "The ability to manufacture cutting-edge chips is a critical issue for the US, with China's determination to become a world leader in this industry."

GlobalFoundries, which is US-based and controlled by Abu Dhabi's state-owned fund Mubadala, has about 7% of the foundry market share by revenue, according to The Journal, which cited research from Taiwan's TrendForce.

Three weeks ago GlobalFoundries said it would spend $6 billion to expand the capacity of its factories in Singapore, Germany and the US. "I think the next five to eight years, we're going to be chasing supply not demand as an industry," GlobalFoundries CEO Thomas Caulfield said, according to a report by Aradhana Aravindan on Reuters.

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Phil Harvey, Editor-in-Chief, Light Reading

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About the Author(s)

Phil Harvey

Editor-in-Chief, Light Reading

Phil Harvey has been a Light Reading writer and editor for more than 18 years combined. He began his second tour as the site's chief editor in April 2020.

His interest in speed and scale means he often covers optical networking and the foundational technologies powering the modern Internet.

Harvey covered networking, Internet infrastructure and dot-com mania in the late 90s for Silicon Valley magazines like UPSIDE and Red Herring before joining Light Reading (for the first time) in late 2000.

After moving to the Republic of Texas, Harvey spent eight years as a contributing tech writer for D CEO magazine, producing columns about tech advances in everything from supercomputing to cellphone recycling.

Harvey is an avid photographer and camera collector – if you accept that compulsive shopping and "collecting" are the same.

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