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Intel in Talks To Buy GlobalFoundries for $30 Billion: Report

Intel 3rd Gen Intel Xeon Scalable Processor
(Image credit: Intel)

According to a report from the Wall Street Journal citing people familiar with the matter, Intel is in talks to buy GlobalFoundries for roughly $30 billion. Intel has not confirmed the report, but if true, the plan would intercept GlobalFoundries' widely-reported plans for an IPO later this year. We reached out to Intel about the report and the company responded that it does not comment on rumors and speculation.

The news comes on the heels of recent reports that Intel is in talks to buy RISC-V chip designer SiFive for $2 billion as it undergoes a major restructuring effort under new CEO Pat Gelsinger

Intel's rumored buy-out plan also comes as it lobbies the US government for subsidies to boost its manufacturing capabilities, particularly to help fund its IDM 2.0 initiative that will find it producing chips for other companies through a newly-formed Intel Foundry Services (IFS). Intel has pledged $20 billion of its own money to kick-start that initiative with two fabs in Arizona.

Acquiring GlobalFoundries would be an immediate shot in the arm for that initiative, particularly because it would bring in experienced leadership teams and an already-healthy third-party foundry business. GlobalFoundries' production capacity of trailing-edge nodes, which are the largest volume movers for most third-party fabs, would also fit well with Intel's plans to begin offering its manufacturing services to other parties.

Even though GlobalFoundries famously abandoned the race for leading-edge node technology, it has plenty of its own existing fabs in the US with impressive production capacity. GlobalFoundries has long serviced contracts with the US government, which requires certain indigenous chip production for some of its military projects. As such, the company's existing work with the US government makes it a shoo-in for government funding.

GlobalFoundries, AMD's former foundry, is headquartered in the US. The company is currently owned by the Mubadala Investment Company, an investment arm of the Abu Dhabi government. GlobalFoundries has been widely reported to be seeking an IPO, but it scuttled its plans last year amidst the turmoil of the pandemic. However, according to the WSJ, GlobalFoundries could move ahead with its planned IPO if talks with Intel fall through.

The proposed deal would dwarf Intel's $16.7 billion Altera acquisition, which was its largest thus far. Intel recently sold off its NAND and SSD business to SK hynix for $9 billion as it looks to focus on its core competency of manufacturing high-margin logic devices. 

However, an Intel-GlobalFoundries deal would certainly face intense regulatory scrutiny, especially amid the tensions associated with the US-China trade war. Intel CEO Pat Gelsinger has also been on a tour throughout the EU to drum up support for government funding to build fabs there, saying that the company's investments in Europe could total $100 billion

Interestingly, Intel CEO Pat Gelsinger will provide an update on the company's process and packaging technology and roadmap on July 26 at 2pm PT, streamed via the Intel Newsroom. If an acquisition of GlobalFoundries is in the cards, we're sure to learn more at this event. 

Paul Alcorn

Paul Alcorn is the Deputy Managing Editor for Tom's Hardware US. He writes news and reviews on CPUs, storage and enterprise hardware.

  • vern72
    Seems a bit strange since they already have some factories of their own. It's really ironic considering where GF came from.
    Reply
  • ezst036
    Admin said:
    Intel's rumored buy-out plan also comes as it lobbies the US government for subsidies

    I really enjoy buying fabs for wealthy people. That made my day.

    Intel made what, 40 billion profit in 2019? That makes it clear that I needed to buy them a fab as they just couldn't afford it. This was a top priority.
    Reply
  • spongiemaster
    ezst036 said:
    I really enjoy buying fabs for wealthy people. That made my day.

    Intel made what, 40 billion profit in 2019? That makes it clear that I needed to buy them a fab as they just couldn't afford it. This was a top priority.
    The likely alternative if they don't get subsidized is to build overseas or not at all. Both of which are worse scenarios.
    Reply
  • Alvar "Miles" Udell
    And earlier this year they spent $20B on 2 fabs in Arizona.

    https://www.forbes.com/sites/tiriasresearch/2021/03/23/intel-invests-20-billion-in-2-new-arizona-fabs/
    Reply
  • Why_Me
    Alvar Miles Udell said:
    And earlier this year they spent $20B on 2 fabs in Arizona.

    https://www.forbes.com/sites/tiriasresearch/2021/03/23/intel-invests-20-billion-in-2-new-arizona-fabs/
    And in Ireland ...

    https://www.rte.ie/news/business/2021/0323/1205737-intel-to-create-1-600-new-jobs-at-leixlip-campus/
    New Mexico expansion ...

    https://www.intel.com/content/www/us/en/newsroom/news/new-mexico-manufacturing.html#gs.6kai6a

    And soon Bavaria ...

    https://www.reuters.com/business/german-state-bavaria-talks-with-intel-chip-megafactory-2021-06-18/
    Reply
  • escksu
    vern72 said:
    Seems a bit strange since they already have some factories of their own. It's really ironic considering where GF came from.

    Intel is currently facing severe capacity issues. Their biggest problem is not losing out to AMD, its not making enough chips because demand is way too high.

    Buying GF is an easer and faster way than building an entirely new plant.
    Reply
  • watzupken
    I feel Intel very highly geared to have all these big acquisition plans. Anyway, while most companies don't want the added responsibility of running a fab along with their chip business, Intel is the only one doubling down on it. At this point, I am not too sure if this is the right way ahead, but given that there were idle capacity reported for some fabs prior to COVID hitting us, I am not sure an aggressive expansion of fab by Intel makes sense. Also, Intel is not exactly the fab that most chip makers will turn to because Intel is also a competitor when it comes to chip design.
    Reply
  • Giroro
    The EU or the US should just buy Global Foundries.

    It's cheaper than buying fabs for publicly-traded companies like Intel and TSMC.
    Reply
  • Howardohyea
    watzupken said:
    I feel Intel very highly geared to have all these big acquisition plans. Anyway, while most companies don't want the added responsibility of running a fab along with their chip business, Intel is the only one doubling down on it. At this point, I am not too sure if this is the right way ahead, but given that there were idle capacity reported for some fabs prior to COVID hitting us, I am not sure an aggressive expansion of fab by Intel makes sense. Also, Intel is not exactly the fab that most chip makers will turn to because Intel is also a competitor when it comes to chip design.
    I'm not sure, but I think a lot of these companies using IFS would be ARM devices and not X86/64? ARM isn't in desktop yet so I guess they won't have much overlap?

    Oh also after all Intel already have the largest fabs in the world by capacity/revenue by far, acquiring GloFo would make Intel have the fab power to drown AMD with cheap CPUs
    Reply
  • spongiemaster
    Giroro said:
    The EU or the US should just buy Global Foundries.

    It's cheaper than buying fabs for publicly-traded companies like Intel and TSMC.
    The purpose of subsidizing new FAB construction is to keep the country at the technology forefront. Buying existing non-leading edge fabs doesn't accomplish that. Nor does it create new jobs, which in turn generates more tax revenue.
    Reply