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.
