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Intel is in Talks to Buy GlobalFoundries

hist78

Active member
Intel is trying to buy a chip production and research organization that AMD, IBM, Globalfundries, and Mubadala for many years can't figure out a way to make it be competitive and profitable.

If Intel really wants to jumpstart their foundry business quickly, they should buy UMC.
 
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slin

New member
Yet another baffling move by Pat Gelsinger. GlobalFoundries has the capacity just not on the leading/bleeding edge that Intel desperately needs if it wants to get back in the foundries business. If this deal goes through, it may very well be the last straw that breaks intel's camel back.
 

Daniel Nenni

Admin
Staff member
Not a bad idea if Intel is serious about the foundry business, absolutely. Wait, does this mean Intel is not buying SiFive for $20B? Both for $50B? Exciting times in the semiconductor industry, absolutely.

Maybe Pat will cover this in his next webcast:

 

Andy1299

New member
Not a bad idea if Intel is serious about the foundry business, absolutely. Wait, does this mean Intel is not buying SiFive for $20B? Both for $50B? Exciting times in the semiconductor industry, absolutely.

Maybe Pat will cover this in his next webcast:

Does GF really know how to be a foundry? Outside of Singapore, Malta has two customers: AMD and IBM
 

Andy1299

New member
Intel is trying to buy a chip production and research organization that AMD, IBM, Globalfundries, and Mubadala for many years can't figure out a way to be competitive and profitable.

If Intel really wants to jumpstart their foundry business quickly, they should buy UMC.
True
 

hist78

Active member
Not a bad idea if Intel is serious about the foundry business, absolutely. Wait, does this mean Intel is not buying SiFive for $20B? Both for $50B? Exciting times in the semiconductor industry, absolutely.

Maybe Pat will cover this in his next webcast:

Neither Globalfundries nor UMC are in the game of leading edge. What's Intel looking for from this GF acquisition? Why don't they just buy UMC?

Some thoughts:

1. In terms of revenue, UMC is bigger than GF.

2. GF has been losing money every year while UMC is making profit every year. GF acquisition potentially will drag down Intel's financial performance but buying UMC will be positive to Intel's book.

3. The integration of GF into Intel's organization and roadmap can take several years. Does Intel really have time and energy to do so?

4. If Intel buys UMC, Intel can immediately tap into the large Taiwan semiconductor talents and resources. But buying GF? Do we know if GF has anything that makes GF so wonderful in the past many years?

3. No matter how, in the long run any Intel's competitors will walk away from the foundry Intel acquired. I really don't see there's any magic solution on this. For example, if AMD and Nvidia are currently the clients of GF and UMC, are they going to stay as Intel's customers once Intel becomes the new owner?

4. We know Asia is a critical part of semiconductor industry. We can see TSMC is making strategical investment and partnership in Taiwan, Mainland China, Japan, US, and Europe. On the other hand, I don't see Intel is doing anything significantly in Asia in recent years. Why is Intel avoiding Asia while TSMC is setting up shops in Intel's front yard and backyard? Does it make sense?
 
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hist78

Active member
Interesting, Mubadala wants to sell. But it the current climate which is quicker/ more secure: IPO or Acqusition
IMHO, the Globalfundries' IPO is just a posture to lure some M&A buyers. Without leading edge manufacturing capability, Globalfundries can't create too many amazing outlook to show those potential IPO investors. No amazing outlook means no amazing dream means no amazing IPO.
 

Portland

Active member
If/when China invades Taiwan (I would do it the first chance possible) where are we going to go? Globalfoundries? Samsung?

Globalfoundries isn't a well run corporation now but if it was it would be a huge asset.
 

Andy1299

New member
IMHO, the Globalfundries' IPO is just a posture to lure some M&A buyers. Without leading edge manufacturing capability, Globalfundries can't create too many amazing outlook to show those potential IPO investors. No amazing outlook means no amazing dream means no amazing IPO.
I really disagree with this. When GF was pressing 7nm it was losing slightly less than $1bn per year. Now it is profitable. TSMC and UMC both make money from mature nodes. There is more to semi than leading edge: everything has a chip in it not everything has the latest MPU. They are serious about their IPO and have been planning for years..
 

kh812000

New member
GF buyout is actually a smart move. GF is all in on Si on insulator which is strong for IOT, RF, high power semis, etc. and is unique IP. Makes intel a broader play. After GF dumped trying to compete in leading they finally found a winning formula with multi billion design wins for anyone who hasnt been counting… Those talking about UMC, now that makes zero sense…. A legacy fab with zero IP.
 

Daniel Nenni

Admin
Staff member
  • Interesting to note, quite a few GF people defected to Intel after the great pivot of 2019 so Intel has inside knowledge of how GF works, absolutely.

  • KeyBanc gives two more reasons why a deal would be positive:
  1. It "would provide the Company with significant experience and leadership in operating a third-party service foundry, something the Company lacks today."
  2. It "would provide INTC with a broad and established customer base that could provide revenue synergies for potentially upselling to other services, i.e., x86."
  • UBS analyst Timothy Arcuri, who has a Buy rating on Intel, is also bullish on a deal.
  • "Valuation aside, we think an acquisition of GF would be positive for Intel and make sense on several fronts," he writes. " It would provide the "operational footprint, core customer base, and portfolio design kits needed to catapult INTC's foundry aspirations," Arcuri says.

  • As a big U.S. employer, GF would expand the number of sites Intel could apply for a $3B/project subsidy cap in the CHIPS Act, and "while GF is private, we think it would stand to reason there is is likely quite a bit of gross margin leverage in its model."
 

hkwint

Member
Some questions I have:

What about process knowledge?

Would there be anything in cancelled GloFo 7nm project which Intel can use to improve 10nm?
Would there be any IBM Reaserch which GloFo incorporated when IBM Fabs became part of GloFo, which Intel can use?

Also capacity: Is Intel 10nm capacity constrained, and could GloFo fabs fix this?
 

chipsntexas

New member
Neither Globalfundries nor UMC are in the game of leading edge. What's Intel looking for from this GF acquisition? Why don't they just buy UMC?

Some thoughts:

1. In terms of revenue, UMC is bigger than GF.

2. GF has been losing money every year while UMC is making profit every year. GF acquisition potentially will drag down Intel's financial performance but buying UMC will be positive to Intel's book.

3. The integration of GF into Intel's organization and roadmap can take several years. Does Intel really have time and energy to do so?

4. If Intel buys UMC, Intel can immediately tap into the large Taiwan semiconductor talents and resources. But buying GF? Do we know if GF has anything that makes GF so wonderful in the past many years?

3. No matter how, in the long run any Intel's competitors will walk away from the foundry Intel acquired. I really don't see there's any magic solution on this. For example, if AMD and Nvidia are currently the clients of GF and UMC, are they going to stay as Intel's customers once Intel becomes the new owner?

4. We know Asia is a critical part of semiconductor industry. We can see TSMC is making strategical investment and partnership in Taiwan, Mainland China, Japan, US, and Europe. On the other hand, I don't see Intel is doing anything significantly in Asia in recent years. Why is Intel avoiding Asia while TSMC is setting up shops in Intel's front yard and backyard? Does it make sense?
While your points are certainly valid, I think that the main point you miss is the goal of additional domestic production. GF fabs in the US have almost the same # wafer starts as Intel fabs in AZ & OR, they simply aren't leading edge. But then MOST foundry business is not leading edge, at least as measured by wafer starts. Any such foundry business would have to be run independently - surely Intel learned that lesson the first time around. Regardless it should be interesting to see how it may unfold. GF's "watch this space" for July 19th holds even more curiosity at the moment.
 

Andy1299

New member
GF buyout is actually a smart move. GF is all in on Si on insulator which is strong for IOT, RF, high power semis, etc. and is unique IP. Makes intel a broader play. After GF dumped trying to compete in leading they finally found a winning formula with multi billion design wins for anyone who hasnt been counting… Those talking about UMC, now that makes zero sense…. A legacy fab with zero IP.
It’s a good point on the ip.
 

Daniel Nenni

Admin
Staff member
Some questions I have:
What about process knowledge?
Would there be anything in cancelled GloFo 7nm project which Intel can use to improve 10nm?
Would there be any IBM Reaserch which GloFo incorporated when IBM Fabs became part of GloFo, which Intel can use?
Also capacity: Is Intel 10nm capacity constrained, and could GloFo fabs fix this?

I seriously doubt Intel would look back at failed GF process technologies.

I think the key point here is that acquiring GF will save the Intel failed IDM 2.0 foundry effort. In my opinion Pat Gelsinger took a close look at potential foundry customers and realized that Intel cannot compete in a service oriented business as they are today. Acquiring GF would accelerate the Intel foundry push dramatically. Much easier than spinning out Intel fabs into a foundry group like Samsung did. And did that really work for Samsung? I'm surprised Samsung didn't buy GF after the pivot. It would have been much cheaper!
 
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