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Intel is in talks to buy GlobalFoundries for about $30 billion

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Intel is in talks to buy GlobalFoundries for about 30
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Intel Corp. INTC -1.26% is investigating a deal to acquire GlobalFoundries Inc. to buy, according to people familiar with the matter, in a move that would boost the semiconductor giant’s plans to make more chips for other tech companies and view it as its largest acquisition ever.

A deal could value GlobalFoundries at about $30 billion, the people said. There is no guarantee that one will come together, and GlobalFoundries could go ahead with a planned IPO. GlobalFoundries is owned by Mubadala Investment Co., an investment arm of the government of Abu Dhabi, but based in the US

All talks don’t seem to include GlobalFoundries itself, as a company spokeswoman said it’s not in talks with Intel.

Intel’s new Chief Executive, Pat Gelsinger, said in March that the company would take a big step towards becoming a chip maker for others. a market dominated through Taiwan semiconductor manufacturing Co. TSM -5.51%

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ticker Safety Last Change Change %
INTC INTEL CORP. 55.81 -0.71 -1.26%
TSM TAIWAN SEMICONDUCTOR MANUFACTURING CO., LTD. 117.53 -6.86 -5.51%
QCOM QUALCOMM, INC. 141.46 -2.29 -1.59%
NVDA NVIDIA CORP. 758.65 -35.01 -4.41%

CEO INTEL REPEATS WARNING THAT GLOBAL CHIP DEFICIENCY MAY BE PREVIOUS YEARS

Intel, with a market value of about $225 billion, promised this year over $20 billion in investments to expand chip manufacturing facilities in the US and Mr. Gelsinger has said more commitments at home and abroad are in the works.

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GlobalFoundries is one of the largest specialized chip manufacturing companies. It was created when Intel rival Advanced Micro Devices Inc. decided in 2008 to divest its chip manufacturing business. AMD remains a big customer for GlobalFoundries — agreeing this year to a multi-year deal of about $1.6 billion to supply chip components — and that could complicate an Intel acquisition. GlobalFoundries is relocating its headquarters to Malta, NY from Santa Clara, California.

According to Taiwanese research firm TrendForce, GlobalFoundries has about 7% of the market share in foundries. Some of the largest chip companies, including: Qualcomm Inc. QCOM -1.59% and Nvidia Corp. NVDA -4.41% , relying on third-party manufacturers to make their products, preferring to focus on design and without the hassle of running their own factories. Nvidia passed Intel as America’s largest semiconductor company by value last year.

Like Intel and TSMC, GlobalFoundries is expanding its manufacturing footprint amid a global shortage of semiconductors. GlobalFoundries said last month it has pioneered a new chip manufacturing facility, called a fab, in Singapore, which has invested more than $4 billion in the site.

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Intel is in talks to buy GlobalFoundries for about $30 billion

GlobalFoundries is one of the largest specialized chip manufacturing companies. It was founded when Intel rival Advanced Micro Devices Inc. in 2008 decided to divest its chip manufacturing business. (Photo Illustration/iStock)

The shortage has disrupted production in several sectors, leading to: temporary closures of car factories and reduced supply of items such as computers and some appliances. car manufacturers hit very hard, unable to get enough chips for all their vehicles. The shortages are starting to mount the cost of some electronics, also.

President Biden has pledged to take steps to help reduce the chip shortage, pledge to spend billions of dollars to increase capacity. Governments abroad have signaled similar commitments.

TSMC, the world’s largest contract chipmaker, said this week it expects chip supply issues to hamper automakers to start easing in the coming months after it ramped up its production of car chips. Automakers have indicated they expect shortages to move on to next year.

mr. Gelsinger, who was Intel’s Chief Technology Officer before leaving to run VMware Inc., VMW 0.29% returned to the chip giant as chief executive in February major delays in making chips under his predecessor, Bob Swan. Mr. Gelsinger has vowed to make Intel more reliable in producing new chips.

Intel, a serial deal maker, agreed in October to sell his flash memory manufacturing company to South Korea’s SK Hynix Inc. 000660 -2.02% for about $9 billion.

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The biggest deal to date is the purchase of Altera Corp. at $15.4 billion in 2015. It agreed to buy Israeli-based Mobileye, a maker of driver assistance systems. for about $14 billion in 2017.

Consolidation has swept through the semiconductor sector as industry players seek scale and expand their product portfolios to support the increasing number of everyday items connected to the Internet.

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Last year, Analog Devices Inc. ADI -1.50% agreed to pay more than $20 billion for Maxim integrated products Inc., MXIM -1.29% and Nvidia agreed to pay $40 billion for Arm Holdings, the British chip designer backed by SoftBank Group Corp. 9984 -0.98% AMD later agreed to buy Xilinx Inc. XLNX -2.28% in a deal of about $35 billion.

For more information from The Wall Street Journal, click here.

The post Intel is in talks to buy GlobalFoundries for about $30 billion appeared first on Notesradar.

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