Intel Allegedly Mulls $30B GlobalFoundries Acquisition To Turbocharge Chip Manufacturing
Intel has vowed to aggressively expand its chip manufacturing business, and a huge part of that effort could apparently include buying GlobalFoundries, which was spun off of AMD over a decade ago. It's said Intel is willing to pay around $30 billion if a deal can be hammered out. That would rank as Intel's biggest acquisition ever.
Whether or not a deal can be consummated remains to be seen, but this a bold and ambitious move that could shake up the semiconductor industry. It might also be the kind of thing Intel had in mind when it brought back Pat Gelsinger to serve as the company's chief executive officer, following the departure of Bob Swan.
That's not to say Intel had planned a buyout of this nature all along. However, after suffering multiple chip delays while AMD executed its Zen strategy to near-perfection, Intel knew a change was in order. And as soon as Gelsinger came on board, he began saying all the right things, and outlined a plan to return Intel to its former glory.
Right out of the gate, Gelsinger talked about investing tens of billions of dollars to boost Intel's manufacturing capabilities, capacity, and innovation. Gelsinger also said Intel would not be shy about leaning on third-party fabs as needed, but it would obviously prefer to make as much of its own silicon in-house as possible.
This is where a GlobalFoundries deal could make a lot of sense, at least for Intel. People who are supposedly familiar with the matter told The Wall Street Journal that Intel is exploring a massive buyout offer, but that talks do not currently involve any executives at GlobalFoundries. So these are internal discussions, basically.
Intel has made some pretty big purchase in the past. It acquired chip designer Altera in 2015 for $16.75 billion, and paid $15.3 billion for Mobileye, to name just two of its bigger acquisitions.
If Intel buys GlobalFoundries for $30 billion or anywhere near that amount, it would dwarf its previous acquisitions. Would it be worth it? That is something Intel has to think about. At present, GlobalFoundries represents around 7 percent of the foundry market, based on revenue.
GlobalFoundries also has an ongoing relationship with AMD, which recently inked a multi-year chip supply deal worth around $1.6 billion. That could make things a little awkward if Intel is able to work out a buyout agreement.
Intel's internal discussions come as the industry as a whole faces a shortage of silicon. Intel and TSMC have both committed to spending massive sums upgrading and expanding their fab sites, but both have warned that the chip shortage could last another year or more.