The numbers are never small when it comes to M&A in Chip World. In 2020, four contracts involving chip companies totaled $106 billion, with NVIDIA-led ARM investing $40 billion. One of the highlights of last year’s chipped M&A frenzy was that Intel was left on the sidelines. Concerns over chip production will change if the deal $30 billion deal to buy global foundries comes into force. The rumor was first reported by the Wall Street Journal yesterday. Patrick Moorehead, founder, and chief analyst at Moore Insights and Strategies, which closely monitors the chip industry, says holding on to global foundations will definitely make sense for Intel.
The company is currently adopting a new strategy to manufacture and sell chips to others under Intel and CEO Pat Gelsinger, who came on board in January to turn over the flagged chip maker. “Globalfoundries have technologies and processes that are specifically for 5G RF, IoT, and automobiles. Intel with Globalfoundry is what I call a ‘full-stack provider’ that can deliver everything to the customer. It’s an IDM 2.0 (Intel chip product) the strategy) is in full alignment with it and if the global foundries can’t, you’ll find Intel there a few years ago, “Moorehead told TechCrunch.
It will also give Intel a chip manufacturing facility at a time when there is a global chip shortage and huge demand for the product from every angle, which has caused some epidemics and its impact on the global supply chain. Intel has already indicated that it plans to spend more than $20 billion to build two fabs (chip manufacturing centers) in Arizona.
Adding global foundations to these plans, if implemented, would provide them with a wider production capacity in the coming years, but getting there would involve a significant investment of several billion dollars. GlobalFoundry is a global chip manufacturing concern built in the United States; the company was separated from Intel’s rival chipmaker AMD in 2012 and is now owned by the Abu Dhabi government’s investment force Mubadala Investment Company.