Chinese investors eye GlobalFoundries to get new process technologies

China's National Integrated Circuit Industry Investment Fund has reportedly approached GlobalFoundries about possible acquisition or cooperation. Chinese investors intend to take over GlobalFoundries in order to significantly improve Semiconductor Manufacturing International Corporation (SMIC) and make it one of the world’s largest contract makers of semiconductors.

China-based Hua Capital Management, which manages the national semiconductor industry investment fund, has approached Advanced Technology Investment (ATIC), the owner of GlobalFoundries, for possible acquisition or cooperation, reports DigiTimes web-site. Even though GlobalFoundries is growing and is currently one of the world’s leading foundries, analysts say that the company hardly makes a lot of money for Mubadala, the owner of ATIC. As a result, the company is reportedly considering its strategic options.

China's National Integrated Circuit Industry Investment Fund was founded in order to boost semiconductor industry in the country. The potential acquisition of GlobalFoundries will allow the fund to significantly improve SMIC, which is already one of the largest contract makers of semiconductors. In particular, this will allow SMIC to start making chips using 14nm FinFET process technology earlier than expected. At present SMIC intends to initiate high-volume production using 14nm tech in 2020, but a takeover of GlobalFoundries will grant SMIC access to advanced fabrication processes considerably earlier.

GlobalFoundries is using Samsung’s 14nm FinFET manufacturing technologies right now, but is developing its own 10nm fabrication process. The potential merger with SMIC will make the latter one of the most competitive foundries in the world. The new company will be significantly bigger than Samsung Foundry and United Microelectronics Corp. in terms of revenue and production capacities. However, the new company will still be significantly smaller than Taiwan Semiconductor Manufacturing Co.

Since GlobalFoundries owns IBM’s semiconductor business, it is highly likely that before selling the company ATIC will have to negotiate with the U.S. government, which could block the deal in order not to export leading-edge process technologies to China.

GlobalFoundries, SMIC, ATIC, Mubadala, China's National Integrated Circuit Industry Investment Fund and Hua Capital Management did not comment on the news-story.

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KitGuru Says: When Mubadala established ATIC in 2008, the investment fund planned to develop semiconductor manufacturing industry in Abu Dhabi. GlobalFoundries was supposed to be a primary vehicle for developing the ecosystem in the emirate. However, it does not look like GlobalFoundries has helped ATIC to build the chip industry in Abu Dhabi. Keeping in mind that GlobalFoundries is barely profitable, it is possible that ATIC may be considering to sell it. However, this could be a hard thing to do since GlobalFoundries may be strategically important for the U.S. and Germany, where it owns leading-edge manufacturing facilities.

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