Intel in talks to buy GlobalFoundries for about $30 billion

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Intel Corp. is exploring. INTC -1.26% deal to buy GlobalFoundries Inc. , according to people familiar with the matter, in a move that would cement the semiconductor giant’s plans to produce more chips for other technology companies and rank it as its largest-ever acquisition. .

People said the deal could value GlobalFoundries at nearly $30 billion. It’s not guaranteed that one will come together, and GlobalFoundries can go ahead with a planned initial public offering. GlobalFoundries is owned by Mubadala Investment Company, an investment arm of the Abu Dhabi government, but is based in the United States

No talks appear to include GlobalFoundries itself, as a company spokeswoman said it is not in discussions with Intel.

New Intel CEO Pat Gelsinger said in March that the company would launch a big push to become a chip maker for others, a market dominated by Taiwanese semiconductor manufacturer TSM -5.51%.

Intel, which has a market value of about $225 billion, this year pledged more than $20 billion in investments to expand its chip-making facilities in the United States, and Mr. Gelsinger said more commitments domestically and overseas are underway.

GlobalFoundries is one of the largest manufacturers of chips. It was created when Advanced Micro Devices Inc. Competition for Intel in 2008 separate chip production operations. AMD remains a big customer of GlobalFoundries — it agreed a multi-year chip components supply deal of about $1.6 billion this year — and that could complicate the acquisition by Intel. GlobalFoundries is moving its corporate headquarters to Malta, New York from Santa Clara, California.

GlobalFoundries has about 7% of the foundry market share in terms of revenue, according to Taiwan-based research firm TrendForce. Some of the largest chip companies, including Qualcomm Inc. QCOM -1.59% and Nvidia Corp. NVDA -4.41%, over third-party producers to make their own, preferring to focus on design and without the bother of running their own factories. Last year, Nvidia overtook Intel as the largest semiconductor company in America by value.

Like Intel and TSMC, GlobalFoundries is expanding its manufacturing footprint amid a global shortage of semiconductors. GlobalFoundries said last month it had begun work on a new chip production facility, called fab, in Singapore, investing more than $4 billion in the site.

The shortage has disrupted manufacturing in various sectors, leading to temporary shutdowns of auto factories and a reduced supply of items such as computers and some appliances. Automakers were hit hard, as they couldn’t get enough chips for all of their cars. The shortage is starting to drive up the costs of some electronics, too.

President Biden has promised to take steps to help alleviate the chip shortage, and has pledged to spend billions of dollars to boost capacity. Governments abroad have indicated similar commitments.

TSMC, the world’s largest chip maker, said this week that it expects the chip supply problems holding automakers to begin to ease in the coming months after it ramped up its auto chip production. Automakers have indicated that they expect the shortages to continue next year.

Mr. Gelsinger, who was Intel’s chief technology officer before leaving to manage VMware Inc. VMW returned 0.29% to the chip giant as its CEO in February, after significant delays in chipmaking advances under its predecessor, Bob Swan. Mr. Gelsinger has pledged to make Intel more reliable in producing new chips.

Blockchain deal maker Intel agreed in October to sell its flash memory maker business to South Korea’s SK Hynix for about $9 billion.

Its biggest deal to date is its purchase of Altera Corp. worth $15.4 billion in 2015. It agreed to buy Israel-based Mobileye, a maker of driver assistance systems, for about $14 billion in 2017.

Consolidation has swept the semiconductor sector as industry players seek to expand and expand their product portfolios to support the growing number of everyday items connected to the internet.

Last year, Analog Devices Inc. to pay more than $20 billion to Maxim Integrated Products Inc. and Nvidia agreed to pay $40 billion to buy Arm Holdings, a British chip designer backed by SoftBank Group Corp. AMD subsequently agreed to buy Xilinx Inc. In a deal valued at about $35 billion.

Robert Wall contributed to this article.

Write to Cara Lombardo at [email protected] and Dana Similuca at [email protected]

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