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Is China targeting GlobalFoundries next?

Posted: 04 Sep 2015 ?? ?Print Version ?Bookmark and Share

Keywords:memory chip? national IC investment fund? semiconductor?

China is taking advantage of its huge financial resources to boost its standing in the global semiconductor industry as seen in its recent bids to acquire companies these past few months.

Could a next step be the acquisition of leading foundry GlobalFoundries Inc. (Santa Clara, Calif.)? And could China find a bid pushing at an open door.

China's Tsinghua Unigroup bid $23 billion to buy U.S. memory chip company Micron Technology, and now a consortium led by China's Hua Capital Management Co. Ltd bid $1.9 billion for image sensor vendor OmniVision Technologies.

Both deals are subject to regulatory consideration and while the first is widely thought to be a non-starter, the second seems more likely to go through. And clearly both bids are part of a broader strategy that may produce many similar bids.

And now Hua Capital Management, which manages China's national IC investment fund, has reportedly approached GlobalFoundries over possible cooperation, according to a Digitimes report that cites unnamed sources in Taiwan. And there have been some signs in recent years that Abu Dhabi's interest in GlobalFoundries is waning, which could make the approach welcome.

Such a move would provide China with a key element in the modern high-volume semiconductor ecosystem and could potentially accelerate its progress to 14nm FinFET production and beyond.

Whereas Micron and OmniVision are public companies, GlobalFoundries is private, owned by Mubadala Development Company PJSC, an investment vehicle of the government of Abu Dhabi in the United Arab Emirates.

Abu Dhabi made its move in 2009 by investing in Advanced Micro Devices and then forming GlobalFoundries to take over its chip manufacturing and to allow AMD to go fabless. GlobalFoundries was scaled up with the acquisition of Chartered Semiconductor from its Singaporean investment fund in January 2010.

The emirate's move was justified by its need to find activities that it will develop for a post-oil global economy, as well as to attract semiconductor manufacturing to the region. With the passage of time, the capital cost of staying at the leading edge in manufacturing has increased, along with signs that GlobalFoundries could struggle to maintain its position and that the building of a manufacturing ecosystem in the UAE would cost even more.


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