Semiconductor companies GlobalFoundries and United Microelectronics Corp (UMC) are reportedly considering a merger, in a bid to challenge Taiwan Semiconductor Manufacturing Co. (TSMC).
A merged company would be based in the United States, with production in Asia, the U.S. and Europe. It would also later invest in research and development in the U.S., according to Nikkei Asia.
TSMC, the world’s largest semiconductor foundry, said in March that it would invest US$100 billion into chip manufacturing in the U.S. “We intend to expand our U.S. semiconductor manufacturing investment by an additional $100 billion, bringing our total planned investment to $165 billion,” TSMC CEO C.C. Wei said at the time.
Incoming GlobalFoundries CEO Tim Breen has been considering options for a merger with UMC, per Bloomberg. GlobalFoundries has reportedly contacted UMC about a potential merger, with U.S. and Taiwan officials aware of the talks.
Any merger would likely require approval from both Chinese and Taiwanese regulators, with Taiwan unlikely to agree to a deal that gave GlobalFoundries control over both businesses.
A merged U.S.-based company could also avoid possible tariffs on chips. U.S. President Donald Trump said last week that he plans to impose tariffs on semiconductors, which could be as high as 25%, with the goal of attracting semiconductor manufacturing to the U.S.
South Korean chipmaker SK Hynix has said that customers have begun to bring forward chip orders to avert the potential tariffs. Japan and South Korea have also agreed to import raw materials for semiconductors from China.
GlobalFoundries reported a net loss of US$729 million last quarter. UMC’s net income was $259 million, though the company still saw a year-over-year decline of 35.6%.
Azzet has contacted GlobalFoundries for comment.
GlobalFoundries’ (NASDAQ: GFS) share price closed at US$36.91, up slightly from its previous close at $36.89. Its market capitalisation is $20.41 billion.
Meanwhile, UMC’s (NYSE: UMC) share price surged by 9% following reports of a possible merger, closing at US$7.15. its market capitalisation is $17.96 billion.
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