GlobalFoundries Explores Merger Possibility with UMC
GlobalFoundries, a U.S. semiconductor foundry, is reportedly exploring the possibility of merging with United Microelectronics Corporation (UMC), Taiwan’s second-largest semiconductor manufacturer. This move could position UMC as a competitor to TSMC in the mature process segment. As a result, UMC’s stock price surged over 5% at the opening today; however, UMC stated that the company is not currently pursuing a merger.
Background Information
(Context: The U.S. wants TSMC’s supply chain to be “fully packaged”? Arizona Governor to visit Taiwan next week, Taiwan companies reveal: pressure is mounting.)
(Background: Intel’s newly appointed Chinese CEO, Pat Gelsinger, sees a stock price surge of 10%, denies TSMC-NVIDIA acquisition: insists on being a foundry.)
According to a report from Nikkei, GlobalFoundries is exploring a potential merger with UMC, with an assessment plan indicating that a merger would create a larger U.S.-based company with production facilities in Asia, the U.S., and Europe. The aim of the merger is to create an economically scaled company, ensuring that the U.S. can maintain a stable supply of mature process chips amid rising tensions with China and increasing domestic chip production in China.
The merged company would significantly increase research and development investments in the U.S. and could potentially become a competitor to TSMC in the mature process segment, where TSMC currently holds a significant market share.
Insiders revealed that GlobalFoundries has been in discussions with UMC regarding a potential merger, and some government officials in the U.S. and Taiwan are aware of this matter. The two companies had discussed potential collaboration about two years ago, but negotiations did not progress at that time.
Encouraged by this news, UMC’s ADR surged 9.16% to close at $7.15. UMC’s stock opened at NT$47.2 this morning, gaining over 5%. Subsequently, profit-taking pressure emerged, causing a downward adjustment, but the current price remains above NT$45, with an intraday increase of 1.79%.
UMC Denies Merger Reports
In response to the merger-related reports, UMC stated, “We do not respond to market rumors. The company is not currently pursuing a merger.”
Liu Peizhen, Director of the Economic Research Institute’s Economic Data Center in Taiwan, analyzed that if UMC were the acquirer, the U.S. would likely have a significant influence over the merger. After all, the U.S. hopes to have its own representative in the mature process foundry sector, as currently, besides Intel, the U.S. is striving to regain its position among the leading advanced process manufacturers. Furthermore, the U.S. also aims to play a role in the mature process segment.
Thus, Liu inferred that if this merger is true, the likelihood of UMC leading the merged entity is low. If UMC were to acquire GlobalFoundries, market concerns might arise. However, if UMC is indeed acquired by GlobalFoundries, the impact on Taiwan’s semiconductor industry as a whole remains to be observed.
