Published in PC Hardware

Intel may not do so well out of foundry expansions

by on22 July 2021


Acquisition is the only way and there are not that many people to buy

Intel Chief Executive Kicking Pat Gelsinger's plans to make Intel great again by increasing fab numbers is hitting a snag -- Intel can't wait to build its own and there are not many fabs up for sale.

The problem became obvious when the Wall Street Journal reported that Intel was considering a purchase of chipmaker GlobalFoundries for $30 billion. Intel reports earnings Thursday, and despite a booming PC market, analysts expect a 9.8 percent drop in sales to $17.8 billion as Intel loses share to rivals.

Buying a foundry would give Intel "real customer support people, as opposed to technologists who have mainly been told what to do by management", said Dan Hutcheson, chief executive officer of VLSI Research. "It took Samsung 10 years to build up a foundry business."

But analysts question the price tag for GlobalFoundries, and conflicts could arise because some of the foundry's major customers, such as AMD, compete against Intel. The fact that Intel is prepared to write such a cheque means it is really desperate to have fabs that work.

GlobalFoundries Chief Executive Tom Caulfield told Reuters on Monday he plans to take the chipmaker public in 2022 as previously planned and dismissed talk of an Intel deal. A person close to Mubadala Investment Co., the Abu Dhabi state investor that owns GlobalFoundries, told Reuters earlier this week there are no active discussions with Intel.

Stacy Rasgon, an analyst with research firm Bernstein, pointed out that if Intel wants to buy a large foundry and cannot buy GlobalFoundries, there would be few other options.

Two of the next largest players, China's Semiconductor Manufacturing International Corp and Taiwan's United Microelectronics would almost certainly be off-limits for political reasons.

Intel's only option would be to go after smaller chip firms that still own some of their own factories, like On Semiconductor Corp and Analog Devices. 

 

Last modified on 22 July 2021
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