Log in
E-mail
Password
Show password
Remember
Forgot password ?
Become a member for free
Sign up
Sign up
New member
Sign up for FREE
New customer
Discover our services
Settings
Settings
Dynamic quotes 
OFFON
News: Latest News
Latest NewsCompaniesMarketsEconomy & ForexCommoditiesInterest RatesBusiness LeadersFinance Pro.CalendarSectors 
All NewsEconomyCurrencies & ForexEconomic EventsCryptocurrenciesCybersecurityPress Releases

Intel's foundry ambitions could be slowed by lack of deal targets

07/21/2021 | 05:16pm EDT

July 21 (Reuters) - For Intel Corp Chief Executive Pat Gelsinger, an obvious strategy in his high-stakes bid to make the company a player in producing chips for others would be a transformational acquisition, analysts say.

But there is just one problem - a dearth of acquisition targets for Intel to buy.

The conundrum came into focus last week 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% drop in sales to $17.8 billion as Intel loses share to rivals like Advanced Micro Devices Inc.

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.

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 Corp, would almost certainly be off-limits for political reasons.

Hutcheson said that if Intel cannot buy a foundry business, its only other option may be to go after smaller chip firms that still own some of their own factories, like On Semiconductor Corp and Analog Devices Inc.

AMORTIZATION TRANSFORMATION

For decades, Intel aimed to make the world's fastest computing chips. That focus on the cutting-edge meant that Intel discarded older chipmaking technology - called "process nodes" in the industry - relatively quickly.

But most of Intel's would-be rivals in the foundry industry take a different approach, keeping older technology around to make cheaper chips for customers who do not require the latest technology.

"TSMC does an excellent job of keeping process nodes for many years," said Kevin Krewell, principal analyst at TIRIAS Research. "When they build a new fab, they keep the old ones humming along."

Intel's ability to buy, build or re-purpose foundries for outside customers even as it tries to regain its competitiveness in advanced chips may prove a tall order at a moment when the industry is stretched globally for talent, equipment and materials.

"There may be internal limits to how many facilities Intel can bring up," said Dean McCarron, president of Mercury Research, which tracks market among chipmakers. "Clearly they want more capacity - as does the rest of the planet." (Reporting by Stephen Nellis and Saeed Azhar; Editing by Jonathan Weber and Diane Craft)


ę Reuters 2021
Stocks mentioned in the article
ChangeLast1st jan.
ADVANCED MICRO DEVICES, INC. -0.33% 105.8 Delayed Quote.15.36%
ANALOG DEVICES, INC. 0.73% 178.53 Delayed Quote.20.85%
INTEL CORPORATION 0.35% 54.22 Delayed Quote.8.83%
ON SEMICONDUCTOR CORPORATION -0.14% 49.29 Delayed Quote.50.81%
SAMSUNG ELECTRONICS CO., LTD. -0.13% 77300 End-of-day quote.-4.57%
SEMICONDUCTOR MANUFACTURING INTERNATIONAL CORPORATION 0.46% 21.95 End-of-day quote.-0.68%
TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LIMITED 1.70% 598 End-of-day quote.12.83%
UNITED MICROELECTRONICS CORPORATION 2.76% 67 End-of-day quote.42.10%
Latest news "Economy & Forex"
04:32pNEW ZEALAND INLAND REVENUE : Income tax return credit transfer requests not being completed
PU
04:25pBP says nearly a third of its UK fuel stations running on empty
RE
03:51pCanada foreign minister says eyes wide open when it comes to normalizing China ties
RE
03:43pBritish PM to consider using army to supply fuel stations - Guardian
RE
03:22pU.s. cdc says delivered 471,814,235 doses of covid-19 vaccine as of sept 26
RE
03:21pU.s. cdc says 2.66 mln people received an additional covid-19 vaccine dose since august 13, 2021
RE
03:21pU.s. cdc says administered 390,114,328 doses of covid-19 vaccine as of sept 26 vs 389,372,689 doses administered as of sept 25
RE
03:20pU.s. cdc says 213,456,787 individuals have received at least one dose of covid-19 vaccine as of sept 26 vs 213,177,462 individuals as of sept 25
RE
03:19pU.s. cdc says 183,670,870 individuals have been fully vaccinated against covid-19 as of sept 26 vs 183,353,326 individuals as of sept 25
RE
02:32pUNECA UNITED NATIONS ECONOMIC COMMISSION FOR AFR : CR4D top organs converge in Dakar to endorse five-year Strategic Plan
PU
Latest news "Economy & Forex"