Does a Chinese bid for GloFo make sense?
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 US memory chip company Micron Technology Inc. and how a consortium led by China’s Hua Capital Management Co. Ltd. has had a $1.9 billion bid for image sensor vendor OmniVision Technologies Inc. accepted.
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 more such 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.
And 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.
The emirate made its move in 2009 by investing in Advanced Micro Devices Inc. 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.
But in those early days a justification for the move was made in terms of finding activities for Abu Dhabi to develop for a post-oil global economy and attracting 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.
One of the signs that Mubadala’s funds are not unlimited was the decision that Globalfoundries should abandon its own 14nm FinFET manufacturing process in favor of one licensed from Samsung. The two companies chose to collaborate and save capital expense the better to compete with foundry leader TSMC. Globalfoundries also has its own 22nm FDSOI manufacturing process, but again this exists in the context of collaboration between Globalfoundries, Samsung and STMicroelectronics.
But that also points out one of the stumbling blocks for such a plan. A Chinese-owned Globalfoundries might find South Korean Samsung politically motivated to withhold further collaboration.
As to whether it makes sense it all depends on how much Abu Dhabi and Mubadala would demand in payment and what assurances of collaboration with Samsung could be obtained.
Related links and articles:
News articles:
China bids $23 billion for Micron
OmniVision shareholders approve Seagull takeover
IBM-GlobalFoundries Deal Finalized
Can GloFo and Europe’s Chip Firms Unite?
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