Intel Weighs Testing Abu Dhabi Resolve With GlobalFoundries Bid

Dinesh Nair (Bloomberg) -- For Intel Corp., a takeover of GlobalFoundries Inc., would jump-start efforts to revitalize faltering manufacturing capabilities -- though it would also invite a clash with an Abu Dhabi owner reluctant to fully part with one of its most promising investments.

Intel has studied the feasibility of buying U.S.-based GlobalFoundries, people familiar with the matter said, asking not to be identified because deliberations are private. But no formal takeover approach has been made to GlobalFoundries owner Mubadala Investment Co., the Abu Dhabi wealth fund, and the two sides are not engaged in active talks, the people said.

Meanwhile, Mubadala continues to work with advisers on plans to list the business at a value of around $30 billion by the end of the year, or early in 2022, the people said.

To convince Mubadala to sell instead, Intel would need to embark on its largest takeover to date and offer a price that captures the future upside for the business, given the current semiconductor shortage, the people said. Mubadala, which has been undergoing a review of its holdings, traditionally prefers to sell minority stakes in its businesses.

Despite this, several analysts reacted positively to the potential transaction, after the Wall Street Journal reported on Thursday that Intel is in talks to buy GlobalFoundries for about $30 billion, citing people familiar with the matter.

A spokesperson for GlobalFoundries said there are no talks with Intel. Representatives for Intel and Mubadala declined to comment.

Intel Chief Executive Officer Pat Gelsinger announced a plan in March to spend $20 billion to build two new semiconductor fabrication plants in Arizona. While those sites aren’t expected to ramp up meaningful production until 2023, a deal for GlobalFoundries would “significantly accelerate” Intel’s plans to become a chip manufacturer for other companies, according to analysts at KeyBanc Capital Markets Inc.

Buying GlobalFoundries would also give Intel “significant” experience and leadership in operating a third-party services, which it lacks, along with an established customer base to which it can potentially sell other services, KeyBanc analysts wrote in a note Friday.

Contract chipmakers like GlobalFoundries fabricate chips for large technology companies such as Apple Inc., Nvidia Corp. and Amazon.com Inc. that design their own silicon. Intel’s deliberations come as numerous industries complain about a lack of semiconductor chip supply and GlobalFoundries’ biggest rivals, Taiwan Semiconductor Manufacturing Co. and Samsung Electronics Co., struggle to keep up with demand.

Gelsinger, who took over as Intel’s chief executive officer in February, has pledged to restore the company to its dominant role in manufacturing and computer processors after losing ground to TSMC and others.

GlobalFoundries was created when Mubadala bought Advanced Micro Devices Inc.’s manufacturing facilities in 2009 and later combined them with Singapore’s Chartered Semiconductor Manufacturing Ltd.