Intel Said To Be Considering Buying GlobalFoundries In $30B Deal

Semiconductor giant Intel Corp INTC is in talks to buy contract chip maker GlobalFoundries for $30 billion, The Wall Street Journal reported on Thursday, citing sources.

What Happened: The acquisition will be the largest for Intel and could help boost the semiconductor manufacturing volume for the Satya Nadella-led company.

A deal is not guaranteed and GlobalFoundries could proceed with a planned initial public offering, WSJ noted.

Intel CEO Pat Gelsinger in April announced a $20 billion chip building plan in the United States and estimated that the semiconductor shortages will continue to hit some sectors until more capacity comes online to meet chip demand. 

GlobalFoundries is a specialist chip manufacturer that began operations after Advanced Micro Devices Inc AMD spun off its chip-production operations in 2008.

See Also: Intel CEO Expects Global Chip Shortage To Last Another Two Years

Why It Matters: The ongoing global chip shortage has disrupted manufacturing across sectors, forcing global automakers to continue making their most profitable products first, deal with extended delivery times and historically low inventories at dealerships. 

Shortages of semiconductor chips used in auto components, smartphones, and appliances, have increased their pricing power and many large clients such as Tesla Inc TSLA are even willing to pay an advance. 

Items such as computers, smartphones from Apple Inc AAPL and Alphabet Inc GOOG GOOGL, and some appliances have also been hit. 

Taiwan Semiconductor Manufacturing Co Ltd TSM and South Korea's Samsung Electronics Co Ltd are the leaders in the semiconductor manufacturing business.

Nvidia Corp NVDA last year overtook Intel as the most valuable chipmaker and recently disclosed plans to sell central-processing units for data centers, a market that Intel previously dominated. 

See Also: Micron, Nvidia, AMD, TSMC, Or Intel? One Semiconductor Stock Emerged As Clear Winner In 2021 First-Half Gains

Price Action: Intel shares closed 1.26% lower at $55.81 on Thursday and were up 0.43% in after-hours. 

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Photo: Courtesy of Chris Potter via Flickr