It’s not clear whether a deal will actually materialize, and a purchase of UMC might prove difficult for GlobalFoundries. The US chipmaker has a market value of roughly US$20 billion, while the Taiwanese firm is worth about US$17 billion. They’re both engaged in a highly cyclical business with large capital spending requirements. GlobalFoundries doesn’t have the cash on hand to finance an outright takeover, so a transaction might require it to borrow heavily or undertake a dilution of its stock.
GlobalFoundries Inc is exploring a potential merger with the Taiwanese chipmaker United Microelectronics Corp as part of a long-shot deal aimed at creating a more resilient manufacturer of older-generation semiconductors, people familiar with the situation said.
Tim Breen, who was named as GlobalFoundries’ incoming chief executive officer in February, has been open to considering deal options including a possible tie-up with UMC as he prepares to take the helm in April, the people said, asking not to be named because the discussions are private.
