GlobalFoundries Mulls UMC Takeover in Effort Dubbed 'Project Ultron'

Arthur T Knackerbracket has processed the following story:

GlobalFoundries is mulling a possible merger with Taiwanese semiconductor producer United Microelectronics Corp. to strengthen their shared role in making chips using mature and specialty process technologies, according to an assessment document reviewed by Tom's Hardware.

The document outlines plans for 'Project Ultron,' which is meant to create a powerhouse controlling a significant share of the global production of chips. However, the plan will likely face major financial, political, and regulatory challenges. Nikkei has also reported on the matter, citing that it has reviewed an assessment plan. UMC has denied involvement, saying it is not currently conducting a merger.

[...] Tim Breen, named GlobalFoundries's next chief executive in February, will take over in April and is considering acquiring UMC, one of GF's main rivals. Combining two major foundries would create a stronger competitor in the mature-node segment (e.g., 28nm and above), essential for automotive, industrial, and legacy applications.

The combined company is expected to control around 28% of the mainstream node foundry revenue, and a greater scale would enable better pricing power, operational efficiency, and stronger negotiating leverage with customers. The GF-UMC, if combined, will still be smaller than TSMC, which controls 44% of the mainstream node share.

There is a rationale for GlobalFoundries to buy its rival and for UMC to become a part of GF. The mature-node segment is increasingly threatened by low-cost Chinese fabs, and a combined GF-UMC entity could consolidate global capacity and better compete on cost, scale, and reliability. Also, UMC and GF have different but complementary customer sets, so a merger could enable cross-selling, better utilization of fabs, and more diversified revenue streams, reducing business risks.

Also, UMC is heavily concentrated in Taiwan, while GF operates fabs in the U.S., Germany, and Singapore, so a merger would spread geographic risk, reduce reliance on Taiwan, and appeal to customers and governments looking for supply chain resilience. Taiwan would still lead with 40% of capacity (UMC), followed by Singapore with 25% (shared by both), and smaller shares in China (11%), Germany (9%), the USA (9%), and Japan (6%). Growth is expected in the USA, Germany, and Singapore, while capacity in China and Taiwan is projected to decline.

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