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In an attempt to capitalize on the worldwide shortage of computer chips, Intel is mulling the purchase of competitor GlobalFoundries, a deal that would rank as Intel’s biggest buy yet and value GlobalFoundries at as much as $30 billion.
GlobalFoundries is based in the U.S. but owned by the government of Abu Dhabi.
Intel, with a market value of about $225 billion, has pledged to invest at least $20 billion this year to expand chip-making capacities. It is not clear if Intel would view the purchase as “expanding” that capacity.
Chip makers are not only racing to make up for a global shortage of their product, but also seeking to grow in order to hold market share in a world where more and more devices need more and more chips.
Intel paid $15.4 billion in 2015 to absorb rival Altera Corp. in 2014. Intel then paid $14 billion for Mobileye in 2017.
TREND FORECAST: In 2020, Analog Devices put up $20 Billion to buy Maxim Integrated Products; Nvidia bought Arm Holdings for more than $40 billion. (See “Competitors Mull Purchase of Chip-Maker Kioxia,” Trends Journal, 13 April 2021.)
The nature of the chip-making business demands not only technical expertise but also elaborate manufacturing plants, making it hard for smaller firms to compete.
Chip companies will continue to buy upstarts and vulnerable rivals until the world will depend on a handful of companies for the brainpower that runs our devices, our economy, and, increasingly, our lives.