US chip giant GlobalFoundries Eyes Merger with UMC as Singapore Gears Up for Semiconductor Expansion

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GlobalFoundries have made significant investments in R&D, including ongoing projects with NTU and National Research Foundation.

GlobalFoundries‘ (GF) decision to expand its production base shows that Singapore will continue to have a robust, competitive, and dynamic semiconductor industry despite fierce global competition for high-end chip investments.

GlobalFoundries, which has a large manufacturing base in Singapore, is considering a possible merger with United Microelectronics Corp. (UMC), the second-largest chipmaker in Taiwan.

This move is part of the long-shot agreement to build a more resilient manufacturer of older-generation semiconductors.

According to sources, Mr Tim Breen, the new CEO of GlobalFoundries, has been open to exploring deal options, including a potential partnership with UMC.

The US chipmaker has a market of around US$20 billion (S$26.9 billion), and the Taiwanese company is worth approximately US$17 billion.

The combination would be challenging to manage due to geopolitics, merging policies, and who would run them.

Deputy Prime Minister Lawrence Wong stated that Singapore’s greatest asset is its human capital, consisting of an educated and talented workforce that provides strong innovation and research capacities for Singapore.

In addition to the labor advantage, he added that Singapore has established a manufacturing specialty chips niche. They are found in every gadget daily and will remain in high demand due to the development of 5G, automobiles, and the Internet of Things.

Technological analysts Charles Shum and Steven Tseng stated that this deal would need consent from Chinese authorities, which is a significant obstacle.

The Taiwanese government would not approve the deal that would put GlobalFoundries in control of the two companies, which would be the most likely structure.

GlobalFoundries did not reply to requests for comment. GlobalFoundries has not answered an inquiry for comment.

Liu Chi-tung, UMC’s chief financial officer (CFO), said the company does not address market rumors and declined to comment.  

Taiwan’s chipmakers supply a significant portion of the world’s electronics manufacturers. As President Donald Trump threatened additional tariffs, it went to the forefront of shifting manufacturing to the United States.

Amid escalating geopolitical tensions, countries have prioritized accessing semiconductors, which power everything from artificial intelligence (AI) to car production.

Trump administration has urged Taiwan Semiconductor Manufacturing Co. to consider investing in a spin-off of struggling US chipmaker Intel’s manufacturing factories.

UMC has not yet responded to recent queries from GlobalFoundries on a potential combination.

Chris Caso, an analyst at Wolfe Research, stated that the combination would help GlobalFoundries expand on a larger scale, and United Microelectronics Corporation could diversify its capacity beyond China and Taiwan.

According to Mr. Wong, GlobalFoundries’ plant expansion would create up to 1000 high-value jobs, the bulk of which will be filled by Singaporeans, who will gain from the sophisticated technologies’ manufacturing and research and development (R&D) know-how. GlobalFoundries was already an active partner in Singapore’s efforts to foster students’ interest and skills in science, technology, engineering, and mathematics to develop a solid talent pipeline.

He stated that up to 32 GF employees have been allowed to conduct industry-relevant PhD research since the Industrial Scholarship Program with Nanyang Technological University (NTU) started approximately six years ago.

GF has made significant investments in R&D, including ongoing projects with NTU and National Research Foundation.

GF has one of Singapore’s biggest corporate R&D teams, with over 700 R&D professionals.

The third largest contract chipmaker has over 4900 people and operates one of the biggest wafer foundries in Singapore.

The collaboration will produce an additional 450,000 wafers of 300mm each annually, raising GF Singapore’s overall capacity to about 1.5 million.

Demand will improve when international semiconductor inventories are likely to be depleted to a level where new orders will grow in gravity.

GF Singapore will provide approximately 45% of the group’s global income, up from about 33% at full capacity.