U.S. contract chipmaker GlobalFoundries and Taiwan’s United Microelectronics Corp. are exploring a potential merger that would create a stronger competitor in the global semiconductor industry dominated by Taiwan Semiconductor Manufacturing Co., according to documents reviewed by Nikkei Asia.
The proposed combination, which would establish a U.S.-headquartered entity with manufacturing facilities across Asia, Europe and America, aims to secure American access to mature chips amid rising tensions in the Taiwan Strait and growing Chinese production capacity.
The discussions come as China’s SMIC recently surpassed UMC to become the world’s third-largest contract chipmaker by revenue. While mature chips account for more than 70% of global semiconductor demand, Taiwan controls about 44% of that market versus China’s 31% and America’s mere 5%.
Despite their strategic positioning, both companies face financial challenges. UMC reported profits of NT$47.2 billion (US$7.21 billion) on revenue of NT$232.3 billion last year, while GlobalFoundries posted a US$265 million net loss on US$6.75 billion in revenue. Each firm holds approximately 5% of the global foundry market.
UMC’s Chief Financial Officer Chitung Liu told Nikkei Asia that the company isn’t currently working on any merger deals but would review proposals using “the highest corporate governance standard” to protect shareholder interests. GlobalFoundries declined to comment.
Any potential deal would likely face regulatory scrutiny from Taiwan and China, with previous semiconductor consolidation attempts having encountered government opposition. GlobalFoundries’ majority ownership by Abu Dhabi’s sovereign fund Mubadala also raises questions about U.S. government support for the combined entity.
