Globalfoundries’ Owner Says Company Is Unable to Acquire UMC

Globalfoundries Inc.’s majority shareholder, Advanced Technology Investment Co., said it doesn’t currently have the budget to acquire Taiwanese chipmaker United Microelectronics Corp., quashing takeover speculation.

“ATIC is not in a position to do this in this stage of our capital deployment,” Ibrahim Ajami, chief executive officer of Advanced Technology, said today in an interview in Shanghai. “There are a lot of risks we would have to consider and a lot of implications of an acquisition of that nature.”

United Microelectronics, known as UMC, has climbed 7.9 percent in Taiwan trading during the past 10 days, following a report that Globalfoundries may buy a stake. Globalfoundries is trying to build itself into a leader in the chip-foundry industry, where manufacturers make electronic components on a contract basis. The company aims to capture 30 percent of the foundry market, Ajami said earlier this year.

Globalfoundries was created last year when Advanced Micro Devices Inc. spun off its chip plants as a separate company -- with backing from Advanced Technology, which serves as the investment arm of the Abu Dhabi government. Advanced Technology then bought Singapore’s Chartered Semiconductor Manufacturing Ltd. and is merging it into Globalfoundries’ operations, trying to build a rival to market leader Taiwan Semiconductor Manufacturing Co.

Gaining 30 percent of the market would put Globalfoundries in the No. 2 spot, behind TSMC. UMC would rank third. Foundry companies manufacture semiconductors to the specifications of customers, such as Qualcomm Inc., Texas Instruments Inc. and Broadcom Corp. The increasing cost of building plants has led chip companies to outsource more of their production to contractors.

UMC rose 5.2 percent to NT$15.10 today in Taipei. The shares have fallen 12 percent this year. Sunnyvale, California-based Globalfoundries is closely held.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE