U.S.-based pure play foundry GlobalFoundries and Taiwan’s United Microelectronics Corp. (UMC) foundry are reportedly in talks to merge amid concerns regarding geopolitical risks to Taiwan and China’s growth in mature semiconductor manufacturing.
According to a report from Nikkei Asia, due to China’s rising growth in mature process technologies, the aim would be to have the company develop a strong footprint in the U.S., Asia and Europe. The company would give these regions access to mature chips without having to rely on China, given the rising tensions between that country and Taiwan and the U.S.
Chi Tung Liu, UMC’s CFO, told Nikkei Asia that it is not working on any merger deals.
The combined companies would invest in R&D in the U.S. and could potentially be an alternative to TSMC in the future, the report said.
Why it matters
Beyond the fact that the combined companies would be better positioned to compete on a global scale, it could potentially become a roadblock to China’s rising mature semiconductor process push.
According to market research firm TrendForce, Chinese foundries' mature process capacity is likely to surpass 25% by the end of 2025 with 28 nm/22 nm processes seeing the largest additions. Specialty process nodes in high-voltage platforms will also grow this year after entering mass production in 2024.
Faced with the inability to get the capital equipment needed to produce advanced nodes due to export restrictions, Chinese foundries started turning to mature process technologies including leading foundry Semiconductor Manufacturing International Corp. (SMIC) as well as HuaHong Group and Nexchip.
While not as flashy or headline-making as advanced process nodes, mature lines are still needed for semiconductors like driver ICs, image sensors, power discretes and more. This will likely increase the dependency on Chinese foundries even more in these sectors, TrendForce said.
