Intel Shakes Foundry Market, Threatening the Two Giants Samsung Electronics? ...Mixed Outlook

[Asia Economy Reporter Kim Heung-soon] The news that American comprehensive semiconductor company Intel is pushing forward negotiations to acquire GlobalFoundries has enough impact to shake up the foundry (semiconductor contract manufacturing) market. If the acquisition is successful, Intel could instantly leap into the world's top three companies. It could also pose a threat to Samsung Electronics, the world's second-largest foundry. On the other hand, there are mixed forecasts that Intel may find it difficult to close the gap as the leading companies in this field, where advanced process competition is in full swing, have outstanding competitiveness.

Speed race to join the foundry top three?

According to the industry on the 17th, regarding recent foreign media reports that Intel is pushing to acquire GlobalFoundries by investing $30 billion (about 34.26 trillion KRW) to expand semiconductor production, the domestic semiconductor industry views this as a strategic choice for rapid market settlement and strengthening competitiveness.

An Gi-hyun, Executive Director of the Korea Semiconductor Industry Association, said, "Intel has already declared its entry into the foundry business, but since it cannot do it internally for now, it can be seen as trying to use GlobalFoundries," adding, "From GlobalFoundries' perspective, it can gain investment capacity through Intel's funds, so their interests can align."

Earlier, Pat Gelsinger, Intel's CEO, announced in March that he would invest $20 billion (about 23 trillion KRW) to build two new fabs (factories) in Arizona, USA. Even if the plan is executed, the actual operation of the factories was expected to take place only after 2024. If Intel acquires GlobalFoundries, the timeline could be accelerated. They can speed up attracting global clients based on the established infrastructure.

If Intel actually finalizes the acquisition of GlobalFoundries, the current duopoly structure of the foundry market could be reshaped. According to market research firm TrendForce, as of the first quarter of this year, GlobalFoundries ranked 4th in the global foundry market with a 5% share, alongside SMIC, following TSMC (55%), Samsung Electronics (17%), and UMC (7%). Although there are quarterly fluctuations, they generally form the 3rd to 4th tier.

Samsung Building, Seocho-gu, Seoul [Image source=Yonhap News]

Samsung Electronics pressured from above and below
Some predict "No threat due to lack of fine process technology"

As a tectonic shift in the foundry industry is anticipated, the concerns of Samsung Electronics, ranked second, have grown. First, the largest competitor, Taiwan's TSMC, is expanding its footprint by investing not only in the US but also in China and Japan. The market share gap is not narrowing. Moreover, if Intel, backed by strong support from the US government, pours in manpower and resources and pushes the acquisition to enter the upper ranks of the foundry market share, Samsung Electronics will inevitably feel pressure from both above and below.

Samsung Electronics has decided to invest $17 billion (about 19 trillion KRW) to build a factory in the US, but since it is still conducting behind-the-scenes negotiations with several candidate sites over incentives, it is expected to take some time to select the location. The absence of a top executive to lead major decision-making while reading the flow of the business sector and competitors' moves is also acting as a negative factor for large-scale investment decisions.

However, some predict that in the semiconductor industry, where technology is crucial, only TSMC and Samsung Electronics can handle processes below 7nm (nanometers; 1nm = one billionth of a meter), so even if Intel acquires GlobalFoundries, it will not immediately join the ranks of competitors competing with fine processes. GlobalFoundries focuses on 12nm and 14nm processes, and Intel's technology is also evaluated as inferior to competitor AMD.

An industry insider said, "Simply increasing market share does not mean dominating the market; technology must back it up," adding, "Even if Intel acquires the 3rd or 4th ranked foundry company, it will not cause a market upheaval immediately, and the situation should be observed from a long-term perspective."

This content was produced with the assistance of AI translation services.