Rumor: Abu Dhabi Fund Seeks to Sell GlobalFoundries

Subject: General Tech | November 29, 2015 - 04:45 PM |

Several years ago, AMD spun off their chip manufacturing infrastructure into a company, which was named GlobalFoundries, and became a fabless integrated circuit designer. This transaction meant that AMD would be free to shop around when they needed something printed, and they wouldn't need to pay for the upfront expenses. That burden would be placed on the shoulders of stakeholders in GlobalFoundries, and of course the revenue they acquire from their larger pool of customers.

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Speaking of their stakeholders, GlobalFoundries is wholly owned by Advanced Technology Investment Company, which is owned by Mubadala Development Company, which is owned by the government of Abu Dhabi. GlobalFoundries merged with Chartered Semiconductor and was actually paid by IBM to acquire their fab business, at a reward of $1.5 billion USD and binding IBM to a ten-year exclusivity deal for server processors, which helped bolster the company. Oil prices have been fluctuating though, and sources tell Bloomberg that Abu Dhabi is interested in selling some or all of GlobalFoundries at a valuation of around $15-20 billion USD.

The report stops there, without declaring any potential candidates, but speculation doesn't. A lot of it just sounds like listing names who have lots of cash. If the source is even accurate, we don't know who are involved or how serious they are.

Source: Bloomberg

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November 29, 2015 | 06:24 PM - Posted by Anonymous (not verified)

Abu Dhabi is short of petrol-dollars so they are trying to sell their interest in a relatively low margin/high overhead business like the chip fab business is! So some other fat cats will take over, but that does not matter for the contracts that already are made, including the 10 year deal with IBM. Hell a lot of the big CPU/GPU players that use GF could get together with some private equity firm and take GlobalFoundries private, but the everyday business of the company will not be affected.

The Chinese have some money maybe they can invest some money in GlobalFoundries, along with others like Apple, etc., and private equity funds. Apple would do better investing in products and services that it uses, even more so than cars/other! GlobalFoundries is making profits, so it's not a losing proposition it's just not a very high margin business. GlobalFoundries is doing OK, and as long as those fabs are running at as close to full capacity as possible then the business is sound, it's just that the chip fab business is high volume and low margin!

So the bankers are breathing down Abu Dhabi's neck and they need to get some liquid assets to keep from defaulting until the price of oil goes back up, well there goes the middle east construction boom!

November 29, 2015 | 07:33 PM - Posted by Scott Michaud

Yeah, the speculated "potential candidates" that I mentioned are basically the middle paragraph of your comment.

November 29, 2015 | 08:41 PM - Posted by Anonymous (not verified)

Where in the post that you replied to was a condemnation of your reporting! The post was more a reply to the many commentards that are predicting AMD's demise based on GlobalFoundries current majority owner's petrol-dollar problems. And not on this site yet, but on other sites the rabid fanboys are really something to behold! It's business as usual at GlobalFoundries it's the Abu Dhabi folks problem for all that spending that got them as an investment entity in trouble. They are sure not going to gut GlobalFoundries and lose more money and business, they are not complete fools, they are just shopping their share in GlobalFoundries out for some much needed liquidity!

November 29, 2015 | 09:17 PM - Posted by Scott Michaud

Oh, I didn't mean to imply that you were condeming my reporting. I was just using your comment to note that people think it will either be China (or a major Chinese corporation) or Apple who buys GlobalFoundries. I'm skeptical, though.

November 30, 2015 | 10:28 AM - Posted by Anonymous (not verified)

Well some investors like China with loads of excess dosh to invest, Apple for example owns part of Imagination Technologies, and Apple does have in interest is seeing that the supply of available fab capacity remains constant and growing, least the fabrication services that Apple purchases becomes more expensive. So a Healthy GlobalFoundries should be on Apple's list of possible investments. Abu Dhabi's problems are self made, thinking that any commodity like oil was going to stay high forever and the low prices of oil/energy should be good for the chip foundry business, a relatively energy intensive business in the first place. Apple and any fabless chip maker/user should be investing some in the Foundry businesses, if just to act as a source stock/liquidity investment for that industry and its continued health.

December 1, 2015 | 06:16 PM - Posted by Anonymous (not verified)

I think he was referring to the articles you write in each of the comment section. You ramble on with your run on sentences regularly.

November 30, 2015 | 07:00 AM - Posted by Mobile_Dom

would it be possible (however improbable) that Nvidia could buy GloFo?

November 30, 2015 | 12:26 PM - Posted by jimecherry

Nvidia is worth a lot but they don't have tens of billions in cash or stock that's not locked down already. They could join up with some other companies who have similar interest

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