GlobalFoundries wants bigger chunk of China's chip market

Semiconductor manufacturer is looking to expand its presence in the Chinese market and hopes its recent buyout of IBM's chip business will lead the way.

GlobalFoundries is keen to expand its presence in China's lucrative semiconductor market and hoping its recent buyout of IBM's chipmaking business will help lead the way.

The chip foundry in October inked a deal to acquire loss-making IBM Microelectronics for US$1.5 billion over three years and had pledged to grow the business. Under the agreement, GlobalFoundries will own all of Big Blue's manufacturing, foundries, sales and technology operations, as well as patent portfolio, which IBM says is one of the world's largest.

It now hopes the acquisition, targeted to be finalized mid-2015, will help drive its growth in the Chinese market.

"Our design footprint is tiny right now in China, but we expect to leverage IBM's large presence in China to start building new IP [intellectual property] designs," Chuck Fox, GlobalFoundries' senior vice president for worldwide sales, said in a report by South China Morning Post (SCMP).

Fox said the company is currently involved in "active discussions" with several intellectual property (IP) partners in China, but declined to provide specific details. "The challenge in our industry is about design, so we're making greater investments in IP," he said.

He noted that GlobalFoundries will gain some 100 technical staff in Beijing, Shanghai, and Shenzhen from the IBM acquisition, focused on design work for products and technologies used in smartphone and tablet antennas.

"Our focus will be to enable the Chinese fabless companies to pursue innovation with both mainstream and advanced design platforms," he said.

Citing stats from PwC, the SCMP report noted that integrated circuit design was the fastest-growing market in China's semiconductor industry, with estimates that it grew at a compound annual growth rate of 37.6 percent in 2003 to more than US$13 billion in 2013.

The China Centre for Information Industry Development also projected the country's chip design market to hit US$23.8 billion by 2016.

That the market has growth potential isn't lost on other players.

Intel in September invested US$1.5 billion in China's Tingshua Unigroup in a bid to boost the adoption of Intel-based mobile devices in the country.

Samsung Electronics in May also opened its chip plant in Xi'an, which spans 230,000 square meters and cost US$7 billion to build. The facility produces 10-nanometer NAND flash memory chips and is estimated to generate annual sales of 60 billion yuan (US$9.74 billion) at full capacity.

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