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An aerial view of US semiconductor firm GlobalFoundries’ abandoned chip fabrication plant in Chengdu, capital of southwest Sichuan province. Photo: Weibo
TechTech War

Intel shelves plan to take over GlobalFoundries’ abandoned chip plant in Chengdu, sources say

  • Intel’s proposed takeover of the abandoned joint venture factory in Chengdu was intended to fast-track the company’s expansion plans in China
  • The deal could have revived one of the country’s major foreign-invested semiconductor projects
Semiconductors
Che Pan
Che Panin Beijing
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US semiconductor giant Intel Corp was poised to expand its operations in China by taking over the abandoned joint venture factory of GlobalFoundries in the southwestern city of Chengdu, but that plan has been shelved, according to two people familiar with the matter.

The deal, part of what the people described as “secret projects” inside Intel, could have revived one of China’s major foreign-invested semiconductor projects, for which the Chengdu government rolled out the red carpet in 2017.

The proposed takeover was put on hold around August 12, after a number of job positions at the site were opened for applications, according to a former Intel employee, who requested anonymity because the discussion was private.

Intel’s plan to ramp up its semiconductor production in Chengdu to help address the current global chip shortage had been rejected by the White House over security concerns, according to a Bloomberg report on Monday. The firm’s expanded production site was not identified in the report.
The US company declined to comment. It currently operates a chip fabrication plant in Dalian, a port city in northeast Liaoning province, that was opened in October 2010 and currently produces 60,000 wafers a month. It also has two assembly and test facilities in Chengdu, capital of Sichuan province.

GlobalFoundries, which halted operations in Chengdu in May 2020, did not immediately reply to an emailed request for comment.

Intel Corp’s Fab 68, its chip fabrication plant in the northeast city of Dalian, is the company’s first wafer production facility in Asia. Photo: Handout

Intel’s proposed takeover of the abandoned GlobalFoundries plant in Chengdu was intended to accelerate its capacity expansion plans amid the global shortage, according to a Chinese semiconductor industry source.

GlobalFoundries had earlier planned to produce 300-millimetre wafers in the 65,000-square-metre facility, in which the firm had a 51 per cent stake and the rest controlled by an investment vehicle of the Chengdu government. Total investment in this facility was expected to reach US$10 billion.

In the prospectus for its planned public listing in New York, GlobalFoundries said the Chengdu government is seeking compensation for losses from their failed joint venture. The US firm said it has set aside a provision of US$34 million in June to settle the potential compensation, and is in talks with the Chengdu government to settle the claim, according to the prospectus that was published in October.

Intel’s proposed takeover of the abandoned GlobalFoundries factory, however, was never made official across the company, according to a current Intel employee who declined to be identified. This employee indicated that there are many Intel vacancies in Chengdu posted on job recruitment sites since early this year.

Intel sets up global video unit in China as it eyes IoT drive

The way Intel has apparently stumbled in its bid to fast-track its China expansion plans reflects the difficulties for multinational companies in trying to navigate the uneasy relationship between Washington and Beijing.

In October, the investment promotion bureau of China’s Ministry of Commerce held talks with Intel, STMicroelectronics, Infineon Technologies and other firms to discuss setting up a working group to facilitate “cross-border semiconductor investment” in Beijing’s latest move to ensure chip supply chain security.
But China’s efforts are increasingly at odds with Washington’s tech export policy orientation. Republican hardliners in Congress are pressuring the US Commerce Department to fortify export controls to keep critical American technology from being exported to China.
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