Analysts Have Mixed Opinions over Acquisition of Chartered by ATIC

From X-bit Labs: Industry analysts believe that acquisition of Chartered Semiconductor Manufacturing by Advanced Technology Investment Company and merging it with Globalfoundries, a joint venture between ATIC and Advanced Micro Devices, will allow Globalfoundries to gain new customers and revenue streams. This may provide additional profit to AMD, some believe. However, Globalfoundries is still much smaller than TSMC, which is a threat.

“We view the (Chartered) transaction as a strategic positive for Globalfoundries, which will acquire customer relationships and manufacturing capabilities in both 8” and 12” fabrication. The ATIC/Chartered Semiconductor transaction is a net positive for AMD as it could likely help moderate loss levels at AMD consolidated, as Global Foundries broadens its customer base over time,” said analyst Tim Like for Barclays Capital, reports Reuters news-agency.

“In order to be competitive, a foundry needs to be able to offer a broad variety of processes, interfaces and libraries. This is something that has not been available at Globalfoundries, given its background as a purely high-end processor manufacturing entity,” said industry consultant Harald Eggers, a former manager at Infineon, reports EETimes web-site.

However, everything may not be that positive. Globalfoundries has two customers: AMD and STMicroelectronics and is losing money. Even though Chartered has many more clients, it has been losing money for the past years. As a result, ATIC and AMD are likely to continue losing money on manufacturing operations. Moreover, in terms of market share, Globalfoundries will still be well behind market leader Taiwan Semiconductor Manufacturing Company.

“I think it is risky. Chartered is just kind of a little militia fighting against a full-fledged army,” said Wedbush Morgan Securities' analyst Patrick Wang.

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