Shares in semiconductor foundry GlobalFoundries (GFS) rose today despite Taiwanese peer United Microelectronics Corp (UMC) pouring cold water over talk of a potential merger.
No Ongoing Talks
According to a Reuters report, UMC declared today that there is currently no ongoing merger activity between it and U.S.-based GFS. This followed talk last month of a potential tie-up between the two groups.
UMC Chief Financial Officer Chitung Liu said on an earnings call that he did not want to comment on what he called market rumors.
“We are consistently looking for strategic options to enhance shareholder value. Anything that can help increase our competitiveness and shareholder value we will certainly look into that,” Liu said. “There is no ongoing so-called merger activity right now.”
GFS stock was up nearly 3% in pre-market trading with investors perhaps taking some comfort in the phrase used by UMC. Instead of a simple flat-out denial of merger talk, UMC may have left some ongoing hope for investors by declaring that there was nothing happening “right now.” Who knows what might happen further down the road?
U.S. Chip Production
Indeed, it might not even be a merger being considered with Liu suggesting that there are “many other collaborations we can still pursue.”
A combined company would establish a larger U.S.-based firm with a global manufacturing footprint spanning Asia, the United States, and Europe.
It would be a serious rival to industry leader TSMC (TSM) and it is understood it would look to prioritize research and development investments in the U.S.
That would please President Trump, who wants to strengthen the domestic semiconductor supply chain amid rising geopolitical tensions in Taiwan and increasing competition from China.
It could also be a boost to U.S. tech stocks that could benefit from a larger domestic semiconductor foundry to make them less reliant on the Chinese market.
Is GFS a Good Stock to Buy Now?
On TipRanks, GFS has a Moderate Buy consensus based on 5 Buy and 6 Hold ratings. Its highest price target is $66. GFS stock’s consensus price target is $46.55 implying an 46.80% upside.
