GlobalFoundries merging operations with Chartered-CEO

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By Ian Sherr

SAN FRANCISCO, Jan 12 (Reuters) – GlobalFoundries plans to merge its operations with recently acquired Chartered Semiconductor, creating a single contract chipmaker with more than $2 billion of revenue to take on market leaders TSMC and UMC.

GlobalFoundries, a joint venture of Advanced Micro Devices Inc and Abu Dhabi-backed Advanced Technology Investment Co, is already beginning to work with suppliers and partners as one company, GlobalFoundries Chief Executive Doug Grose told Reuters in an interview.

The company is working to consolidate all its relationships where possible over the next few months, he said.

GlobalFoundries will officially announce its merger plans on Wednesday.

“We’re on a very fast pace to build a pretty good sized company with a full breadth of capability,” Grose added. “We feel really good about bringing the capabilities at Chartered and what we had at GlobalFoundries.”

Grose also said that GlobalFoundries is not eyeing any more mergers or acquisitions, nor an initial public offering for now. Currently, the manufacturer represents roughly $10 billion in investments.

Although chips rolling off former Chartered assembly lines will be marked with the new company’s name within the month, Grose said the two entities are not entirely integrated.

“We’ve got to get the investments correct, get the  capacity in place, satisfy the customers that we do have, get the two companies integrated,” he said. “We’ve got enough operational things to focus on and get those investments in place so that the point that we can show profitability.”

Grose added that where the two companies had previous relationships with the same customer, the merger will simply expand that agreement.

THE FAB AND THE FABLESS

Grose also said that AMD will reduce its stake in the company over time, and continue to focus on chip design.

GlobalFoundries will not only produce the computer’s brains, called microprocessors, for AMD, but it will also manufacture separate graphics chips for AMD’s ATI visual chip division sometime in the future.

“Broadening the customer base, as we now have with a combined entity, helps AMD from the standpoint of pushing capacity and more and more capability,” Grose said. “Customers are willing to pay for entry into leading-edge capability.”

(Editing by Steve Orlofsky)

(Published on Jan 12,  2009, on the wire at Reuters News as exclusive “INTERVIEW” content.)