BofA Cites ‘Very Complicated’ Road Ahead For GlobalFoundries-UMC Merger – Stocks Slip But Retail Remains Bullish

BofA flagged that GlobalFoundries’ primary value add compared to its peers is its lack of exposure to China and Taiwan, which "might be negated" by a merger.

Shares of GlobalFoundries (GFS) and United Microelectronics (UMC) declined in early trading Tuesday, tracking broader market weakness ahead of the Trump administration’s reciprocal tariffs, which are set to take effect on Wednesday. 

The losses followed a note from Bank of America cautioning that any potential merger between the two companies would be “very complicated,” as per TheFly.

The brokerage outlined a mixed view on a possible deal. As Nikkei Asia reported on Monday, the merger aims to mitigate geopolitical risks tied to Taiwan and to counter increasing competition from China in the mature chip segment.

On one hand, BofA noted that consolidation could help mitigate industry oversupply in mature node chips, particularly in the PC, smartphone, and consumer electronics markets, where demand remains weak. 

It also aligned with the merger’s goal of a combined company that could help them both gain scale against growing competition from China.

However, BofA flagged significant hurdles to a cross-border transaction, stating that such a deal would be “very complicated” and that GlobalFoundries’ primary value add compared to peers – its lack of exposure to China and Taiwan – "might be negated" by a merger. 

The brokerage maintained a ‘Neutral’ rating on GlobalFoundries, suggesting the complexities outweighed the immediate benefits.

GlobalFoundries’ stock was down over 1% in morning trade on Tuesday, while UMC’s stock fell as much as 2.3%.

On Stocktwits, retail sentiment around GlobalFoundries’ stock dipped but remained in ‘bullish’ territory amid rising chatter to ‘high’ levels.

Meanwhile, retail sentiment on Stocktwits around UMC’s shares rose within the ‘bullish’ zone, with chatter jumping to ‘extremely high’ from ‘extremely low’ levels a day ago.

GlobalFoundries’ stock is down 15% in 2025 and has declined 22% over the past 12 months. 

In contrast, UMC shares gained 5% this year but remained 13% lower over the past year. 

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