GlobalFoundries and Chartered: Impact on SMIC

The purchase of Chartered by GlobalFoundries should impact the foundry industry for years to come, but is it good or bad for SMIC? Mark Lapedus at EE Times (link here) argues that SMIC is a winner in the wake of this merger because there is one less leading edge foundry firm in the marketplace. I am not convinced the implications are actually so positive for SMIC because the GlobalFoundries-Chartered combination is more formidable than Chartered alone. And let's face it, among the big four foundires, SMIC and Chartered were battling to see who would not end up in fourth place so enhancing Chartereed's competitiveness impacts SMIC more negatively than TSMC or even UMC. With AMD as a steady client, sharing the cost of IBM's licensing fees over a larger scale firm and the deep pockets of Abu Dhabi's Advanced Technology Investment Corporation (ATIC), the merged firm is much more of a threat than Chartered alone despite Singapore's lavish support for the firm over the years. Furthermore, the merger does not seem to consolidate the amount of mainstream CMOS capacity out there since GlobalFoundries did not have much of that prior to the merger.