According to a report by Nikkei, Taiwan's leading chipmaker United Microelectronics and U.S.-based GlobalFoundries are considering a potential merger. The combined company would create a larger U.S.-based corporation with manufacturing operations across Asia, the United States, and Europe. This news comes as the U.S. aims to enhance its semiconductor supply chain amidst growing tensions in the Taiwan Strait and heightened competition from China in the chip market.

The merged entity would focus on investing in research and development in the U.S. and could emerge as a strong competitor to Taiwan Semiconductor Manufacturing Co, the top chipmaker globally. GlobalFoundries and UMC have not yet commented on the potential deal.

As per data from LSEG, GlobalFoundries has a market capitalization of $20.40 billion, while UMC is valued at $16.90 billion. Shares of UMC closed slightly higher at 44.65 Taiwanese dollars on Monday, while GlobalFoundries saw a small increase following the Nikkei report.