The new entity would later invest in research and development within the U.S, and potentially compete with Taiwan Semiconductor Manufacturing Co. (TSMC).

Taiwan's major chipmaker United Microelectronics and U.S.-based GlobalFoundries are exploring the possibility of a merger, the Nikkei reported on Monday, citing an assessment plan seen by the newspaper.

GlobalFoundries Inc. may merge with United Microelectronics Corp., creating a viable alternative to Taiwan Semiconductor; deal faces Chinese regulatory hurdles.