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.

If realised, the combined entity would establish a larger, US-based company with production capabilities spanning Asia, the US and Europe.