If you watch the Tour de France cycling, then everyone goes along on the flat in a pack called the peloton, since the effort involved surrounded by other cyclists can be less than 20% of the effort of riding alone. But in the mountains, the pace is slower, the road is steeper, and there are no aerodynamic effects. The top cyclists still often stay together, but not everyone can keep up and gradually the weaker cyclists get "dropped" and fall off the back. Well, GLOBALFOUNDRIES (GF from now on) just got dropped off the back of the leading edge process peloton. GF put out a press release last week with the innocuous title GF Reshapes Technology Portfolio to Intensify Focus on Growing Demand for Differentiated Offerings . On the same day, AMD put out an equally innocuously titled communication Expanding our High-Performance Leadership with Focused 7nm Development . What this actually means is that GF is abandoning developing its 7nm process, and AMD is switching to TSMC 7nm for its future microprocessors. That leaves TSMC and Samsung as the only leading-edge foundries, and Intel (and Samsung with another hat on) as the only leading edge IDMs. Of course, there are specialist memory suppliers too, such as Samsung (with yet another hat on), SK Hynix, and Micron. Ironically, at SEMICON West earlier this summer, I wrote two posts, one based on an interview with Gary Patton GLOBALFOUNDRIES' CTO State-of-the-Roadmaps and 5nm: 7nm Is Just a Dress-Rehearsal based mainly on a presentation by GF's Eric Hoster. In the first of those posts, Gary told me that 7nm designs would be taping out in the second half of this year with production in 2019. The second post was mostly about the challenges facing EUV for 7nm and 5nm. In the Gary Patton interview post referenced above, I included a history of AMD and GF. The three line version is that AMD sold its fabs to ATIC, the investment arm of the government of Abu Dhabi, who created GF as a standalone foundry business. They then acquired Chartered Semiconductor and IBM's Semiconductor Division. As part of the deals, both AMD and IBM were committed to GF as a foundry for some of their product lines. There was a change of CEO in March when Tom Cauldfield took over as CEO of GF. He is a manufacturing operations guy by background, so reading between those lines is that there is an increased focus on building a profitable manufacturing business and working with a more limited budget than would be required for 7nm and 5nm. Since EUV is not required for older nodes, I am assuming that the work on EUV (or much of it) will also be put on hold. Building a modern fab is a $10+B proposition, and developing a leading-edge process is measured in billions of dollars too. GF has been building out fab 8 in Malta in upstate New York (above), which currently runs 14/12nm and, I believe, was planned to run 7nm (but could not run 5nm). I don't have any insight into whether the change was driven by losing AMD. Without AMD, GF doesn't really have volume customers to fill the fab. On the other hand, if GF was late with their internally developed 7nm process, then AMD would be forced to use other foundries to be competitive in their microprocessor business (their GPU business, the old ATI, was already using TSMC). One of the remaining mysteries is what IBM will do for leading-edge node manufacturing for its servers going forward. Even though its older servers are in a partially depleted IBM-only process, I always assumed they would be a major customer for GF's 7nm. IBM also has kept a significantly sized team of semiconductor technology researchers, who now seemed to be all-revved-up with no place to go. Although the leading edge processes like 7nm get the spotlight, a huge percentage of designs are done in 14/16nm, 28nm, and older processes. The design cost is less, the mask cost is less, the fabs are already fully depreciated. GF also has FD-SOI which can do some things that FinFET processes cannot, in particular putting RF on the same die as digital (my understanding is that you can't do RF with FinFET due to the high gate capacitance, but I make no claim to being an RF expert, I just know enough to be dangerous). It is also cheaper to manufacture, with a shorter cycle time. So from a business point of view, the non-leading edge processes are important, even if a little boring. But boring is often where a lot of the money is. It reminds me of a guy I sat next to on a plane once who sold concrete in the midwest. It is a very boring business, but it returns over 30% of its invested capital every year. A small town can support one concrete plant but not two. So the competition for that one plant is in the next town over, which may be 50 miles away. Unlike silicon chips, where competition can be anywhere in the world, concrete is heavy. Competition 50 miles away is no competition at all. GF wants to be the concrete manufacturer of semiconductor, not so sexy but nicely profitable. Moore's Law has stopped, not in the sense that 7nm and 5nm will not happen, but in the sense that the economics have changed. The old rule of thumb was that a new process node would be twice the density of the old node, at a 15% cost increase, leaving a reduction in the cost of a given design (or the cost-per-transistor, which comes to the same thing) of 35%. But the cost reduction has pretty much stopped. If you need lower power, or a lot more transistors, these nodes are attractive. If you don't, then there is no economic driver like there was at, say, 180nm where you couldn't compete if your competition moved and you didn't. The GF press release summarizes their strategy going forward: GF is intensifying investment in areas where it has clear differentiation and adds true value for clients, with an emphasis on delivering feature-rich offerings across its portfolio. This includes continued focus on its FDX platform, leading RF offerings (including RF SOI and high-performance SiGe), analog/mixed signal, and other technologies designed for a growing number of applications that require low power, real-time connectivity, and on-board intelligence. GF is uniquely positioned to serve this burgeoning market for “connected intelligence,” with strong demand in new areas such as autonomous driving, IoT and the global transition to 5G. So it's like the old Genesis rock group who gradually lost members until "Then There Were Three". Now there are just three leading-edge semiconductor manufacturers. Sign up for Sunday Brunch, the weekly Breakfast Bytes email.![]()
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