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2009: Tumultuous year for foundries

Posted: 28 Dec 2009     Print Version  Bookmark and Share

Keywords:foundry  fab  R&D 

The foundry business is here to stay as more IDMs go fab-lite or fabless..

For many IDMs, it's a matter of survival. Fabs, process R&D and equipment costs are simply out of control. Only a select few can build and equip new fabs on their own; even fewer are talking about the shift to the next-generation, 450mm wafer size.

Despite the trend line, foundry providers took a beating along with everyone else during this tumultuous year. But the damage done by the economy was magnified by the foundries' own foul-ups. The year brought consolidation, divestments, layoffs, unfulfilled promises, process delays, management changes and intellectual-property theft. Foundry customers would do well to keep a close eye on the changing landscape.

The biggest foundry news in 2009 was a two-part story: Advance Micro Devices' spinoff of its fab operations as GlobalFoundries Inc., and the subsequent purchase of Singapore-based Chartered Semiconductor Manufacturing Co. Ltd by GlobalFoundries stakeholder Advanced Technology Investment Co. for Rs.18,229.33 crore ($3.9 billion). The plan is to fold Chartered into GlobalFoundries and take a stab at eroding Taiwan Semiconductor Manufacturing Co.'s imposing market lead. But it might not be as straightforward as it looks on paper.

Another wild card is South Korea's Samsung Electronics Co. Ltd, which plans to double its production of chips for foundry production every year until it rivals TSMC, according to recent reports. Time will tell if Samsung's foundry gambit is for real. So far, it hasn't gotten much traction.

Yield woes
Then again, mighty TSMC began to look vulnerable this year, suffering yield problems after the rollout of its 40nm process. The company promises a resolution by early 2010. But chairman Morris Chang's recent return to day-to-day oversight as CEO suggests TSMC might have seen the need for a management change in the wake of the process issues.

Meanwhile, competitors including Chartered, IBM, Samsung, Toshiba and United Microelectronics are struggling to get their own 45-/40nm processes tuned and wafers shipped. The 40nm node is tough. It will be even tougher to deliver next-generation 32-/28nm processes. Expect delays.

TSMC did score one important win this year: It prevailed in its long and bitter intellectual property theft suit against China's Semiconductor Manufacturing International Corp. SMIC agreed to pay Rs.934.84 crore ($200 million) to TSMC, which also gained a small stake in the Chinese foundry company. SMIC CEO Richard Chang lost his job in the fallout.

China's foundries are also seeing the first signs of consolidation among their ranks, including a pending merger between Shanghai Hua Hong NEC Electronics Co. Ltd and Grace Semiconductor Manufacturing Corp.

Going forward, foundries are looking at analogue/mixed-signal and RF as the next growth engines. Logic is still big, but only a handful of players can comfortably keep pace with Moore's Law.

- Mark LaPedus
EE Times

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