Paul Jacobs doesn't rule out Qualcomm owning a wafer fab. But don't expect Qualcomm to go IDM any time soon. There are a few other options to be tried first.
First of all Jacob's can only be really interested in working with
companies that are at least as good in terms of manufacturing process
technology as its incumbent long-term supplier TSMC and who also have a
good manufacturing technology roadmap.
That almost but not quite
takes United Microelectronics Corp. (Hsinchu, Taiwan) out of
contention. A cash injection from Qualcomm might be what UMC needs but
it is not clear that is where Qualcomm would be advised to send its "big
Intel has an edge in manufacturing process technology
right now, which must be worrying for Jacobs, but it is also a
competitor seeking to capitalize on Qualcomm's 28-nm application
processor supply problems.
This leaves Samsung also a competitor, but one with a more mature and distinct foundry operation, and GlobalFoundries.
is eager to expand its foundry operation, which is already doing
essential work for Apple's iPhone and iPad products. Why not take a
chunk of cash to convert additional manufacturing lines and reserve the
output for Qualcomm? For Samsun Qualcomm might also make a useful replacement or complement for
Apple which may be thinking of switching at least some of its production
to TSMC. That Jacobs has, reportedly, visited Samsung recently for
discussions that included semiconductor supply adds weight to this
And then there is GlobalFoundries Inc. with its
brand new wafer fab in Malta, Saratoga County, in upstate New York. The
faster the ramp the better for GlobalFoundries and as a relative
beginner in the foundry business it probably prefers supporting relative
few customers wholeheartedly. I could see a deal in which Qualcomm and a
few others write "big checks" to get a guaranteed first call on the
output of the New York wafer fab.
Unless the Abu Dhabi government
and the sovereign wealth fund – the Advanced Technology Investment
Company – that controls Globalfoundries suffers a complete U-turn in
policy I don't see them selling off the New York wafer fab to Qualcomm
or to a consortium of fabless chip companies assembled around Qualcomm.
it could take some up-front money from such a set of customers – as has
become customary in the NAND flash memory business – and then re-apply
that money to expansion in New York, and building a next wafer fab in
Abu Dhabi. And whether that wafer fab would have a G or a Q on the
outside of the building is a little way down the road.
The choice comes down to the non-competitive pure-play foundry,
GlobalFoundries, against whom there is a question mark on execution; and
the competitive Samsung, a company which usually executes well and
which is closer on the heels of Intel.
Taking multiple approach rather than relying on one company could benefit Qualcomm. Rather than spending money and resources on buying a stake in fab, Qualcomm can buy advance nodes chips from Samsung and other chips from GF. Both should be desperate to expand their business due to Apple looking for another chip supplier than Samsung and GF looking to expand to Abu Dhabi.
Yes, for the most part. That's just the technology side of the equation though. Then there's the manufacturing side of the equation. Taken together some other IDMs probably have an inherent advantage in cost/performance/time to market even if they are at the same node or even a node behind TSMC. As semiconductor technology gets even more complex the IDM advantage will likely grow. As others have noted, the free ride for fabless companies is over.
I would n't quite put Samsung in the same League as INTC yet. FinFETs represent a Physics barrier that even with a crash program funded by $10 billion+ R&D budget would take about 3 years to cross ( put into HVM ). Perhaps till then it should not be just "IDMs" but IDM_1 and IDM_0.5
@chipmonk- an interesting idea. I found it quite interesting that when all the speculation was swirling a few months ago about a mega merger involving Japanese SoC makers, Globalfoundries was somehow involved taking over Renesas fabs. What if Qualcomm partnered with GloFo in order to secure some of that capacity for its dedicated use?
Qualcomm can plan better, and partner better, but there's no guarantee that the same thing wont happen again at the next node. And it makes no sense for them to build or buy a fab. Qualcomm needs to accept the fact that they will be about a node behind the IDMs for the next few years and try to innovate in other ways (more than Moore).
Peter, thanks for enjoyable speculation. What would you think of yet another scenario in which QC funds some of the competent Japanese Fabs now in dire straits ? e,g. Elpida, convert their DRAM Fab to 28 nm Processor ( a la Samsung ) or even Renesas. When it comes to Fab discipline the Japanese are still tops, expect that after much Fab technology diffused out from the US to lower cost Taiwan and So. Korea and they got most of the business from the Smart Phone / Tablet boom, the Japanese could no longer keep up.
If you do the math right, it does not even make sense for a company like Qualcomm to own a fab. They always had a option to purchase additional capacity ahead of time with take or pay option in their supply agreement if they planned it right. The problem is that they never execised its option until it's too late. To me it's a Qualcomm's indecision and management issue and not able to plan their demand picture correctly.
I'm not sure it is about planning earlier. As a fabless company Qualcomm is relying on its suppliers to come up with the goods.
But it may need to spend a little of its cash pile to give TSMC and others a little boost or risk losing design slots to rivals using Samsung or Intel.
I would agree with you, Peter, that there is virtually no change of Qualcomm opening up its own fab. The idea of Qualcomm striking a deal with UMC is an interesting one. As the article mentions, such a deal might be just what UMC needs to get closer to TSMC on the leading edge of process technology.
It seems to me that what Qualcomm really needs to do is strike a better deal with TSMC, including ponying up more money to secure the wafers it needs. Certainly, any such deal would be cheaper and more realistic than the idea of establishing a Qualcomm fab. Qualcomm execs admitted a few months ago that the 28-nm capacity issues had a lot to do with the fact that 28-nm chips were in greater in demand, earlier on, than they expected.
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