SAN JOSE, Calif. — Like an old married couple, IBM and Globalfoundries are still great partners, but at this stage, they just have different needs. At least, that's the theory I am brewing after a long discussion with Semiconductor Advisors market watcher Robert Maire late Friday afternoon.
Globalfoundries needs to grab the brass ring to cement its position as a top foundry player. That means big deals for high-margin, bleeding-edge fab business. TSMC is all over the 28nm node, so GF is trying to get out ahead of the 14nm node with its deal with Common Platform partner Samsung that apparently has an edge with the process.
With the technology in place, GF's next step was to put in the right team to drive to 14nm production. Enter Tom Caufield, the guy who led IBM's leading-edge East Fishkill, N.Y., plant for many years. "If anyone can do it, he can," Maire said.
Not long ago, GF and IBM struck a deal to send a couple hundred top IBM experts with GF's leading-edge fab in Malta, N.Y. I assume this was part of the A-Team for 14nm work.
I'm guessing GF's goal is to beat TSMC to a solid 14nm capability. Intel is just about there now with its Broadwell processors about to debut. Samsung is a bit behind Intel but ahead of GF, which wants to be third.
If it succeeds, GF could become a valued second source for leading-edge chips of all sorts, from Apple and Qualcomm mobile processors to wired networking and server chips, from the ABCs of the industry -- firms such as AMD, Broadcom, and Cavium. That's a semi-sweet position.
GF is putting all its focus behind the 14nm arrow and has little resources for anything else -- like helping IBM with its needs.
The latest unconfirmed stories floating around say that GF walked away from IBM's proposal to sell its East Fishkill and Burlington fabs for $2 billion, saying the price was too high. GF's position makes sense in the light of its laser-like focus on getting to 14 nm as soon as possible.
As noted in our recent three-part series on the company, IBM's hardware business has become a drain on its earnings. The loss leader appears to be the Power server business, which has fallen into a big slump. But the East Fishkill and Burlington fabs are not exactly the stars of the balance sheet, either.
Wall Street wants to see these hardware assets go, but these yapping dogs will have to howl for a while. The latest Power systems are just hitting the streets. IBM is still cranking up the energy on its efforts to make Power an open standard, and a whole new generation of mainframe systems are in the pipeline.
IBM has done a good job retooling the trailing-edge process technology in its older Burlington fab for relatively high-value RF parts. And, as I noted, East Fishkill is cranking out the latest Power chips. So that's all goodness -- or at least not terrible badness.
This company can afford to stay the course for a while. Its situation is tolerable but will have to be addressed at some point. Even IBM doesn't expect a resurgence in Power shipments. I can't imagine its mainframes will find significant new markets, and those two fabs aren't wine that will increase in value over time.
I'm guessing Burlington could look attractive to an expanding analog company. East Fishkill is a tougher sell. Like Burlington, it could retool into something trailing edge but hot, such as MEMS for next-generation sensors. But it won't upscale to the size of a TSMC factory or the sophistication of an EUV bleeding-edge fab.
Maire and I both see IBM's recent EUV and post-silicon announcements, at least in part, as attempts to get the focus off the aging fabs, which apparently will just remain a problem for some time. IBM could surprise us all and craft a deal with other partners. It's a company full of smart people who know both how to Think and, with new partner Apple, how to Think Different.
— Rick Merritt, Silicon Valley Bureau Chief, EE Times