Globalfoundries' $10 billion Chengdu fab announcement is a reminder of China's inexorable arms race for semiconductor production capacity. Who just gained from the deal? Who's losing ground as the fab tsunami sweeps over China?
Globalfoundries’ announcement last week that it intends to build a $10 billion fab in Chengdu, China, came as no surprise to the industry observers following China’s aggressive pursuit of a local soup-to-nuts semiconductor eco-system.
Bill McClean, president of market-watcher IC Insights, told my colleague Rick Merritt, “With TSMC, UMC, and SMIC expanding their foundry capacity in China, I believe that Globalfoundries believes that they need to do something as well.”
Globalfoundries’ move is a reminder of China’s inexorable arms race for semiconductor production capacity.
Of course, every major business/technology announcement brings collateral damage — or advantage — to other companies and/or technologies.
This poses questions. Who just gained from the Globalfoundries’ deal? Who might be losing ground – in the long run – as the fab tsunami sweeps over China?
FD-SOI in China
Let’s start with the winners.
Undoubtedly, the big winners are the promoters of fully depleted silicon-on-insulator (FD-SOI) technology. Their concerted effort to push FD-SOI as an alternative process technology for low-power, mobile devices may be finally coming to fruition in China.
A few telltale signs have consistently linked China with FD-SOI, but nobody was never sure which Chinese foundry, if any, was willing to bet on FD-SOI. The world was waiting for another shoe to drop.
Now, we all know the answer. It’s Globalfoundries’ new fab in Chengdu.
In last week’s announcement, Globalfoundries made it clear that after about a year of producing 180/130nm chips using processes transferred from the foundry’s Singapore operations, the second phase, scheduled to begin in 2019, will be devoted to 22nm fully depleted silicon-on-insulator (FD-SOI) chips with technology from Dresden.
Besides the Chengdu announcement, several data points indicate that China is quietly becoming the development focus for FD-SOI:
— Shanghai-based Simgui began in the fall of 2015 the production of the company’s first 200mm SOI wafers based on Soitec’s Smart Cut manufacturing technology. [Soitec, a French company that specializes in developing and manufacturing semiconductor materials, made a partnership agreement with Simgui in 2014, which included a license and technology transfer authorizing Simgui to manufacture Soitec’s 200-mm SOI wafers using its proprietary Smart Cut technology.]
— China’s National Silicon Industry Group (NSIG) acquired 14.5 percent of Soitec last year. NSIG shouldn’t be confused with China’s so-called “Big Fund,” China’s government funds for national IC development. NSIG is an investment platform, formed by the Big Fund in early 2016. Its mission is to build the semiconductor material business and its ecosystem, keeping its focus on “more than Moore.”
— When an executive from foundry Shanghai Huali Microelectronics Corp. came to the Industry Strategy Symposium sponsored by the SEMI trade group last month, he shared a slide revealing that FD-SOI is integral to Huali’s $5.9 billion Fab 2 plan.
Inside Huali's $5.9 billion bet on Fab 2 (Source: Huali)
When reached by EE Times, Soitec’s spokeswoman said Globalfoundries’ Chengdu announcement “confirms our strategy in the mobility markets.” In Soitec’s view, this means not only that “FD-SOI is becoming a standard just as RF-SOI already is,” but also it “vindicates Soitec’s strategy in China.” Globalfoundries’ investment in Chengdu will be “instrumental to support China’s growing fabless semiconductor industry,” she added.
In short, FD-SOI has officially become a part of China’s semiconductor roadmap.
TSMC will feel the pain
So, who could possibly lose anything as a result of Globablfoundries’ latest investment?
Government officials in China reportedly believe that Taiwan Semiconductor Manufacturing Co. will feel the pain. TSMC’s loss won’t necessarily be technology, but people, they say.
This conclusion, however, isn’t directly tied to Globalfoundries’ Chengdu investment alone. The Chinese officials believe TSMC will suffer from the broader onslaught of fab investment in China by various parties -- including the latest by Globafoundries.
Next page: Do the math