BURLINGAME, Calif. — Rising cost and complexity of making chips is fueling a record year for semiconductor mergers and a search for alternative technologies. Engineers heard about emerging options in silicon-on-insulator, sub-threshold voltage design, and monolithic 3D integration, as well as industry consolidation, at the IEEE S3S Conference here.
Chip companies executed 23 acquisition deals so far this year, more than the last two years combined, said Mark Edelstone, global head of investment banking in semiconductors for Morgan Stanley. Before the year is out, the total worth of M&A transactions will likely rise from $17.4 billion to nearly $30 billion, Edelstone predicted in a keynote talk here.
“It’s really off the charts,” he said, noting big combinations so far of Infineon and International Rectifier as well as Avago and LSI. “This trend will continue -- it will be a very busy M&A landscape for next few years.”
2014 has seen more semiconductor M&A deals already than the last two years combined, according to Morgan Stanley. Click here for larger image
The low cost of capital is fueling M&A across all industries, and the rising cost and complexity of making chips is pouring gas on the fire in semiconductors. It could cost $53 million to make a 20 nm chip, up from $36 million for a 28 nm part, and cost will take another leap with the 16/14 nm node, Edelstone told the crowd.
“It requires a really big market to make money on such an investment, and this will have a dramatic impact on how the industry evolves. The cost per gate is going up with the [16/14 nm] FinFET generation, which changes the dynamics of the industry pretty dynamically -- that tells you scale matters.”
Several speakers agreed that costs per transistor are rising across the industry. However, Intel said in September its 14 nm FinFET process will support lower costs per transistor.
The 14/16 nm FinFET node represents the mainstream path forward, but fully depleted and extremely thin SOI processes also have an opportunity, said Michael Mendicino, a product manager from GlobalFoundries.
Some cost-sensitive mobile chips will avoid the 14 and 10 nm FinFET nodes due to their costs, perhaps for as long as four to six years. SOI may offer an alternative that delivers the performance of 20 nm bulk at a price closer to 28 nm poly, but he noted pressures are driving down all bulk prices, too.
When pressed, Mendicino estimated the SOI alternatives might grab a 10 percent share of the foundry business over the next three years, but emphasized that was only a guess. “Ask me again in three years,” he quipped.
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