SAN JOSE, Calif. – Globalfoundries and city government officials from Chengdu, China, will break ground Saturday on a new fab valued at roughly $10 billion. The foundry simultaneously announced expansions for fabs in Germany, the U.S. and Singapore, although it declined to put dollar figures on them.
Globalfoundries suggested it is putting on the back burner a separate joint venture in Chongqing announced in May. It has a memorandum of understanding in that deal but it is focusing on Chengdu which appears to be a significantly larger, more promising deal.
The news comes at a time when China federal and provincial officials are competing in a race to build up a domestic semiconductor industry. Ironically the new joint venture comes one day after Intel announced at the White House it will spend $7 billion to restart its Fab 42 in Arizona.
Globalfoundries will be the majority owner and will operate the Chengdu fab. Additional terms are confidential, said a spokeswoman.
In the first phase, the fab will make 180/130nm chips using processes transferred from the foundry’s Singapore operations with production starting in 2018. Starting in 2019, it will make 22nm fully depleted silicon-on-insulator (FDSOI) chips with technology from Dresden as part of a second phase.
Under the earlier deal, the Chongqing government would have provided the land and built a fab to company’s specifications. That plan initially included bringing an existing China fab up to a 300mm capability, according to the press release, and transferring 180-130nm processes from Singapore, according to an interview with a foundry executive in January.
Now, “Chengdu is our only focus in China,” said the spokeswoman. “We decided to combine mainstream and 22FDX capabilities into a single facility in Chengdu to benefit from the advantages of scale.”
The company simultaneously announced plans to expand:
- 14nm capacity 20 percent at its Fab 8 in New York
- Overall capacity 40 percent in Dresden by 2020
- 40nm capacity at its 300mm fab in Singapore by 35 percent
- 180nm production on 200mm wafers in Singapore
- Its capabilities in RF-SOI
“With TSMC, UMC, and SMIC expanding their foundry capacity in China, I believe that Globalfoundries believes that they need to do something as well,” said Bill McClean, president of market watcher IC Insights, in an email exchange.
While Intel, Samsung and SK Hynix have been making chips in wholly owned fabs in China for some time, TSMC pioneered the way for a foundry with its 16nm fab in Nanjing. “Morris Chang specifically cited the need to have continued access to the Chinese market as the reason for constructing TSMC's new 300mm fab in China,” McClean said, calling such deals “an insurance policy for IC producers.”
“China’s electronics industry and fabless community is growing leaps and bounds, so having a fab brings scale to an area where you must be close to your customers,” said G. Dan Hutcheson, president of VLSI Research.
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