High-k or not high-k
Still to be seen, however, is whether or not IBM's fab club, TSMC and other foundries can deliver wafers based on high-k and metal gates. The technology is difficult to develop and manufacturer, due in part to integration issues. It makes use of hafnium-based films and metal gates, a huge departure from conventional silicon dioxide materials and polysilicon gates.
Today, Intel Corp. is the only chip maker that is shipping products with both high-k and metal gates. It's one thing to ship one type of product--such as an Intel processor--based the technology. On the other hand, foundries must ensure it can process a plethora of different products based on the technology.
Demand for high-k is another issue. On the business front, it appears that foundry demand is falling off a cliff. The subprime mortgage crisis, bloated inventories and lackluster demand are casting a shadow over the overall IC business.
''It all looks bad, very bad,'' said Steven Pelayo, an analyst with the Hongkong and Shanghai Banking Corp. Ltd. (HSBC), in a recent report. ''We are hearing of some fabs with a 30 percent month-over-month decline in wafer starts. Companies like TSMC were 100 percent utilized 90 days ago. We now think that they are sub-75 percent in 4Q and potentially even lower in seasonally soft 1Q '09.''
HSBC has lowered its estimates for Chartered, SMIC, TSMC and UMC. TSMC is now projected to earn NT$0.65 ($0.021) a share on sales of NT$67.9 billion ($2.109 billion) for the fourth quarter, compared to NT$0.82 ($0.025) a share on sales of NT$74.9 billion ($2.327 billion) in the original forecast, according to HSBC.
For 2008, TSMC's sales are now projected to grow 4 percent over 2007. In the previous forecast, it was originally supposed to grow 6 percent in 2008, according to HSBC. In 2009, TSMC's sales are projected to fall 11 percent, compared to its previous forecast of only a 1 percent decline, according to the firm.
With sales of almost $10 billion, TSMC was the leading foundry supplier in 2007, followed in order by UMC, SMIC and Chartered, according to IC Insights Inc.
In the foundry market, TSMC hopes to remain the leader in technology. Seeking to stay one step ahead of its rivals, the company in March unveiled what it claimed was the industry's first 40-nm foundry process for leading-edge designs. The technology makes use of 193-nm immersion lithography, copper-interconnects, strained-silicon, low-k and other features.
In comparison, UMC is expected to have its 45-/40-nm wafers by year's end. Chartered has been shipping 65-nm technology and is ''engaged with customers'' with its 45- and 40-nm processes, said Walter Ng, vice president of design enablement alliances with Singaporean foundry provider Chartered.
At 32-nm, Chartered and its partners, IBM and Samsung Electronics Co. Ltd., will ''be the first -- or one of the first -- to implement high-k and metal gates,'' he said at a recent presentation.