Is IBM moving to fab-lite, research heavy?

11/24/2010 4:10 PM EST

The research is the source of IP and therefore the differentiator in the marketplace. With fab costs skyrocketing the need to leverage the fab price tag over many chip streams and customers it becomes a better business model. As long as there is sufficient capacity and 2nd/3rd sourcing options this will continue to be the way to keep costs down and enabling resources to be concentrated on generation of money streams.

11/24/2010 5:08 PM EST

Good article. I heard IBM had discussions with Global Foundries this summer about selling their Fishkill fab to them. I also heard Global Foundries decided to pass on the opportunity since IBM was asking for too much money.

11/24/2010 8:08 PM EST

I am tired of everybody saying that fabs are consolidating because capital equipment prices are skyrocketing. Has anyone thought that they might be confusing cause-and-effect at least a little bit. For the capital equipment makers, the cost of producing better-and-better performing systems has not gone down. Yet there are increasingly fewer customers out there buying fewer tools because they want to save money by, "consolidating". I hate to break it to these guys but consolidation only works if you are the only one doing it. When everyone does it, prices skyrocket because there are fewer tool sales to spread your fixed costs across. This does not even take into account R&D and additional costs from the loss of capability and experience as engineers and technicians flee the capex industry.

No matter how much they try to streamline to reduce their costs, the more the hidden costs will, "skyrocket", no matter how much they whine (don't hold your breath for capex manufacturers to pick up 450). They will end up with more bottlenecks and, "premium", pricing for in-time orders. Intel knows this and will continue making money from the foolishness of others.

11/25/2010 12:27 AM EST

This has been the stratergy adobpted by many semiconductor biggies. TI sold some of its fab (they retained analog fabs) and went for TSMC. If this helps companies to cut down expenses, nothing wrong in this.

11/25/2010 2:19 PM EST

Peter, that is really an old news - we both know that. IBM is a system and R&D/Engineering services company and usually a decade ahead of the rest of the industry in strategic directions, including with its asset-lite strategy.
Its research is formidable and critical to, for example, GlobalFoundries' long-term viability. I was one of questining TSMC's prowess in research - versus its superb strengths in low cost manufacturing and customer service.

However, recently I was impressed by breakthrough credit to TSMC by Dr. Kelin J Kuhn, Intel Fellow, Director of Advanced Device Technology, Portland Technology Development. She led the development of 90nm, 45nm, 22nm and 15nm process technologies at Intel and is currently engaged in the development of the 11nm CMOS process technologies:
"Recently, TSMC found a method to overcome a technical problem related to fin FETs, which I have been concerning about for a long time. It developed a technology to apply strong strain to the channel of fin FET. This is a major advance toward commercial production of fin FETs."
Of course, we can be sure that both Intel and IBM are deep in the "post-silicon" IC research...
Boris @ Petrov Group

11/26/2010 4:29 AM EST

At the moment, the concept of consolidating costs and moving to fab-lite or fabless seems very reasonable. However, I believe that there is a point when the narrowing of options will cause problems for a lot of companies - especially the ones that require the latest and most advanced nodes. As I can see, there are at the moment two advanced options for foundries: TSMC and GlobalFoundries. Samsung will likely become a third option (and could Intel become a fourth? I'm not so sure about that but let's consider it). Suppose there is a company like nVidia. It can not manufacture at Intel nor GlobalFoundries for competitive reasons. As it is pursuing more and more the embedded market with the Tegra lines, maybe it will be hard for nVidia to manufacture its chips at a direct competitor Samsung. So, it practically has only one option - TSMC. If the latter screws a process (and we know how probable this is) it has a serious problem if at least one of its competitors can manage to manufacture to a different facility which does not face these problems.

Increasingly there will be other companies in a similar position.

11/28/2010 12:09 PM EST

Thanks for this article. Yes, you are correct. For years IBM has been a beacon of research in semiconductor technology. I recall reading an article about this project years ago. I hope they are making better progress.

11/30/2010 6:44 PM EST

Most of the discussions are centered around the high cost of migrating to newer technology nodes and the ensuing high cost of equipment, hence consolidation. But the industry is also seeing an evolution of sorts with 3D chips stacking using older technology nodes. So isn't there a potential for new tools albeit lesser expensive that can give a leg up to the smaller companies to stay afloat without getting consolidated?

It seems to me that the talk of consolidation is a bit premature for across the board but will happen in select segments.

Dr. MP Divakar