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KB3001
Not sure about that. It makes sense if you are a complete solution provider, ...
Sheetal.Pandey
I am not sure if I agreee thayt foundry business is in trouble. I gues with ...
Intel: Foundry business is in oversupply trouble
Peter Clarke
2/18/2011 4:22 PM EST
LONDON – The world's leading foundries are facing difficult times due to the creation of too manufacturing capacity, according to Paul Otellini, president and CEO of Intel Corp., the world's leading chip maker.
"I think the foundry business is in big trouble over the next few years," Otellini told analysts at a conference here Thursday (Feb. 17) and accessed by EE Times by a telephone replay. He put it down to "significant overcapacity" mainly due to attempts to grab market share by new player Globalfoundries Inc. (Sunnyvale, Calif.). On Friday in Hillsboro, Oregon, Otellini said Intel would build a wafer fab in Arizona and create 4,000 U.S. jobs in 2011.
However, talk of overcapacity does not chime with the view of some analysts, such as Malcolm Penn, founder of Future Horizons (Sevenoaks, England). Penn has heralded the coming of a fab-tight era, due to a lack of spending on manufacturing capacity by both IDMs and foundries over the last couple of years.
Some have said that the chip world is rapidly collapsing to a handful of leading-edge chip makers most of whom will have some foundry interest. Intel and Samsung still make the majority of chips for sale under their own brand while Taiwan Semiconductor Manufacturing Co. Ltd. (Hsinchu, Taiwan) and Globalfoundries are pure-play foundries.
Nonetheless Otellini does not seem eager to be joining the foundry crowd any time soon. "Foundries make money not on the leading edge but on the trailing edge, with long running products," he said.
"Leading-edge capacity excess, driven by Globalfoundries' expansion primarily, means pricing is going to come down. As leading-edge pricing comes down, so does the trailing-edge [pricing], hollowing out the business. That means real trouble for Globalfoundries and TSMC over the next few years," Otellini predicted. He conceded that with its memory and logic operations Samsung was a different case.
Otellini said chip building was all about the efficiency of the development and manufacturing operations and that Intel's was second to none.
"Our competitors have to take what TSMC and Globalfoundries offer them," indicating that Intel liked having control of its manufacturing choices. But Otellini also glided over the collorary of his prediction of price erosion at the foundries; that fabless chip companies will be getting good deals on both leading- and trailing-edge silicon making those companies, the likes of Qualcomm and Broadcom, better able to compete with Intel.
Nonetheless, Otellini's conclusion was that Intel and Samsung would increasingly pull away from the manufacturing pack, particularly Globalfoundries and TSMC.
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AlvinL
2/18/2011 8:51 PM EST
I suppose if you are having oversuppy trouble, you shouldn't suppy so much ;-)
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the_floating_ gate
2/18/2011 11:02 PM EST
It's kind of funny Intel is commenting on foundry business - unless they were thinking entering the business
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the_floating_ gate
2/19/2011 12:00 AM EST
Otellini
You would think Otellini's plate is full - is Otellini stupid enough to call TSMC trailing edge?
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SiliconAsia
2/21/2011 3:27 PM EST
Becuase foundry over-capacity affects Intel's strategy and bottom line indirectly. Intel's competitors especially ATOM's competitors will get lower asp and plenti of capacity.
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yalanand
2/19/2011 7:27 AM EST
If Otellini is really so much worried about overcapacity, why is Intel building so many new fabs? Are these comments, tactic by Otellini to divert the attention of rival companies ?
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SiliconAsia
2/21/2011 3:28 PM EST
There is no choice for Intel other than building all their capacity needs.
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RobDinsmore
2/19/2011 8:13 AM EST
I am confused by this. I think Otellini is hoping for a miracle in mobile. Tablets and mobile phones are a huge growth opportunity for foundries, yet Intel does next to nothing in these markets. They recently lost the Nokia Meego partnership and Atom is not showing up in any winning tablets. To make matters worse, MS is going to release a Windows OS on ARM. Where does this leave Intel if tablets replace the consumer notebook?
Sorry Paul, I just don't buy it. Also I think Intel also "makes" their money on trailing edge technology. It's just accounting semantics. New technology doesn't start to pay for itself until it is in full high volume production, and when that happens, the next gen tech is starting to ramp up.
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David6108
2/19/2011 5:31 PM EST
I have heard so many similar comments in the past from companies like TI, Motorola, IBM, ..etc. What happens to these guys? Otellini is either too arrogant or naive. Sorry to see Intel has such a learder. Do not worry, TSMC will continue to be the winner with huge profit.
Foundry Guru
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rfab
2/20/2011 10:38 AM EST
David6108 ---------WHERE IS TSMC"S 28nm ,AND TSMC"S 40nm IS VERY BAD,28nm IS WORSE
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SiliconAsia
2/21/2011 3:30 PM EST
TSMC 28nm and 40 was bad experience but others were not even present in the market.
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rfab
2/20/2011 10:47 AM EST
TSMC will continue to be the winner with huge profit.--Buy an external IP. synthesize products. Measured by the generation of factory-built sealed pattern, so that the semiconductor gradually becoming less and less profit, after the TSMC 45 shattered the myth of high yield, 40NM, YELD still 40%
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rfab
2/20/2011 10:49 AM EST
TSMC is getting behind the big INTEL, TSMC 28HP and INTEL 22 with mass production, and to know the performance behind TSMC INTEL generation, plus the amount of time to produce one generation behind, behind two generations together, and. letter to get eternal life TSMC ? TSMCYY actually very successful, so much IDM FAB-LITE, and can be effective getting worse. . . . . . "We are discussing how best to use external resources. " Chen Weiming, president of TI Asia, "Global Entrepreneur " said. OEM is the highest guiding principle of the internal Texas Instruments, which dropped after the order of 45 nm process, the large customers already had Sun Microelectronics (Sun Micro) 45 nm chip manufacturing orders to TSMC. ... make good use of external resources TI baseband market collapse, OMAP in decline
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rfab
2/20/2011 10:49 AM EST
TSMC is getting behind the big INTEL, TSMC 28HP and INTEL 22 with mass production, and to know the performance behind TSMC INTEL generation, plus the amount of time to produce one generation behind, behind two generations together, and. letter to get eternal life TSMC ? TSMCYY actually very successful, so much IDM FAB-LITE, and can be effective getting worse. . . . . . "We are discussing how best to use external resources. " Chen Weiming, president of TI Asia, "Global Entrepreneur " said. OEM is the highest guiding principle of the internal Texas Instruments, which dropped after the order of 45 nm process, the large customers already had Sun Microelectronics (Sun Micro) 45 nm chip manufacturing orders to TSMC. ... make good use of external resources TI baseband market collapse, OMAP in decline
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rfab
2/20/2011 10:50 AM EST
Buy an external IP. synthesize products. Measured by the generation of factory-built sealed pattern, so that the semiconductor gradually becoming less and less profit, after the TSMC 45 shattered the myth of high yield, 40NM, YELD still 40%
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rfab
2/20/2011 10:51 AM EST
David6108 --That you are EW"s
David,You are very poor level of
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paul.delamusica
2/20/2011 1:31 PM EST
:)
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rick.merritt
2/20/2011 9:07 PM EST
I suspect Otellni was trying to defend to a skeptical Wall Street his decision to commit billions to more fabs. A bigger worry for Intel may be whether Intel will be in oversupply come the 14nm generation when ARM could be making big in roads in traditional PCs.
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Baolt
2/23/2011 7:59 PM EST
if there was oversupply why fablite/fabless companies suffered during '10-Q3&Q4 coz' of delayed shipments/outcomes where big players had the bigger pie always on time? Where was this overcapacity and why did foundries let their small size customers down?
Another Otellini speech where he is trying to mirror focus on other direction. I truelly agree with u @Rick, where are intel's serious moves against ARM? soon after it will be too late
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mranderson
2/20/2011 9:59 PM EST
I don't see trouble for TSMC and GF in the future. Nor do I see trouble for Intel of Samsung. Wall Street has never liked fab expenditures, despite the fact that they drive much of the growth. TSMC hopefully will get their act together for 28nm since 40nm had significant issues. If TSMC continues to have issues at new nodes, GF may gain.
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SiliconAsia
2/21/2011 3:35 PM EST
mranderson, How will GF gain? Who's using GF's 40 and 28nm today?? Have not heard anyone claiming they are using GF technology today, have you? If you know, please copy the links here.
TSMC is the only foundry who're having these issues. Others even don't know what the issues are!
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friedrich II
2/22/2011 8:45 AM EST
GF may gain a yield advantage, a cost advantage and new customers for new nodes.
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fdunn
2/21/2011 10:20 PM EST
So then AMDs decision to dump its foundries was not a bad one after all. Since they will not have to pay a premium while the foundry is not at 100%.
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KB3001
4/7/2011 7:08 PM EDT
Not sure about that. It makes sense if you are a complete solution provider, otherwise it's quite risky.
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Les_Slater
2/22/2011 11:08 AM EST
Intel is a large and profitable chip producer. I am sure they are keenly aware that Windows and x86 are running out of steam. And they're expanding capacity while at the same time pointing out an overcapacity in the industry? So what gives?
There is more than one metric that needs to be addressed to be successful in the evolving mobile market. Of course power consumption is of prime importance. Also of great importance is cost.
Intel could manufacture an Arm license but that incurs royalties. Intel in the past, with some notable failures, has attempted to architect to meet specific applications. The 432 comes to mind. However, Android type environments could benefit from a specific architecture. There is, in my opinion, the likelihood of increasing power/workload efficiency while reducing cost.
To do this Intel needs to step back and approach the silicon/software solution much more holistically. It would mean substantially increasing the software side of the equation.
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Silicon_Smith
2/27/2011 3:55 PM EST
Sounds like Intel is trying hard to justify its own investment strategies! How exactly is TSMC a trailing edge, by the way?
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resistion
3/5/2011 3:39 AM EST
UMC so far ignored but last I checked it's still #2, just ahead of GF. Has it dropped behind so rapidly, at least in reputation?
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Robotics Developer
3/30/2011 6:33 PM EDT
I wonder how much the production interruptions in Japan could play into the "over-supply" of Fabs? It seems wise to have diverse Fab locations and while very expensive to build/run, owning your Fab does give you control over your destiny (for good or for bad).
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Sheetal.Pandey
3/31/2011 7:07 AM EDT
I am not sure if I agreee thayt foundry business is in trouble. I gues with times to come chip businesses will only accelerate.
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