Report: Qualcomm wafer fab not ruled out

6/28/2012 7:26 AM EDT

What's wrong with UMC and Global Foundries? Are the technologies incompatible?

6/28/2012 9:11 AM EDT

Qualcomm's current supply problems come as part of a fabless strategy. You can't have it both ways. If you don't own a wafer fab, then you can not control your supply of chips. If you do own a fab then you have to pay for it when you have excess and, or, obsolete fab capacity. It's going to be expensive either way. In the last several years being fabless has been very good to Qualcomm. It may now change for the next several years. Right now it seems IDMs like Intel and Samsung have the advantage.

6/28/2012 9:14 AM EDT

There's nothing wrong with UMC or GlobalFoundries and -- as i discuss in an analysis -- I think GlobalFoundries could be a major supplier to Qualcomm.

However, the days when you could easily move an IC design from one foundry to another are long gone.

So are the technologies incompatible...well both foundries are offering CMOS.

But they are different CMOS processes, with different tweaks, design rules, checks and sequences. There is considerable foundry supplied IP required to make a design work and different foundries have different IP sets and design rules associated with those IPs.

The result has been that fabless chip companies have tended, even where they work with multiple foundries, to only bring a given design up at one foundry. To run genuine multivendor second sourcing is generally thought to be too expensive.

And at the leading-edge you would have to wait for a second foundry to match the first's capability. Waiting is not a good idea in consumer markets.

However, when you are single-sourced on a leading-edge process and you do not get the volume of chips you desire you start to think "How could i get favorable treatment? I want my allocation of chips and my rival's allocation."

6/28/2012 10:38 AM EDT

A far cheaper way for fabless companies is to develop some independent DFM expertise and make their layout manufacturable everywhere.

The rules are more or less the same because the fabrication equipment are the same and the EDA software are the same. Fabless companies can build or uses or transform an existing standard organization to do it (Si2, Sematech, etc.).

For now, we are seeing the effects of de facto foreign monopoly. A monopoly helped by the fabless companies. Consumers will pay more.

6/28/2012 11:43 AM EDT

Used to work like that until 40nm when only variables are stress engineering and gate oxide but not anymore.. The differences of advanced technologies are so subtle and is reached to the point that even Qualcomm do not have enough resources to make their design multi-sourceable and EDA tools are not sufficient(not upto par with technology changes) to address these issues.

6/28/2012 11:51 AM EDT

Considering the rising cost and unclear roadmap to future CMOS, it doesn't make much sense to build their own fab at this point. Especially they are competing Intel and Samsung in the same market mobile processors. If they were using 90nm technology, then maybe. The statement from Qualcomm is directed at TSMC and pressure them to deliver on time.

6/28/2012 2:00 PM EDT

This makes Intel's CEO look brilliant. Fabless strategy can only work upto a certain point, but after that you got to be a IDM to win.

6/28/2012 3:01 PM EDT

Physics BITES back. Free ride over for the Fabless wonders & Polygon pushers ?

6/29/2012 12:21 PM EDT

If they really want to do this they should wait through 14 nm to see what new technologies are adopted.

7/1/2012 12:18 AM EDT

The semiconductor industry is very complex. A lot of IP is involved. The fact that the latest S4 processors are 28 nm based rule out the multi-vendor option. I think if Qualcomm is talking seriously the next logical step is to go for a fab. the question is when is the right time?
Also, this would only be to address the shortage of Snapdragon processor? How about other chips from the fabless giant?

7/1/2012 9:04 PM EDT

I have said this before. No one can discount the impact of fab in Intel's success. Intel continues to win because its innovations are double-edged. They have process innovation besides all they do with circuits and architecture. If Qualcomm go do same, they may get it right. Yet, it is very expensive and risky.

7/2/2012 6:26 AM EDT

I had assumed that the reason that Qualcomm was not getting volume from TSMC was that they had tried to minimise financial risk by not pre-booking (sufficient?) capacity. In the event that capacity was under-utilised, this would in the past have allowed Qualcomm to negotiate better prices (it's not really the case if you are sole-sourced, however).
If my assumption is correct, this represents at least two major failings in Qualcomm's purchasing strategy - both a misreading of the semiconductor demand/supply cycle, and failure to recognise the implications of single sourcing.

I can see no reason that self-supplying would compensate for incorrect prediction (more the reverse, in fact).

If there were any business sense in the idea of floating an own-fab it would be as a negotiating ploy - however, the potential suppliers have too much information for it to work.

I believe the only possibly "benefit" of Qualcomm's public stance is to avoid excessive fluctuation of the share price - and even this may well misfire.

7/2/2012 11:06 AM EDT

The issue of pre-booked capacity is also inextricably linked to yield. Which then begs the question as to whether low yields are the due to poor design (the fabless) or the process (the foundry).

Qualcomm may be arguing that at 80 percent yield they would have had enough wafers but at 20 percent yield they only have one quarter of what they need.

TSMC's response may well be that at this stage in a roll out lower yields are quite normal and that Qualcomm should either have bought more wafers...or should make its customers wait for their chips.

As such, mentioning alternative manufacturing strategies may be a way of putting pressure on to TSMC...a coded way of saying "You are my supplier and are meant to be trying to keep me happy. I am not happy and have to think about my future here."

7/2/2012 11:12 AM EDT

How would yield be better if you own the fab? Your own learning curve would be at best at par or worse than TSMC at each nodes. If you do the math right, it does not even make sense for a company like Qualcomm to own a fab. They always had a option to purchase additional capacity ahead of time with take or pay option in their supply agreement if they planned it right. The problem is that they never execised its option until it's too late. To me it's a Qualcomm's indecision and management issue and not able to plan their demand picture correctly. They're simply shifting investors' focus from inability to manage their demand to supply issue. There is no supply issue here if they planned it ahead. Now they are going around every foundries and trying to drum up the capacity - which in turn is a wrong move.

7/2/2012 12:09 PM EDT

Well, it may figure that a fabless company, even Qualcomm, may be averse to facing the fab-intensive risk and complexities of scaling to the next node, to the point of not wanting to face it earlier than necessary. So maybe it is not the 'fabless model' that is the trouble, but the fabless mindset.

7/2/2012 2:49 PM EDT

A change of paradigm? From fab-lite to fab-might (y)? For a company who does not have fab experience, this will cost too much. Does not make sense to me.

7/4/2012 12:58 PM EDT

Those who were paying attention when DFM had its 15 minutes of fame at DAC and VCs should have seen that the bandaid solutions which worked at 65 and 45nm wouldn't work at sub-20nm IF EUV didn't make it. And those who remember that EUV is still x-ray should have seen that EUV wouldn't make it. The only way to build 10nm logic devices will be with completely seamless integration of design and manufacturing. For Intel and other such IDMs, this is second nature. Fabless/foundry will require a new model. Perhaps reintegration? Buying a fab? Renting a fab line? Otherwise, IDMs rule.

7/7/2012 2:53 PM EDT

Even the companies that have fabs use foundries. It's an easier and quicker way to increase capacity and allows them to decrease capacity without running their own fabs at less than full capacity. It's a nice hypothesis, but the actual results aren't that easy. For a fabless company to build their own fab is a huge task. The time and cost up front is huge. I don't see that happening for Qualcomm.

8/8/2012 12:31 PM EDT

I am sure that Apple is having the the same discussions.