A Forgotten Chipmaker May be Key to Ending the Global Shortage

Opinion

June 28th, 4:35am

Tim Culpan

Tim Culpan -

“Legacy” and “mature” are the words usually thrown at the semiconductors Tom Caulfield produces at factories in Singapore, the US and Germany. He doesn’t like that. Instead, the chief executive officer of GlobalFoundries wants people to refer to his chips as “feature-rich,” a term he feels better describes their wide array of uses. His point is valid. While larger rivals Taiwan Semiconductor Manufacturing Co., Samsung Electronics Co. and Intel Corp. battle it out to make ever-more advanced chips, the world is suffering most from a lack of capacity in the very products that GlobalFoundries offers. “The industry has painted itself into a corner by focusing on single-digit nanometer,” Caulfield said in an online press conference, referring to the current obsession with smaller, more advanced manufacturing geometries. “Today we have cars sitting in a parking lot missing chips made on 45 or 65 nanometer.” While the three largest foundry players, led by TSMC, get much of the kudos for driving chip manufacturing into new frontiers, the reality is that most semiconductors simply don’t need to be the most-advanced. Chips used for radio communications, to control display screens, regulate power, or operate tiny motors do just fine with technology that debuted a decade ago. And that’s the sandpit in which New York-based GlobalFoundries plays. This is why its $6 billion plan to boost capacity globally in 2021 and 2022, including raising output at its Singapore facility by around 50%, makes sense. It might even go further toward solving the current chip shortage than the $100 billion TSMC expects to spend over the next three years. The Hsinchu-based company, which controls around half the made-to-order chip market, is crucial to ensuring Apple Inc., Qualcomm Inc. and Nvidia Corp. get the most powerful chips available. Yet only 28% of its revenue last year came from products made using older technologies 1 and just 3% of sales were to the automotive sector, one of the hardest hit by the current shortage. There’s no doubt that GlobalFoundries is talking its own book. Ranked fourth in the world by share of the chip foundry market, the company is planning a New York initial public offering that could value it at $30 billion while also trying to convince governments around the world to help fund its expansion. Singapore’s Economic Development Board said it is a partner in the $4 billion project there, without specifying just how much it has invested. Yet the demand does exist. Much of the new Singapore capacity will be funded by prepayments from clients eager to ensure they’ll have guaranteed capacity in coming years. That follows an April announcement by Taiwan’s United Microelectronics Corp., one of GlobalFoundries’ nearest rivals, that clients were putting down deposits to secure supply to help fund a $100 billion ($2.8 billion) factory project in Taiwan. Importantly, this pre-booking isn’t for current or future manufacturing processes. While Apple was the primary driver for TSMC to build an advanced factory in southern Taiwan a decade ago, clients today want to ensure they have access to “legacy” (or “feature-rich”) technology. In February, GlobalFoundries announced that it had signed up the US Department of Defense as a customer for its 45-nanometer offerings at a factory in upstate New York. Bloomberg

from Asharq AL-awsat https://english.aawsat.com/home/article/3051106/tim-culpan/forgotten-chipmaker-may-be-key-ending-global-shortage