Business, Hardware

Did GlobalFoundries just become an 800-pound Fab gorilla?

ATIC [Advanced Technology Investment Company], technology investment group from the Government of Abu Dhabi, the majority owner of GlobalFoundries announced that the group is making a bid to acquire Chartered Semiconductor.

The move is not entirely unexpected, but rather a consequence of events that had nothing to do with semiconductor industry: Chartered Semiconductor is one of golden eggs in Singaporean’s government investment arm [Temasek Holdings Pte], who is feeling the pain of global economy slowdown and the changes in companies owned by Temasek were obvious. As Singapore Airlines went through ownership change [now mostly owned by Temasek] the investment arm needed the cash to complete the transaction and Abu Dhabi’s ATIC rode into town.

ATIC was interested in buying its competition, but when an opportunity like this arises, there isn’t much you can do but to take it. The acquisition of Chartered Semi puts GlobalFoundries in a role of an 800-pound gorilla in the contract manufacturing space. First GlobalFoundries signed the deal to manufacture chips for a chip maker [STMicroelectronics], and now the GF owner is buying one of own largest competitors. In fact, until TSMC gets its SOI production up and running, GlobalFoundries is acquiring its second largest competitor in the SOI space [we take that ATIC does not want to buy IBM… for now].

Chartered Semiconductor Fab complex in Singapore via Google MapsIn case you’re unfamiliar with Chartered semiconductor manufacturing capabilities, the foundry owns six cleanrooms in a giant fab complex in Singapore, with production based on 200mm and 300mm wafers. Total output of the company is also very interesting:

  • Fab 2: 50,000 200mm WSM 600-350nm
  • Fab 3: 25,000 200mm WSM 350-180nm
  • Fab 3E: 34,000 200mm WSM in 250-180nm
  • Fab 5: 24,000 200mm WSM 350-180nm
  • Fab 6: 39,000 200mm WSM 180-110nm
  • Fab7: 45,000 300mm WSM 130-40nm [equal to 101,250 200mm wafers]

So, we have 172,000 WSM [wafer starts per month], or around 2,06 million 200mm wafers per year, plus an additional 540,000 300mm wafers. This manufacturing capacity is nothing short of impressive, even though the majority is in less competitive 200mm wafer space. If you would compare Chartered’s Fab7 [300mm2 one] to GlobalFoundries’ Fab1 complex in Dresden, you might be surprised at the differences in size, since Fab7 is massive: clean room space is as big as whole Module 2 [ex-Fab30/38] and half of Module 1 [ex-Fab36].

Yes, it is true that currently "only" 27,000 wafer starts can be in 40nm, but SOI capacity is quite impressive. Inside this advanced 300mm facility Chartered makes Microsoft’s Xbox 360 CPUs, some AMD CPUs and some of IBM’s Power chips.

Clean room space is also quite impressive – six facilities with a grand total of 773,640 square feet [71,871.15 m2]. If you compare that to current manufacturing facilities in Dresden, Module 1 [14,500 m2 – 156,000 sqft] and currently upgrading Module 2 [16,700 m2 – 180,000 sqft], you can see that GlobalFoundries wants to go from 336,000 sqft [31,214 m2] in 2009 to 1.38 million square feet [128,202 m2] of clean room space in 2012.
Divided by wafer size, GlobalFoundries in 2012 could look like this:

  • 300mm2 – 120,000 wafer starts per month, 838,000 sqft [77,850 m2] Class 100 clean room
  • 200mm2 – 172,000 wafer starts per month, 541,640 sqft [50,318 m2] Class 100 clean room

All in all, this is quite a significant jump in manufacturing space, as there aren’t exactly many contract manufacturers who can or plan to annually output almost 1.5 million 300mm wafers in 2012-2013 frame. In fact, one could put a question that GlobalFoundries is doing this to attract the heavy weights, Microsoft, Sony, Nintendo – but Qualcomm and nVidia as well.

Over the past several months, we featured various articles on upcoming chips, but they all have one thing in common: they have to be built on 300mm wafers in order to be profitable. Qualcomm’s quad-core ARM System-on-Chip is quite nice, but the company has to have 300mm wafers available to score a profit. Same thing with the 2010-2011 generation of nVidia’s Tegra and Texas Instruments OMAP chips.

Thus, a foundry has to position itself aggressively and there is no doubt that this move puts GlobalFoundries on the map of TSMC and Intel challenger. While TSMC still has the overall lead in number of wafers it can produce, the numbers here show that GlobalFoundries is catching up and overtaking in 300mm wafer arena – a worrisome trend.

The clock isn’t exactly stopping there – if we divide the wafers in SOI and non-SOI flavor, GlobalFoundries will be the largest SOI wafer maker, and with a move to optical interconnects starting in 2012-2013 there isn’t exactly any doubt what’s on the table. ATIC and AMD both want that GlobalFoundries change the semi playing field for good, and this acquisition only confirms that direction.

GlobalFoundries can freely disclose all of its plans and there isn’t exactly a lot that other competitors can do but to launch massive FUD campaigns which again, would not stand due to engineering excellence shown by former AMD engineering teams, who saved Microsoft’s bacon on Xbox 360 yields, for instance.

This move also solves one of major pains for GlobalFoundries exec team – no longer journalists and analysts need to ask "who are your customers?", because with the acquisition of Chartered Semi, that list grew by couple of dozen names, including Microsoft and IBM. You can expect that next GlobalFoundries event to feature numerous existing customers, even if they did not sign directly with GlobalFoundries, rather Chartered Semi.

ATIC’s next move: Buying a wafer supplier?
We wonder what the next step for GlobalFoundries will be, but personally I would not bet against GF acquiring Soitec, as the largest SOI wafer vendor. Intel invested in the firm in 2007, when it became clear that the future chip interconnects [remember Intel Hybrid Silicon Laser demonstration on SOI wafers during IDF Fall 2006?] will require the use SOI wafers. AMD did not react at the time, but with over a trillion USD for investments alone, Abu Dhabi investment groups can easily flex their muscle and put everything they need under one roof.