07 October 2008

AMD Split and Implications for TSMC

I am scratching my head here a bit because I just read an article on internetnews.com that looks at AMD's foundry spin-off (The Foundry Company) competitive targeting of TSMC. The reason I am scratching my head is that they claim AMD will have a technological advantage over TSMC because they already have 45 nm processing technologies in place. According to them (emphasis added):

With a long-term goal of being a player in the semiconductor foundry space, TFC now has its sights set on TSMC and other established players. But it won't have the capacity to go head-to-head, notes Spooner. While TSMC has 11 fabs, AMD had only its Dresden facility and its planned New York facility, which is years away from completion.

But TFC will also have an advantage of being much more cutting-edge in its manufacturing capabilities than TSMC, putting it closer to Intel. TSMC is just reaching 55 nanometer die sizes, while AMD, thanks in part to a technology alliance with IBM, is at 45nm and heading to 32nm.

The Foundry Company will join IBM's joint development alliance, a group of leading semiconductor companies collaborating on next-generation silicon technologies, with the ultimate aim of reducing die sizes to 22nm.

This means mean TFC can go gunning for TSMC customers. TSMC has an impressive collection of customers, including Broadcom, Conexant, Marvell, NVIDIA, VIA and ATI, which AMD now owns.

"The Foundry Company will be aimed at the very high end of the market, because they will offer very cutting-edge technologies and will be able to come to market before TSMC," Spooner told InternetNews.com. "I'm not sure how much revenue they can generate going forward. It all depends on how quickly they bring on partners."

This will also let TFC invest more heavily in the fabs than AMD could have all by itself, and it can make more money by making chips for other firms than AMD. AMD's fabs have some problems, most notably they don't use 300 millimeter wafers yet, they still use 200 mm.

A larger wafer means more chips can be made at once, and thus reduce manufacturing costs. Spooner said that with the backing TFC now has, it can make that transition.

First up, TSMC does have a 45 nm fab. All one needs to do is check their website here and you will see the following graphic:

Notice they do have at least one 45 nm fab with an additional two in the works and a plan for three 32 nm fabs. They also seem to have plans for 28 nm processing technology by 2010. TSMC is very competitive in the foundry business and should not be taken lightly.

There is also an issue of long term contracts and established partnerships with TSMC. TSMC also has a great deal of knowledge of how to be competitive in the pure-play foundry industry. AMD spin-off The Foundry Company (TFC) may have big ideas, but it will not be as easy for them. They are going up against a smart competitor with large market share. Remember the last time they did that against Intel they lost.

At any rate, I guess TFC knows more about TSMC's capabilities than either me or the author of that article and I am pretty sure they will not enter this market naively. If they do, they will be in trouble.

Internetnews.com: AMD Dumps Fabrication Plants

1 comment:

Anonymous said...

I was really interested in the news of the AMD split too. The foundry business hasn't been purely about who is at the lowest scales or who has the best technology. IBM made some noise these past few years with very advanced stuff, competitive with Intel even, with completed automated lines (a waste of money in my opinion given the capital costs), but they can't handle the volumes or give you good prices. One of the reasons TSMC has been really successful though is its really high utilization rates.

The whole scheduling thing is a bitch, and you're either good it or you're not. TSMC is, others, not so much. The Foundry company is going to have that fear hanging over every customer's head over whether AMD's order is going to be bumping theirs.

TSMC is so good they have been for a long time (not sure about during this downturn) but are usually backordered by several months in a market where time-to-market is critical.

An AMD split is double-bladed for TSMC anyways. It has a competitor in The Foundry Company, but it also has an opportunity to win more business from AMD the chip designer (ATI already contracts out manufacturing).

Anyways, good catch of the 45nm error.