For more than 30 years, Intel Corp has dominated chipmaking, producing the most important component in the bulk of the world’s computers. That run is now under threat from a company many Americans have never heard of.
Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) was created in 1987 to churn out chips for companies that lacked the money to build their own facilities. The approach was famously dismissed at the time by Advanced Micro Devices Inc (AMD) founder Jerry Sanders.
“Real men have fabs,” Sanders said at a conference, using industry lingo for factories.
These days, ridicule has given way to envy as TSMC plants have risen to challenge Intel at the pinnacle of the US$400 billion industry.
AMD has chosen TSMC to make its most advanced processors, having spun off its own struggling factories years before.
TSMC’s threat to Intel reflects a sea change in chipmaking that has seen one company after another hire TSMC to manufacture the chips they design.
Hsinchu-based TSMC has scores of clients, including tech giants Apple Inc and Qualcomm Inc, second-tier players like AMD and minnows such as Ampere Computing LLC.
The explosion of components built this way has given TSMC the technical know-how needed to churn out the smallest, most efficient and powerful chips in the highest volumes.
“It’s a once-in-a-50-year situation,” said Renee James, the former No. 2 at Intel who heads start-up Ampere.
Her company is less than two years old and yet it is going after Intel’s dominant server chip business. That Ampere thinks it can compete is a testament to stumbles by Intel and TSMC’s ability to benefit from those mistakes.
It has been a decade since Intel faced major competition and its 90 percent revenue share in computer processing is again to deliver record results this year.
However, some on Wall Street are concerned, and rivals are emboldened, because TSMC has a real chance to replace Intel as the best chipmaker in the business.
Last year, the Taiwanese company amassed a bigger market value than its US rival for the first time.
What Intel investors really worry about is that the largest Internet companies will start making their own chips.
Earlier this week, Amazon.com Inc, the biggest cloud-computing company, announced its first in-house server processor.
The Graviton is made by TSMC and it supports a new version of Amazon’s service that is more than 40 percent cheaper than a similar offering powered by Intel chips, the company said.
Without TSMC’s capabilities, Amazon would not have the option to go it alone, Amazon Web Services Inc vice president Matt Garman said.
“More competition in this space is great,” he said.
Production bragging rights in semiconductors are judged by the width of the space between lines on the tiny circuits that give chips their function. Shrinking that gap — measured in nanometers, or billionths of a meter — gives designers the ability to make chips that count faster, use less power, store more data or simply cost less.
In the highest-end processors, where Intel makes most of its money, space is at a premium. A Xeon server processor crams billions of transistors into an area the size of a postage stamp.
Intel was the first to use 14-nanometer technology at scale in 2013, Goldman Sachs Group Inc said.
It will not have a 10-nanometer process ready for prime time until the end of next year — by far the longest wait in its history.
TSMC has gone from producing 20-nanometer to 7-nanometer chips in the same time.
Intel’s holdup revolves around yield, the number of good chips that emerge from each production run. In plants that cost about US$7 billion and run 24 hours per day churning out millions of chips each month, the slightest hiccup can be disastrous financially.
Intel has not ironed out enough of these manufacturing wrinkles yet and the company will not shift to 10-nanometer production until it is sure everything works properly.
Sanders’ current successor at AMD, CEO Lisa Su (蘇姿豐), does not have to worry about this, because the company sold its factories and lets TSMC handle the complex production.
“That’s one of the best decisions we’ve made,” Su said. “It allows us to manage risk and focus on the things that make the product great.”
With TSMC’s help, Su is pursuing a goal that Sanders never attained: A credible and lasting challenge to Intel’s hold on computing.
AMD is now telling investors and customers that its new chip designs will surpass those from Intel. TSMC makes this competition possible, even though AMD has about one-10th of Intel’s workforce and research and development budget.
However, TSMC did not catch Intel all by itself. The company’s real break came a decade ago, when the smartphone began filling consumers’ pockets.
Intel dabbled in mobile chips, but the US company never committed its best production and design to the area, preferring to prioritize its existing cash cows of PC and server chip businesses.
When smartphone sales took off, handset makers used other processors from companies like Qualcomm, or they designed their own using ARM Holdings PLC technology, like Apple. TSMC factories churned these components out.
The smartphone business is now almost six times as big as the PC industry by volume. That has given TSMC the advantage of high-volume manufacturing experience that previously belonged to Intel.
With billions of transistors on chips, a problem with a small number of those tiny switches can render the whole component useless. Production runs can take up to six months and involve hundreds of steps requiring maniacal attention to detail.
Each time there is a mistake, the factory operator has a chance to make tweaks and try a new approach. If the change works, that information is retained to try on the next challenge.
The more production runs, the better, and TSMC has the most nowadays.
“TSMC just continues to deliver latest chips on schedule without any mistakes,” Sanford C. Bernstein analyst Mark Li said.
He said that he thinks Intel’s leadership in PC and server chips, plus its pricing power, are at risk because of its smartphone slip and TSMC’s hard-earned consistency.
Still, this is far from the first challenge Intel has faced. The company is working on its production problems and in the meantime is to deliver new chips built with existing production technology that it has said would keep the opposition at bay.
Navin Shenoy, head of Intel’s server processor division, has said that nanometer-based production measures have never been the only factor of success (although the company liked to talk about this more in the past).
Intel’s near-term solution is to design better chips using old production technology.
“I’m confident that we’re going to deliver what our customers care about, which is system performance,” Shenoy said.
Historically, Intel has squashed rivals using a research budget that dwarfed anything else in the industry. However, TSMC’s approach is undermining even this advantage.
While Intel still outguns TSMC in capital spending on new plants and equipment, the tables are turned when you combine the research budgets of TSMC clients like Qualcomm, Apple, Nvidia Corp and Huawei Technologies Co (華為).
The combined budgets of TSMC’s customers are not only larger than Intel’s, but the gap is increasing, Goldman Sachs said, adding that by 2020, they would spend almost US$20 billion, at least US$4 billion more than Intel.
“They’re a self-fulfilling prophesy now,” Nvidia executive vice president of operations Debora Shoquist said. “They are the best and the best go to the best.”
Among the rows of vibrators, rubber torsos and leather harnesses at a Chinese sex toys exhibition in Shanghai this weekend, the beginnings of an artificial intelligence (AI)-driven shift in the industry quietly pulsed. China manufactures about 70 percent of the world’s sex toys, most of it the “hardware” on display at the fair — whether that be technicolor tentacled dildos or hyper-realistic personalized silicone dolls. Yet smart toys have been rising in popularity for some time. Many major European and US brands already offer tech-enhanced products that can enable long-distance love, monitor well-being and even bring people one step closer to
Malaysia’s leader yesterday announced plans to build a massive semiconductor design park, aiming to boost the Southeast Asian nation’s role in the global chip industry. A prominent player in the semiconductor industry for decades, Malaysia accounts for an estimated 13 percent of global back-end manufacturing, according to German tech giant Bosch. Now it wants to go beyond production and emerge as a chip design powerhouse too, Malaysian Prime Minister Anwar Ibrahim said. “I am pleased to announce the largest IC (integrated circuit) Design Park in Southeast Asia, that will house world-class anchor tenants and collaborate with global companies such as Arm [Holdings PLC],”
Sales in the retail, and food and beverage sectors last month continued to rise, increasing 0.7 percent and 13.6 percent respectively from a year earlier, setting record highs for the month of March, the Ministry of Economic Affairs said yesterday. Sales in the wholesale sector also grew last month by 4.6 annually, mainly due to the business opportunities for emerging applications related to artificial intelligence (AI) and high-performance computing technologies, the ministry said in a report. The ministry forecast that retail, and food and beverage sales this month would retain their growth momentum as the former would benefit from Tomb Sweeping Day
Thousands of parents in Singapore are furious after a Cordlife Group Ltd (康盛人生集團), a major operator of cord blood banks in Asia, irreparably damaged their children’s samples through improper handling, with some now pursuing legal action. The ongoing case, one of the worst to hit the largely untested industry, has renewed concerns over companies marketing themselves to anxious parents with mostly unproven assurances. This has implications across the region, given Cordlife’s operations in Hong Kong, Macau, Indonesia, the Philippines and India. The parents paid for years to have their infants’ cord blood stored, with the understanding that the stem cells they contained