Tue, Jul 14, 2015 page14

• Globalfoundries looks backward

  • Bloomberg
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  Globalfoundries Inc, the world’s second-largest outsourcing chipmaker, is offering a new production technique that is deliberately less advanced than state of the art.

  A variation of 22-nanometer technology, the company’s new process is aimed at providing less expensive production of chips that need to operate in low-power environments, yet do not require the highest performance.

  Globalfoundries is looking for ways to grab orders from Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) and win market share as its customer base shrinks and production costs increase.

  Throughout the more than 50-year history of the chip industry, companies have raced toward more advanced fabrication techniques, yet the uses for that “bleeding edge” are shrinking, Globalfoundries chief executive Sanjay Jha said.

  “Growth now is in much more cost-sensitive areas,” he said in an interview at the company’s Santa Clara, California, headquarters.

  “We think this technology is well suited to that marketplace,” he said.

  Globalfoundries is to use the new fully depleted silicon on insulator process at its plants in Dresden, Germany.

  The company is not giving up on more advanced production and expects devices that use chips made with its 14-nanometer process to come to market soon, showing that Globalfoundries is keeping pace, Jha said.

  Performance and cost improvements in computer chips come from shrinking their basic component — transistors. The most powerful chips contain more than a billion of the tiny switches in an area the size of a thumbnail.

  Jha needs to deliver on his promise of advanced technology to help banish Globalfoundries’ reputation for not being as reliable a supplier as TSMC, said Len Jelinek, an analyst at IHS Inc.

  “We need verification from somebody coming out and saying: ‘We use Globalfoundries and we’re winning in the marketplace.’ I think Sanjay’s on a short leash,” Jelinek said. “The market has always cried out for a viable second source to TSMC.”

  TSMC had a growing 60 percent slice of the US$42 billion outsourced chip production industry last year, according to IHS. Globalfoundries was second with 11 percent, just ahead of United Microelectronics Corp (聯電).

  A former head of Qualcomm Inc’s chip business and chief executive of Motorola’s Mobility Holdings, Jha in January last year took the top job at Globalfoundries. The closely held chipmaker is owned by an investment arm of the Abu Dhabi government.

  Created from elements of Advanced Micro Devices Inc, Chartered Semiconductor Manufacturing and International Business Machines Corp, Globalfoundries is trying to convert plants dedicated to individual customers to serving multiple clients.

  “There was a perception that our execution wasn’t where our customers needed it to be,” Jha said.

  “It’s been a singular focus I’ve brought to the company. You’re now beginning to see people taking bets on us at the leading edge,” he said.

  Like other chip industry executives, Jha said he has received calls from bankers eager to assemble deals in a record year for semiconductor mergers and acquisitions.

  Establishing a reputation for execution, grabbing market share and improving financial performance would lead Globalfoundries to where it can consider strategic options, he said.

  The company’s owners remain committed to investing in Globalfoundries, he said.

  “Our market share is such that I don’t have to worry about the market growing,” Jha said. “A very modest share gain will make a very big difference to our financials.”
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