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March 2009

Foundry Market Forecast: First Quarter 2009

The semiconductor foundry market is facing a number of challenges in 2009. Most of the burden is being born by the foundry suppliers. The foundries continue to invest in new technologies, not just advanced nodes, but new processes for high voltage, mixed signal and power management. All these investments are forcing foundries to assume most of the risk while margins continue to become tighter. Offering more options is one way to capture customer loyalty but it also increases foundry costs.

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GlobalFoundries: Think Global, Work Local

This has been an active week for big foundry announcements.  On March 2, 2009 Intel/TSMC announced an MOU to collaborate on technology and IP infrastructure for SoCs.  At the same time, AMD announced it had closed their deal with Advanced Technology Investment Company (ATIC) and Mubadala Development Company of Abu Dhabi. Within 24 hours, GlobalFoundries was launched.  GlobalFoundries is a new business formed through the spinoff of AMD’s manufacturing operations.  The company will provide manufacturing services to AMD as well as offer services to third-party customers.   

Semico Spin

Most observers would wonder why any company would want to enter the foundry business at this time in our world and industry downturn.  What will differentiate GlobalFoundries from TSMC, Chartered, Samsung or UMC?  Those companies are struggling to get capacity utilization back up.  Going after blue chip, high volume customers is already an established strategy among the large foundries.  Wouldn’t it be nice if they established a foundry in the U.S. that enabled innovation and growth opportunities for the fabless companies in the U.S.? 

Intel and TSMC Split the Atom

March 2, 2009:  Today Intel and TSMC made a major announcement.  The companies have issued a memorandum of understanding (MOU) to collaborate on addressing technology platform, intellectual property (IP) infrastructure, and System-on-Chip (SoC) solutions.  Essentially, Intel is licensing the Atom core to customers who will be able to customize a design and have it manufactured by TSMC.

Intel is doing this in order to expand the potential market for the Atom architecture, which is a derivative of the 80x86.  The agreement with TSMC allows IP to be integrated around the Atom core.  This is IP that Intel does not have access to for whatever reason.  Both OEMs and other semiconductor companies may be customers, but no companies were identified at this time.

The primary market segments that are targeted are mobile internet devices (MIDs), smart-phones, netbooks, nettops, and AC-powered consumer electronics device.  These are the same markets Intel is addressing with its current Atom products and roadmap.  The company said the agreement with TSMC does not change any of its plans for its standard product line.  The current Atom product line will continue to be manufactured in-house by Intel; this is not a second sourcing agreement.  Intel will maintain control of which companies will be allowed to license Atom under this agreement. 

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