GlobalFoundries Stops All 7nm Development: Opts To Focus on Specialized Processesby Anton Shilov & Ian Cutress on August 27, 2018 4:01 PM EST
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GlobalFoundries on Monday announced an important strategy shift. The contract maker of semiconductors decided to cease development of bleeding edge manufacturing technologies and stop all work on its 7LP (7 nm) fabrication processes, which will not be used for any client. Instead, the company will focus on specialized process technologies for clients in emerging high-growth markets. These technologies will initially be based on the company’s 14LPP/12LP platform and will include RF, embedded memory, and low power features. Because of the strategy shift, GF will cut 5% of its staff as well as renegotiate its WSA and IP-related deals with AMD and IBM. In a bid to understand more what is going on, we sat down with Gary Patton, CTO of GlobalFoundries.
7LP Canned Due to Strategy Shift
GlobalFoundries was on track to tape out its clients’ first chips made using its 7 nm process technology in the fourth quarter of this year, but “a few weeks ago” the company decided to take a drastic, strategic turn, says Gary Patton. The CTO stressed that the decision was made not based on technical issues that the company faced, but on a careful consideration of business opportunities the company had with its 7LP platform as well as financial concerns.
It is noteworthy that when GlobalFoundries first announced its 7LP platform in September 2016, it said that it would start risk production of processors using this technology in early 2018 (PR), which means that the first chips should have been taped out before that. When the company detailed the process in June 2018, it said that it expected to start “volume production ramping in the second half of 2018” (PR), which would be close to impossible if customers taped out their first chips only in Q4.
Generally, it looks like the company had to adjust its roadmap somewhere along the way, moving the start of high-volume manufacturing (HVM) further into 2019. Whether or not these adjustments had any implications on GlobalFoundries is up to debate. Keep in mind that AMD’s first 7 nm product was designed for TSMC’s CLN7FF from the beginning, so the company did not bet on GF’s 7LP in late 2018 anyway, and no rush with the manufacturing technology was needed for GF’s key customer.
Along with the cancellation of the 7LP, GlobalFoundries essentially canned all pathfinding and research operations for 5 nm and 3 nm nodes. The company will continue to work with the IBM Research Alliance (in Albany, NY) until the end of this year, but GlobalFoundries is not sure it makes sense to invest in R&D for ‘bleeding edge’ nodes given that it does not plan to use them any time soon. The manufacturer will continue to cooperate with IMEC, which works on a broader set of technologies that will be useful for GF’s upcoming specialized fabrication processes, but obviously it will refocus its priorities there as well (more on GF’s future process technologies later in this article).
So, the key takeaway here is that while the 7LP platform was a bit behind TSMC’s CLN7FF when it comes to HVM – and GlobalFoundries has never been first to market with leading edge bulk manufacturing technologies anyway – there were no issues with the fabrication process itself. Rather there were deeper economic reasons behind the decision.
Economic Reasons Behind the Move
As we noted in our article covering GlobalFoundries's new CEO hire earlier this year, former CEO Sanjay Jha was never able to make the company profitable. His key tasks were to increase GlobalFoundries’s sales, streamline the company in general, and ensure that it executes its roadmap.
To address the needs of the manufacturer’s traditional key client (AMD) and ensure that his company was competitive against other contract makers of semiconductors, he licensed Samsung Foundry's 14LPP fabrication technology. That strategy worked well. With Sunjay Jha at the helm, GlobalFoundries has managed to land a variety of new customers and increase its sales of semiconductor wafers from approximately $4.121 billion in 2013 to $6.176 billion in 2017. Besides, the foundry’s leading-edge Fab 8, which has been processing wafers using exclusively 14LPP process technology for well over 1.5 years now, is running at full capacity.
To ensure that GlobalFoundries remains competitive against Samsung Foundry and TSMC in the long run, Sunjay Jha obtained IP and development teams from IBM (along with two fabs and a lot of obligations), and poured in billions of dollars in development of the 7LP fabrication technology platform. The latter would include three generations of manufacturing processes and, possibly, a custom high-performance technology available exclusively to IBM. While everything appeared to proceed smoothly with the 1st Gen 7 nm process (DUV only), the 2nd Gen 7 nm process (with EUV used for non-critical layers, such as padding) still needed some additional development investments, and the 3rd Gen 7 nm (with intensive usage of EUV) required even more money for development and further could require installation of additional EUV equipment. Meanwhile, there were two things to consider.
First. If GlobalFoundries kicks off production using the 1st Gen 7 nm fabrication process, it would have needed to cure all of its teething troubles and offer its clients a roadmap forward. The latter would have included 2nd Gen and 3rd Gen 7 nm, but nothing stops there. Customers would have asked for 5 nm and then for 3 nm nodes. Meanwhile, you cannot tell your clients that you are packing up after a certain node and then hope that this node will be a success (the same is true for DUV-only 1st Gen 7 nm).
Second. Development of leading-edge process technologies is extremely expensive. Every new node requires billions of dollars in investments. Those costs are eventually amortized over each chip the company makes, so to keep increasing R&D costs from driving up chip prices, foundries need to produce more chips. To make more chips, they need to either run multiple fabs that use the same process technology (these are going to cost $10+ billion in the EUV era), or build giant fabs that process a gargantuan number of wafers (these are going to cost $20+ billion in the EUV era). Meanwhile, GlobalFoundries has only one leading-edge fab featuring capacity of 60,000 wafer starts per month. As a result, either GlobalFoundries has to pass these R&D costs on to the finite number of wafers it processes – and become uncompetitive against rivals in the process – or eat the costs with reduced profitability.
Meanwhile, having spent well over $20 billion on GlobalFoundries over the last 10 years, Mubadala, the owner of the company, is not inclined to lose more money or invest tens of billions in the hopes of becoming profitable one day. The investor wants GlobalFoundries to stop bleeding and start generating profits.
“The culture of [our investments], the ones I’ve been involved with, was about accumulating assets and then just maintaining it,” said Mubadala CEO Khaldoon Al Mubarak in an interview with Bloomberg earlier this year. “The shift that has happened over the last couple of years, that I’ve tried to push at Mubadala today, is a monetization strategy that makes sense, not with a view to cash out but with a view to reinvest.”
Gary Patton admits that GlobalFoundries never planned to be a leading producer of 7-nm chips in terms of volume. Furthermore, the company has been seeing increasing adoption of its 14LPP/12LP technologies by designers of various emerging devices, keeping Fab 8 busy and leaving fewer step-and-scan systems for 7LP products.
Without another big fab, it would be impossible to make any new leading-edge process technology competitive against Samsung and TSMC due to aforementioned scale reasons. Meanwhile, building a new fab (or even expanding the Fab 8 with another clean room module, which is something that GF considered several years ago) and creating another node or two would require another $10 – $15 billion from Mubadala, which is not inclined to invest just now. As a result, the GlobalFoundries has decided to switch entirely to specialized process technologies for emerging high-growth markets. This strategic shift enables it to reduce spending on R&D, slowdown procurement of new equipment, reduce its workforce by 5% (most of which will be in Malta), and potentially avoid direct competition against the aforementioned contract makers of semiconductors.
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FunBunny2 - Tuesday, August 28, 2018 - link" Price is only an outcome due to lack of volume production"
absolutely not, in this case. the cost is in quantities of raw materials. silicon is plentiful and cheap. the rest are far from it. and, as other comments have described, not technically superior.
evanh - Tuesday, August 28, 2018 - linkThe raw materials are nothing in the final cost for a high value high volume product.
Samus - Thursday, August 30, 2018 - linkDamn you all are WAY the fuck over my head lol
boozed - Monday, August 27, 2018 - linkDo you think they haven't thought about it?
Azethoth - Monday, August 27, 2018 - linkNope. He is a very special boy. He thinks of things nobody else can even dream of.
NuclearArmament - Monday, August 27, 2018 - linkIt doesn't matter, move away from silicon, this is getting ridiculous. You can't keep milking this technology for decades and expect it to, and these multi-billion-dollar technology conglomerates sure can afford to switch to InGaAs or GaAs and still make countless billions more, all while not paying taxes and receiving massive government subsidies.
Reflex - Monday, August 27, 2018 - linkMoving away from silicon has been an industry goal for decades now. When anyone manages to find a cost-effective method of doing so they will become wildly rich. To date, nobody has pulled that off. Not for lack of effort.
FunBunny2 - Tuesday, August 28, 2018 - link"Moving away from silicon has been an industry goal for decades now. "
it's worth noting that the original transistors were made of germanium. hard to find, hard to use. the engineers figured out how to use abundant silicon (thought, not just sand scooped up from the beach). the laws of physics can't be flummoxed.
surt - Monday, August 27, 2018 - linkEvidence seems pretty strong that you can in fact milk silicon tech for decades, since that has already happened. And other companies seem to feel pretty confident about milking it for a couple more decades at least. I'm pretty sure if GaAs or some other technology was easy to make profitable, someone would rush to it and crush the competition. Intel has billions in the bank and knows that Samsung is a mortal threat if they don't catch up. Pretty sure they would leapfrog to another technology if they could have an edge on Samsung of even 6 months.
name99 - Tuesday, August 28, 2018 - linkWhat do you WANT from your logic process? THAT is the question -- figure that out, then we can decide if GaAs or other III-V materials make sense.
What's holding back the performance of existing CPUs? There are three contenders (which one bites first depends on exactly your target market)
- power density (too much power generated and you can't get enough current in, and you can't cool it fast enough)
- metal speed (also RC) you're limited by how fast wires can transport info from one part of the chip to another
- transistor speed
GaAs ONLY helps with transistor speed. In the process it goes bezerk with power and doesn't help with wire speed.
Beyond that the primary reason our current CPUs don't hit their potential is waiting on memory, which halves (or more) their IPC compared to their full potential. All the ways of dealing with this are built on massive transistor budgets (starting with huge caches). But if you want small transistors, there's no magic in GaAs that makes this easier. It's the exact same lithography, with the exact same difficulties, whether it's multi-patterning or EUV.
It's like a car company wants to make a better car, and your answer is "we need to pour ALL our resources into making better paint". WTF? Does better paint make the car faster? Does it improve power efficiency? Does it solve any actual engineering problem?