When GlobalFoundries abandoned development of its 7 nm-class process technology in 2018 and refocused on specialty process technologies, it ceased pathfinding, research, and development of all technologies related to bleeding-edge sub-10nm nodes. At the time, this was the correct (and arguably only) move for the company, which was bleeding money and trailing behind both TSMC and Samsung in the bleeding-edge node race. But in the competitive fab market, that trade-off for reduced investment was going to eventually have consequences further down the road, and it looks like those consequences are finally starting to impact the company. In a recent earnings call, GlobalFoundries disclosed that some of the company's clients are leaving for other foundries, as they adopt sub-10nm technologies faster than GlobalFoundries expected.

"Our communications infrastructure and data center segment continued to show weakness through 2023, partly due to the prolonged channel digestion of wireless and wired infrastructure inventory levels across our customers, as well as the accelerated node migration of data center, and digital-centric customers to single-digit nanometers," said Tom Caulfield, chief executive of GlobalFoundries, at the company's earnings call with financial analysts and investors (via SeekingAlpha).

There are four key reasons why companies migrate to 'single-digit nanometers' (e.g., 5 nm, 7 nm): they want to get higher performance, they want to get lower power, they want to reduce their costs by reducing die size, and most often, they want a combination of all three factors. There could be other reasons too, such as support for lower voltages or necessity to reduce form-factor. For now, the best node that GlobalFoundries has to offer is its 12LP+ fabrication process which is substantially better than its 12LP and 14LPP process technologies and should be comparable to 10nm-class nodes of other foundries.

Meanwhile, based on characteristics of 12LP+ demonstrated by GlobalFoundries, it cannot really compete against 7nm-class process technologies in terms of transistor density, performance, and power. Assuming that TSMC or Samsung Foundry offer competitive prices for their 7 nm-class nodes, at least some of 12LP+ customers are probably inclined to use 7 nm fabrication technologies instead, which is what GlobalFoundries confirms.

"We are actively [watching] these industry trends and executing opportunities to remake some of our excess capacity to serve this demand in more durable and growing segments such as automotive, and smart mobile devices," Caulfield said.

Back in 2022, communication infrastructure and datacenter revenue accounted for 18% of the company's earnings, but in 2023, that share dropped to 12%. Shares of PC and smart mobile devices declined from 4% and 46% in 2022 to 3% and 41%, respectively. Meanwhile the share of automotive-related revenue increased from 5% in 2022 to 14% in 2023, which is a reason for optimism as GlobalFoundries expects automotive growth to offset declines of other applications that transit from 12LP+ to newer nodes.

"[Automotive] products span the breadth of our portfolio from 12 LP+, our FinFET platform, all the way through our expanded voltage handling capabilities at a 130 nm and a 180 nm technologies," said Caulfield. "Through these offerings, we believe that GF will play a key role in the long-term transition of the automotive industry, and our customer partnerships are central to that.

GlobalFoundries revenue topped $7.392 billion for the whole year 2023, down from $8.108 billion in 2022 due to inventory adjustments by some customers and migration of others to different foundries and nodes. Meanwhile, the company remained profitable and earned $1.018 billion, down from $1.446 billion a year before.

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  • dotjaz - Friday, February 16, 2024 - link

    Why would they want the dated process nodes with slim margin? GloFo has <30% gross margin. What could Intel possibly get from it?
  • KAlmquist - Friday, February 16, 2024 - link

    They would get people with experience in the foundry business. A foundry needs to be able to manufacture semiconductors, but it also needs to be able to work with customers (and develop credibility with customers), which is something Intel didn't have to do when it was just manufacturing its own designs.

    On the other hand, Intel already has partnerships with Tower Semiconductor and UMC, which is another way to address this issue.
  • FunBunny2 - Saturday, February 17, 2024 - link

    Why would they want the dated process nodes with slim margin?

    simple: there's a few diaper loads of chips, largely embedded, that would be microscopic on single-digit fabrication. you can look it up.

    "Demand growth will be highest for logic chips fabricated at 20nm to 45nm nodes to meet the growing computing demands of centralized electrical/electronic architectures, while demand pressure at mature nodes larger than 55nm may ease. "

  • Blastdoor - Sunday, February 18, 2024 - link

    Yes, foundries need to offer a range of processes to benefit a diversity of needs. IFS+GF would be great from that perspective. You can bet China would throw up regulatory hurdles, but then IFS can just pull out of China.
  • haukionkannel - Saturday, February 17, 2024 - link

    The problem is… soon there will be Only one or maybe two manufacturers to make chips.. aka monopoli and we know what that means!
    There just is not companies that can keep up with the top dogs and soon there Only in top dog that can increase prices by 200%…
  • FunBunny2 - Sunday, February 18, 2024 - link

    effectively, that time has come. if all user-facing companies have only a single source (or near enough to make no difference) for bottle-neck tools...

    "ASML dominates the lithography market with an 82.9% market share followed by Canon and Nikon. Its market share is more than 8x larger than second-place Canon. "

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