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The semiconductor industry appears to be edging back to its roots – making its own manufacturing equipment and fabbing its own chips.
UMC asked for strategic partners to help defray the cost of investing in more advanced process technology.
UMC has fallen behind TSMC, the No.1 foundry, in process technology, and wants to raise the money to catch up. At UMC’s current market cap of $5.4 billion, 10% would cost $540m.
Earlier this month Intel bought 10% of lithographic tools manufacturer ASML. ASML asked for strategic partners to help defray the cost of developing 450mm wafers and EUV.
Before the 1980s, it was normal for every IC company to have its own fab. Now, maybe, we’re seeing a move back to owning, if not a whole fab, at least a part of a fab.
And in the early days of the industry, a device manufacturer had to make its own manufacturing equipment.
That all changed with the rise of the foundries in the 80s, and the rise of the independent semiconductor manufacturing equipment industry.
Clearly the entire semiconductor industry is now on the cusp of change. The foundries need investment; the tools makers need investment. In both cases investment has to come from the device manufacturers.
Recently TSMC, the No.1 foundry, said it was considering setting up dedicated fabs for individual customers. TSMC, and the other Asian foundries, may well be worried at the prospect of US device manufacturers building fabs in the USA again. Political pressures are encouraging the US companies to repatriate manufacturing.
Provoking these moves is the shortage of 28nm parts which has rattled IC companies and made them look at taking more control over their manufacturing.
Sharing fabs has seemed an obvious way for the industry to go for some time. Now the problems at 28nm have forced the device manufacturers to move a bit quicker along this road.
Well you’d think that with all the money being held by US companies abroad, the US government would say to companies: ‘You need not pay the 30% profits repatriation tax if you invest the repatriated funds in factories in the USA.’ Result: A resurgence in US manufacturing, employment, GDP, house values, manufacturing technology and Presidential popularity..
Its about time our US higher ups help bring back mfg to our country. This is how our country was made. This is how we stay a number one leader and keep our people out of a depressed state of living.
Now that raises an intriguing point, Mike. If Qualcomm is TSMC’s lead partner on developing a process, how does TSMC make sure that a 10% Qualcomm-owned UMC doesn’t benefit from that development? Tricky. And Qualcomm’s other foundries, Samsung and GloFo, might similarly benefit. Ouch. it will take a finer mind than mine to figure out the answer to that one, though maybe Morris Chang’s notion of individual customer fabs is one way to stop that dilemma arising. Though it looks too late for the individual fab now – what with Samsung, UMC and GloFo contracted to make Qualcomm chips over the next six months or so. Things are getting interesting.
A risky move on Qualcomm’s part. Will TSMC be quite so open with them now ?