AMD Spinoff GlobalFoundries Gets Aggressive - Page 2

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It may seem like a strange left turn, but Gartner Research Vice President Dean Freeman thinks Chang and company had to do it. "TSMC has a very potentially strong competitor in GlobalFoundries," he told InternetNews.com. "[GlobalFoundries] are going to be in talks with everyone who is fabless." And other than Intel, that's pretty much every chip maker out there.

"The fact that GlobalFoundries has been able to do leading edge technology very well and can do graphics processors would make Chang say 'ok guys, we gotta up our game a little.' The problem is, there's only so much game in town. Do they have all the market share they can get or can they get more?"

TSMC has about 40 to 45 percent of the fabrication market for chip designers that don't fabricate their own chips. The next closest competitor is UMC and it has about 10 percent market share, according to Freeman.

And then there's IBM

In addition to GlobalFoundries, TSMC has the ultimate 800 pound gorilla on its case; IBM (NYSE: IBM). It has its own fabrication business as well as the IBM Alliance, which includes chip makers like Chartered Communications, Samsung, and… AMD. GlobalFoundries is also a partner with IBM. "I'm sure TSMC is feeling a little uneasy right now," said Freeman.

McCarron added "Are we seeing an escalation in the level of competition? Absolutely. You will have GlobalFoundries showing up with cutting edge process technology out of the chute. Clearly that makes the market much more competitive and it won't make for a case where TSMC is a sole source of the latest process technology."

Freeman said he'd be impressed when GlobalFoundries lands a very high volume company like a wireless company. "That's when they've hit the home run and they will be a success. Qualcomm is the number one fabless company in the world," he said.

McCarron thinks it will benefit all players in the chip market to have the major fabrication vendors competing on price and process technology.

"It really is a shared thing rather than a leeching thing, because everyone can combine resources for mutual benefit and go off on their own. They may be competitors but they benefit by sharing the development costs," he said.