AMD’s former chip fabrication plants haven’t been in business for a year, but they are certainly off to the races in the drive to get business. GlobalFoundries, the spin-off firm that’s mostly at arm’s length from AMD (NYSE: AMD), is racking up business and talent pretty fast.
That may have Taiwan Semiconductor Manufacturing Corp. (TSMC) nervous, especially after the big plunge in business earlier this year and GF recently pinching one of its executives. Last month, GF hired Subramani Kengeri away from TSMC to be its vice president of design solutions. Kengeri had served as TSMC’s senior director of design and technology and head of its North America Design Center in Sunnyvale, Calif.
GF also nabbed Mojy Chian to serve as senior vice president of design enablement. He came from Altera, which was closely aligned with TSMC. Finally, GF picked up Gregg Bartlett as senior vice president of technology and R&D from Freescale Semiconductor. He will oversee GlobalFoundries’ collaborative R&D activities with the IBM Alliance.
Another reason to feel uneasy: nVidia, one of TSMC’s bigger accounts, is in talks with GlobalFoundries. A spokesperson for nVidia confirmed the GPU chip maker is in talks but would not elaborate. nVidia and AMD are in a race to reach 40nm GPU design, and unlike AMD vs. Intel, this race is pretty competitive.
Most recently, GlobalFoundries announced it has begun High-K Metal Gate development that would enable it to design processors at 22nm, although it did not say when such technology would be available. By way of reference, Intel has begun work on 32nm and is aiming for 22nm in two years. TSMC last year was struggling with 45nm before finally getting things straightened out.
Dean McCarron, president of Mercury Research, said it makes sense for nVidia to talk to GlobalFoundries, even if it is connected to its only real competitor in the marketplace.
“Typically, what happens is suppliers will keep more than one foundry operational so there isn’t too much risk involved,” he told InternetNews.com. “I wouldn’t expect [nVidia] to shut down all business with TSMC but some migration wouldn’t be surprising.”
Changes at TSMC
Meanwhile, there have been some changes in TSMC’s executive ranks. Last week, its 77-year-old founder and chairman Morris Chang took over the CEO position from Rick Tsai, who had been president and CEO of TSMC since 2005. Tsai had been instrumental in striking the manufacturing deal with Intel (NASDAQ: INTC) last April, in which TSMC would make Atom processors.
Tsai will serve as president of the New Business Development Organization, reporting directly to Chang. According to a report in the Taiwanese publication DigiTimes, the new group will focus on new markets like LED and solar.
Next page: It may seem like a strange left turn
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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.
