Globalfoundries Plans Big Investment in New York State Chip Plant
September 15 2016 - 8:40PM
Dow Jones News
By Don Clark
Chip manufacturer Globalfoundries Inc. said it is planning a
multibillion-dollar investment in an upstate New York factory, part
of a novel strategy for introducing new production technology.
The company, which is owned by investors affiliated with the
government of Abu Dhabi, didn't provide specific dollar figures for
the plans. Dan Hutcheson, an analyst at VLSI Research, estimates
that Globalfoundries would need to spend $4 billion to $5 billion
on new equipment to accomplish its goals.
Globalfoundries, which last year purchased the chip operations
from International Business Machines Corp., makes chips to order
for other companies. It competes in what the industry calls the
foundry business with larger rivals such as Taiwan Semiconductor
Manufacturing Co. and Samsung Electronics Co. Another contender is
Intel Corp., which now offers foundry services in addition to
manufacturing chips it designs.
Chip manufacturers have long competed by cramming more
transistors and other components on squares of silicon, which
yields more computing capability and data storage capacity at a
lower cost. The pace of introducing finer production processes
every two years or so -- dubbed Moore's Law after Intel's
co-founder -- has been running into technical delays and economic
challenges that have reduced the payoff from miniaturization.
Sanjay Jha, the former Motorola Inc. chief executive who took
the CEO post at Globalfoundries in January 2014, said it would
break from standard industry practice by skipping a generation of
production technology. The company in 2018 plans to begin making
chips with circuit dimensions rated at 7 nanometers, or billionths
of a meter, compared with 14 nanometers for its most advanced chips
today.
TSMC, Intel and Samsung all plan to move from roughly the same
dimensions to 10 nanometers before introducing production processes
that can create 7 nanometer circuitry. Mr. Jha argued that the
technical benefits of the intermediary step weren't great enough to
justify its cost.
The planned 7-nanometer technology, by contrast, will bring a
30% boost in performance and a 60% reduction in power consumption,
he said.
Semiconductor companies learn about new production techniques
and materials with each generation of manufacturing technology,
which is one key reason they don't typically skip steps.
Roger Kay, an analyst at Endpoint Technologies Associates,
called Globalfoundries' strategy bold. "It's a bit risky to make
that big of a jump," he said.
Globalfoundries is planning other unusual moves, aided by an
influx of IBM engineers. Besides the production process to be
introduced in Malta, N.Y., the company is advancing an entirely
different production process at its factories in Dresden, Germany.
Mr. Jha said that process -- known as fully depleted
silicon-on-insulator, or FD-SOI -- is better suited for devices
where cost and low power consumption are higher priorities than
performance.
"One technology doesn't fit all," Mr. Jha said at a gathering of
reporters Wednesday in Santa Clara, Calif.
In another novel step, the company plans to offer future FD-SOI
chips with the ability to store data using a new technology called
magnetoresistive random-access memory. Globalfoundries will
introduce circuitry developed by Everspin Technologies Inc., a
Chandler, Ariz., company that has been working on alternatives to
existing memory chips.
Write to Don Clark at don.clark@wsj.com
(END) Dow Jones Newswires
September 15, 2016 20:25 ET (00:25 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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