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Qualcomm’s critical reliance on supply constrained 28nm foundry capacity

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KEY UPDATES: TSMC Board of Directors Meeting Resolutions [TSMC press release, Nov 13, 2012]

Hsinchu, Taiwan, R.O.C. – November 13, 2012 – TSMC (NYSE: TSM) today held a meeting of the Board of Directors, which passed the following resolutions:

1. Approved capital appropriations totaling approximately US$2.975 billion for the purpose of expanding advanced process capacity, construction of 12-inch GigaFabstm, and installation of facilities systems.

2. Approved R&D capital appropriations and 2013 sustaining capital appropriations totaling approximately US$209.5 million.

3. Approved the issuance of no more than NT$45 billion (approximately US$1.53 billion) in unsecured corporate bonds in Taiwan to finance TSMC’s capacity expansion.

4. Approved the subscription of NT$1.24 billion (approximately US$42.28 million) in new shares to be issued by TSMC Solid State Lighting Ltd. in 2013.
5. Approved the subscription of NT$636 million (approximately US$21.63 million) in new shares to be issued by TSMC Solar Ltd. in 2013.

TSMC sees orders returning for its 28nm process [DIGITIMES, Nov 8, 2012]

In first-half 2012, Taiwan Semiconductor Manufacturing Company (TSMC) saw its 28nm process lacking enough capacity, forcing customers such as Qualcomm to shift orders to United Microelectronics (UMC), Globalfoundries, and Samsung.

However, TSMC has been seeing orders returning from tier-one customers such as Qualcomm as it solves the capacity issues.

According to TSMC’s financial forecast for the fourth quarter, revenues will show a single digit decrease compared to the third quarter. Market observers expected TSMC to see an on-quarter decrease of 15% in its fourth-quarter revenues. But due to sufficient 28nm capacity, orders have been returning and revenues are likely to be higher than expected. TSMC forecasts revenues from the 28nm process will exceed 20% in the fourth quarter.

UMC recently announced its 28nm process progress, which has been delayed due to lower than expected yield ramps. UMC noted that 28nm process gross margin has been lower than its average gross margin, and the firm originally planned to increase revenues from the 28nm process to 5% of total revenues by the end of 2012. But the firm has become conservative about the progress, and hopes that among total revenues in December, 5% will be from the 28nm process. Revenues from other processes such as 40nm will likely reach 15% of total revenues before the end of 2012, ahead of schedule, according to UMC.

China-based Semiconductor Manufacturing International Corporation (SMIC) plans to put 28nm process into volume production at the end of 2012. Despite the relatively slow pace on expanding 28nm capacity, the China government has been subsidizing local IC design firms. If local IC design firms enter the 45nm and 28nm process market, the government reportedly will subsidize up to 50% of reticle costs.

Note from the Reticle article of the Wikipedia: Photomask – plate with holes or transparencies used in photolithography integrated circuit fabrication also called a “reticle”

QUALCOMM Incorporated Management Discusses Q4 2012 Results – Earnings Call Transcript [Seeking Alpha, Nov 7, 20]

QCT had another strong year, with record revenues up 37% year-over-year, driven by record shipments of 590 million MSM chipsets, which were up 22% year-over-year. In the fiscal fourth quarter, we shipped approximately 141 million MSM chipsets, above the midpoint of our prior guidance.
Revenue per MSM was up approximately 9% sequentially, driven by a greater mix of multimode 3G LTE devices, which more than doubled quarter-over-quarter and made up approximately 1/3 of our shipments exiting the quarter as expected. Similarly, shipments of our new dual-core MSM8960 tripled quarter-over-quarter as demand for our integrated application processors continues to grow.
Demand for our 28-nanometer products remained strong, including significant design activity on our follow-on chipsets. As expected, we ramped our 28-nanometer supply significantly in the fiscal fourth quarter, and we remain on track to match our current 28-nanometer demand profile exiting the December quarter.
We believe our first 28-nanometer Snapdragon product, the dual-core MSM8960 with integrated 3G/LTE has become the global standard for combined performance and battery life, powering recent flagship devices such as the Samsung Galaxy S III, the HTC 8X, the Motorola RAZR M and the new Nokia Lumia phones.
As carriers deploy LTE networks, they are looking to Qualcomm as the leader in multimode LTE for smartphones. For example, KDDI, NTT DOCOMO and SoftBank announced 27 new smartphones in Japan in October, and 24 of those were powered by Qualcomm Snapdragon processors.
Since releasing the MSM8960, 15 OEMs have launched devices with this chipset across 19 carriers around the globe. The 8960 was our fastest integrated product to ship 100 10 [as later corrected in the discussion] million units.
Our OEM customers have also moved quickly to adopt the Snapdragon S4 Pro, which includes our latest Adreno 320 GPU, 4 Krait CPU cores and is paired with an MDM9x15 multimode LTE modem. Early reviews show that this product has set a new bar for multitasking and graphics performance. The first OEM devices based on this platform include the Google Nexus 4, LG Optimus G and Xiaomi MI2, and we expect more leading devices on this platform to be announced soon.
Smartphone demand in emerging regions is growing rapidly, and we continue to invest in our Qualcomm Reference Design program to help service a new group of emerging customer accounts. The program now has over 40 OEM customers and 100 commercially launched devices. And this quarter we expanded our road map to include the new Snapdragon quad-core MSM8x25Q and our new 28-nanometer based MSM8930 with an integrated global modem.
As we mentioned on the last call, we expect a strong December quarter for QCT as our supply of 28-nanometer chipsets continues to ramp and our partners launch a broad lineup of handsets for the holiday quarter. We are expecting record MSM shipments of between 168 million and 178 million units in the first fiscal quarter, up approximately 19% to 26% sequentially, with revenue per MSM also up sequentially.
Question-and-Answer Session
Q: … could you talk a little bit about what’s going on with ASP at the lower end? Obviously, MediaTek is starting to do a little bit better. Are you seeing more price pressure there? …
… On the low end, it’s pretty much playing out the way that we’ve discussed and/or described over the last year or so, which is pretty competitive market at the low end. It’s very crowded a bit competitively, and people are really pricing aggressively in order to get share or to maintain share. So we expect that to continue to some degree as we talked about for some time. …
Q: You’re upping estimates for emerging market devices in 2012 by $15 million. Could you talk about that? And do you have thoughts on how much of the China market can actually migrate to 3G and 4G? There is a bit of a negative case out there that EDGE plus WiFi is a sufficient smartphone experience for some, given the density of WiFi hotspots in China, and even like iPhones already on the China Mobile network.
… If we look at the EDGE smartphone market, I mean, we believe that‘s a transitional step. Obviously, people aren’t going to be satisfied with the EDGE experience when it comes to the kind of content that many people are consuming on their smartphones, high-bandwidth content like video. The other thing is WiFi is going to tap out because it’s going to be interference limited. And the nice thing about the licensed band technologies that you can cause the base stations to manage interference among themselves. And that’s the kind of technologies that we’re going to be bringing to the market over the next few years. And those, I think, will drive the kind of capacities of the network at very, very much decreased cost points. So the wireless operators are going to be in a position to really supply a lot better data experience, lot better quality of service over the 3G and 4G networks. And so while we love WiFi and we sell an awful lot of WiFi through Atheros, we believe in it for offload, it’s not going to be the solution for the mass of smartphones and tablets going forward.

Q: … You had said earlier that you would expect supply to only match demand later in the second half of the December quarter. Does that mean that you will still be working off demand in the March quarter? Is that the implication of that statement?

With respect to seasonality, let me clarify my comments. For the fourth quarter, we have been talking about how we thought that exiting the fourth quarter we thought supply and demand of 28-nanometer would be matched. By implication, the starting point or the beginning part of the quarter, meaning the October and September time frame, we are still burning off excess or not enough supply. And by the way, these are calendar quarters. So I’m talking about the December quarter. Now going into March, we feel that we have supply and demand imbalance. And we think that, that will be the case, really, exiting the December month. So hopefully that clarifies it.
Q: … I wanted to follow up on an earlier question related to device ASPs. I think Mike Walkley has asked about when we might expect to see the growth in emerging market start to have downward pressure on ASPs. At least, how we should think about that qualitatively? …
[William E. Keitel – Chief Financial Officer, Principal Accounting Officer and Executive Vice President] … On the device ASP, emerging markets having a larger effect on the total average. The — although emerging market units are growing faster than the developed markets are, the total dollar value of the developed TRDS [Total Reported Device Sales] is far greater than the emerging market TRDS. And so we’re ways away from that crossing over where emerging market dollar value is equal to or greater than the developed market. But I think we’re planning a little more color on this next week. So I’ll leave that point there. …
Q: And just to follow up on ASPs, my understanding is that the strong smartphone adoption that’s happening in the emerging markets has been driven in part because the smartphone ASPs have come down. I think, Paul [Jacobs, the CEO], you were talking recently about the price points getting to $100 and, at some point, maybe going down as low as $50. And I’m just trying to reconcile that with the comments around ASPs at the low end running up, and hence, supporting the outlook of flat to up ASPs in 2013.
[Derek K. Aberle – Executive Vice President and Group President] Let me just try to take part of that, and then if Paul wants to add on. I think there’s still — even though the pricing from smartphone is coming down tier, which obviously is a positive for driving growth, there still is a meaningful gap between sort of the lower-end smartphone and the low-end 2G or 3G feature phones that have been sold before those became available. So as we look out and we see the trends, I think we do continue to expect, even as the prices come down, a combination of more people buying at a higher price than they were historically on a feature phone as well as people migrating to even the higher-tier devices will provide some stability there.

END OF KEY UPDATES

Rumors came yesterday that Apple to postpone iPhone 5 amid undersupply of 28nm chips [Want China Times, July 26, 2012]. And the reason:

Apple’s leading chip supplier, Qualcomm, will be able to tackle the 28nm chip undersupply only by the end of this year, said Qi Fei, a spokesman for Qualcomm China. The problem arose during the second quarter of this year, as demand for 28nm chips has been growing alongside the popularity of smartphones.

QUALCOMM Incorporated Management Discusses Q3 2012 Results – Earnings Call Transcript [Seeking Alpha, July 18, 2012]

Paul E. Jacobs – Chairman and Chief Executive Officer:
In QCT, we’re continuing to see strong demand for our new Snapdragon S4, and other 28 nanometer chipsets, and that demand continues to exceed our available supply. We will continue to ramp capacity in the upcoming quarters consistent with our prior expectation. However, the constraints on 28 nanometer supply are continuing to limit our potential revenue upside this fiscal year.

Steven M. Mollenkopf – President and Chief Operating Officer:
We continue to be supplies constrained on our 28 nanometer products but are ramping supply with multiple foundries in the September quarter and again into the December quarter consistent with our prior expectations. We currently project that we’ll be able to closely match supply with demand as we exit the calendar year.

The reduced demand profile and ongoing 28 nanometer supply constraints, as well as our increased efforts to bring additional 28 nanometer capacity online and continue investments in our QRD and mobile computing programs in advance of the opportunities ahead are driving lower operating margins in the fiscal third and fourth quartersversus historical norms.

Looking ahead, we anticipate a strong lineup of device launches leading into the holiday season and believe QCT is well positioned for the December quarter, particularly with the increasing supply of industry-leading chipsets for high-tier devices.

Over 15 devices based on our S4 MSM8960 28 nanometer chipsets have launched to date, including the Samsung GALAXY S III, the HTC One S and One X, LG Optimus LTE2, Pantech Vega Racer 2 and Sony Xperia SX. There are now more than 420 announced Snapdragon-based devices with over 400 more in design, including 175 S4 designs. Third-party reviews and benchmarks again reinforced our product leadership this quarter, confirming that the Snapdragon MSM8960 outperforms quad-core CPUs-based handsets by using a complete multi-core system with our custom GPU, DSP and dual-Krait CPU cores. We also sampled 3 new S4 chips this quarter, including the APQ8064 and the MSM8x30. The APQ8064 includes 4 Krait CPUs. It is the first to use our new Adreno 320 GPU and will extend the performance expectations we recently established with the MSM8960. The MSM8x30 integrates a multi-mode LG or 3G LTE and is designed to enable 3G/4G smartphones at high-volume price points globally.

Our modem leadership also continues to be a differentiator for design wins in modem plus AP smartphones, in tablets, modules and WiFi personal hotspots, including over 90 designs in process based on our 28 nanometer 3G/4G LTE MDM9x15 modem. While many companies are still commercializing their first LTE products, we have already announced our third-generation LTE chipsetsand will continue investing in our modem road map to maintain our leadership.

In emerging regions, our QRD program, which provides turnkey designs for affordable smartphones, continues to expand rapidly. We continue to grow our QRD road map with differentiated technology, including our new [45nm] Snapdragon 8×25 1.2 gigahertz dual-core chipset, which began shipping commercially in July, only 2 months after first sampling. We are engaged with over 40 OEMs, many of which are now transitioning their platforms from 2G to 3G, and these OEMs have announced approximately 50 devices based on our chipsets for China and other emerging countries. In addition to the announced devices, we currently have 100 new QRD-based smartphone designs in the pipeline.

We also continue to invest in mobile computing and are pleased to see the momentum building around the new ARM-based Windows platform. As the only chipset provider supporting Windows on both PCs and phones sold commercially, we look forward to the availability of both Windows 8 and Windows Phone 8 this fall.

Looking ahead, while we are forecasting sequentially lower MSM shipments based on midpoints in the September quarter consistent with the pause and re-profiling of demand, we expect a strong December quarter as new high-tier smartphone devices launch for the holidays and we have an improved supply of 28 nanometer products.

[Question-and-Answer Session]

Brian T. Modoff – Deutsche Bank AG, Research Division

Steve, on the 28 nanometer, can you talk a little bit about how you see demand in the current quarter? You’ve talked about hitting 1/3 of volume by September. Is that still feasible? In terms of the guide down sequentially, is this — a lot of this — have you seen cuts in the 45-nanometer demand trends as well? And then are you bringing a second source on for — in terms of meeting the demand as you get into the fourth quarter? And are you happy with the yields that you’re seeing on that second source at this point?

Steven M. Mollenkopf

Brian, yes, it’s Steve. The 28 nanometer right now, as I said, we’re supply limited. So it’s — and it’s going quite well in terms of bringing up additional sources. We actually have 4 sources that we’re now bringing up. If you track through the calendar year, we’re engaged with all of them now. And it’s going the way that we had thought. You had — you talked a little bit about the 45-nanometer products and such, and I think what you’re seeing a bit of is a little less of the backfill that we would have expected. And I think that’s consistent with what we were talking about, the re-profiling of demand. That’s really a little bit less of the backfill and a little bit more waiting for the new products to come out. So we’re just working very hard to try to get those products out the door.

Brian T. Modoff – Deutsche Bank AG, Research Division

So in terms of talking through the — just talking about a more positive December quarter, some of this is you’re getting demand. People want the 28 nanometer. So the push in demand is to that quarter is what you’re saying?

Steven M. Mollenkopf

That’s right. You — at the same time, you’re — we have a significant demand for the 28-nanometer products. And as you get into the December quarter, you now have a tier of products on 28 nanometer, which, I think, is a big advantage for our portfolio. And they’re moving forward. And you’re essentially in a situation where demand is increasing and supply is increasing, and we’re trying to match those 2 ramps. And it’s — we’re just in execution mode getting through that right now and engaged with 4 fabs in order to do that.

Simona Jankowski – Goldman Sachs Group Inc., Research Division

Just a couple of questions. First, to clarify. With your comments on the 28 nanometer, suffice to say it’s alleviating in the December quarter, was that referring to the entirety of the December quarter? Or is it just for the exit run rate? In other words, would you still see inability to meet some of the demand in the entirety of that quarter? And then as it pertains to your chipset margin, is there any reason to think that in December, chipset margins should not be above your typical average margin given the volumes you’re expecting?

Steven M. Mollenkopf

Simona, it’s — this is Steve. The supply really exits the quarter on a matched situation. It doesn’t end — enter the quarter that way. So at the beginning of the quarter, we still have a gap that we need to deal with, but it improves throughout the quarter. We think it matches up toward the end.

Simona Jankowski – Goldman Sachs Group Inc., Research Division

So then maybe just a question for Paul. In terms of looking strategically longer at some of your big customers who are becoming more vertically integrated, and obviously, we had the announcement yesterday from Samsung are buying some of the technology and connectivity from CSR, now how should we think about customers like that longer termfor fall coming in terms of your potential share of their silicon business?

Paul E. Jacobs

Yes. So we’ve had these same issues throughout the history of the company where internal efforts — people try to build the silicon for their own chipsets. And I think the key way to combat that, as we’ve done all along, is to continue to drive the technology hard. Obviously, we’re driving it very rapidly in a number of areas now, not just the radio. It used to be just the radio. But now it’s also processor and graphics technology. And we’ve seen — I’m sure you’ve seen a number of the benchmarks coming out talking about how, I think the latest one I saw was on graphics, how we were really winning on the graphics side but, obviously also, on the computing side, we’ve had great comparisons. So the key, as I said, is drive the technology hard. Do people for their internal uses have enough scale to invest at the same rate that we do? And the answer is generally no. And plus, we have just a level of experience that we can bring to bear, and I think that, that strategy will continue to work as it has in the past.

      • [from a later part]
        Jeffrey T. Kvaal – Barclays Capital, Research Divisio
        … first is to follow up on the internal production. I think we’ve seen the pendulum shift back and forth between internal and outsourced a bit over the years. Where are we in the current swing? Should we expect production to go a little bit more internal perhaps over the course of the next few quarters or years?
      • Steven M. Mollenkopf
        … I’m assuming the first question is really more about the vertical customers. I would say that it’s really consistent with what Paul said. I think it’s getting harder and harder to create chipsets moving forward. It’s primarily because in order to create particularly high-end products, you need to innovate across so many different technology vectors. And unless you’re fairly large and you have a fairly broad technology portfolio and you’re at the leading nodes, I think you’re going to have a difficult time producing the type of products that you need. So in our view, it’s actually getting harder to do chipsets and so, therefore, probably more favoring of our model.
      • [It is also worth to look at this video published just a day before the earnings call]
Travis Lanier, director of CPU product management, discusses in detail what goes inside Snapdragon processors and sets them apart from the competition. This video sheds light on the thought that Qualcomm puts into its designs—from thermal management, power efficiency and extending device term battery life to asymmetrical loading, multiple cores and more—resulting in a highly optimized chip.

Rod B. Hall – JP Morgan Chase & Co, Research Division

… on 28 nanometer, just one more thing. Can you quantify at all what kind of 28-nanometer shortfall you’re assuming in the fiscal Q4 guidance?

William E. Keitel- Chief Financial Officer, Principal Accounting Officer and Executive Vice President
Oh, in the shortfall. Well, let me say this. First of all, 28 nanometer, our shipment estimates both for the fourth fiscal quarter and what we expect for the first fiscal quarter, we’re essentially in line with where we were 3 months ago. So the QCT team is executing well on that aggressive ramp that we had talked about last time. But going out of this quarter, if we could ship all the demand that’s in front of us for this quarter, I would just say that our revenue and operating margin would be materially higher.

James E. Faucette – Pacific Crest Securities, Inc., Research Division

Just a few follow-up questions. First, back to Steve or Paul related to your partnerships with your foundries. I think, Steve, you said that you’re now sourcing 28 nanometer from 4 different partners. Going forward as we look at future geometry and process improvements, should we expect you to continue to be diversified at the outset across multiple partners? Or should we expect you to return to concentrating on 1 or 2 key partners for future transitions, firstly? …

Steven M. Mollenkopf

James, this is Steve. Our product portfolio at the high tier, we tend to be on the leading node; on the lower tiers or the mass-market tiers, we may be one node behind. So we tend to have a broad sourcing strategy to take account of the fact that we’re on leading node. And also, following nodes, we tend to engage with a lot of fab partners by necessity. On the leading nodes, I think you’re not going to see a big change in our strategy moving forward with the exception that we do, obviously, a much better job of matching our ramps, capacity ramps and demand ramps, as we drive leading nodes. For us, you’re going to continue to see us really taking advantage of the fact that you can play the integration game at the leading nodes. And there’s a number of different good road maps that we’re seeing from the industry through the fab — through fab partners, and we’re going to continue to drive the best ones that we can find.

QUALCOMM Incorporated’s CEO Discusses Q2 2012 Results – Earnings Call Transcript [Seeking Alpha, April 18, 2012]

Steven M. Mollenkopf – President and Chief Operating Officer:
Our QCT business delivered another strong quarter. We shipped 152 million MSMs, up 29% year-over-year driven by increased demand for our integrated smartphone solutions and advanced modems.
Smart — Snapdragon shipments increased by more than 70% year-over-year, driven by growth across all price tiers from Snapdragon S1 products to our latest generation of Snapdragon S4 processors. There are now more than 370 announced Snapdragon-based devices with over 400 more in design, of which over 150 are S4 designs.
As you know, we have made significant investments in recent years to establish a leadership position in LTE chipsets, and we believe we are succeeding. In parallel, industry adoption of LTE technology is growing rapidly. And with our strong portfolio of products, we are at the forefront of this technology transition.
As a result of these trends and as Paul mentioned, demand for our 28-nanometer chipsets continues to exceed available supply. To address 28-nanometer demand, we are increasing our related operating expenses and are working closely with our fab partners to bring up additional capacity.
Within this environment, it is worth noting that our current estimates for total 28-nanometer shipments this fiscal year are largely in line with our prior guidance, though our forecast for the June quarter is a bit lower. Our increased investment to bring up additional 28-nanometer capacity is expected to show results in fiscal 2013.
Across the rest of the business, demand trends are very strong, and we continue to drive our technology leadership. At Mobile World Congress in Barcelona, several leading OEMs announced their first Snapdragon S4 dual-core devices, including ASUS, HTC, Huawei, Lenovo and Panasonic. We also demonstrated our new S4 quad-core processor, the APQ8064 running 4 separate HD video streams; and we announced our S4 Snapdragon MSM8960 Pro, which integrates our new high performance programmable Adreno 320 GPU for higher-end mobile computing devices.
We announced and demonstrated our new 802.11ac Wi-Fi solution and announced a broad family of 11 AC chipsets for mobile, computing, consumer electronics, as well as home and enterprise networking. Also, our new integrated connectivity solution, which includes digital Wi-Fi, GPS, Bluetooth and FM, continues to be designed in by our customers in the vast majority of our growing S4 pipeline.
We continue to invest in our Qualcomm reference design program to support growth of lower-tier smartphones in emerging regions. Shipments into Chinese emerging accounts are expected to grow at a strong double-digit rate quarter-over-quarter while we transition customers to 7x27A. There have been 10 OEM designs launched on our reference programs over the last quarter with more to follow. We are on track to expand the reference design programs to include a new dual-core Snapdragon processor the MSM8x25. We will do this before the end of the June quarter.
We are increasing our investments to address incremental opportunities beyond traditional cellular, including mobile computing and Windows on Snapdragon. And looking ahead, our leadership position across multiple technologies, delivered to our customers with a tiered and expanding chipset road map, positions us well for smartphone and computing trends in both emerging and developed regions.
T. Michael Walkley – Canaccord Genuity, Research Division
Steve, I wonder if you could just elaborate a little more on the 8960 ramp. Obviously, some of your customers are worried about your ability to supply, given the demand’s greater than the ability to supply. So how do you manage maybe losing some share in the short term? And then also how do you manage maybe some double ordering that might come from customers trying to get that supply?
Steven M. Mollenkopf
Mike, it’s Steve here. A couple of things, one is we have taken approach to spread the supply across all of the customers as best we can, and so I think everybody is dealing with this issue. And obviously, it’s a pretty difficult issue to deal with. But in the near term, some of the OEMs have been looking at alternative chipsets, in particular our Fusion 2 lineup, which can be substituted in some cases. But other than that, it’s really a question where we are accelerating as best we can the supply, consistent with what I was saying and what Paul was saying. We’re really focused very much on getting additional supply throughout the year.
Parag Agarwal – UBS Investment Bank, Research Division
Steve, can you please explain the alternative your customer have, given that the supply is constrained? And then what has been the reaction so far? I mean what — I mean are these customers willing to go to older Snapdragon designs? Are they looking at alternatives? Are they trying to use their own set [ph] of solutions?
Steven M. Mollenkopf
Well, I think you see a combination of people. In any constrained environment, people look for any alternative they can in order to solve the problem. Now what you have, particularly in this case, is these are devices that primarily are using LTE type of chipsets, and so the alternatives are a little bit smaller than they would be, let’s say, in a general allocation scenario, maybe in another industry. And we’ve been helping customers to see how they can swap in our Fusion 2 chipset, which is the chipset that we have been ramping over the last 8 months in production. Now in some cases also, our OEM partners are, of course, working with us very closely to try to help us accelerate our own supply, and that is primarily what we’re seeing. And we do expect to see some alternative non-Qualcomm chipsets being used to solve that issue as well. But I will remind you that in addition to the 8960, right on its heels is the 8×30, as well as the APQ8064. So we’re continuing to drive our tiered road map throughout the year on the same schedule, again, gated by the supply here in the near term. But I think that’s a pretty attractive road map that people are interested in doing. So we need to solve the supply issues, and then we’ll move the business on.

Qualcomm chip shortage to continue [The Korea Times, June 21, 2012]

Qualcomm said Thursday that its chip supply will not likely meet high demand from its major clients, including Samsung Electronics, LG Electronics and Pantech, dampening their hopes that chip supply would improve in the latter half of this year.

“We are still struggling to meet an explosive demand for the latest MSM8960 chipsets and other chip variants using a 28-nanometer processing technology, though the production yields of our chip products have steadily been improving,” said Kim Jong-ha, a senior executive at Qualcomm CDMA Technology Korea, Thursday.

Industry sources said Qualcomm has been in negotiations with three and four chip foundries other than Taiwan’s TSMC to increase supply of the chips and stressed “visible results” to follow shortly. Kim was at the sidelines in the press conference to unveil Qualcomm’s updated business strategies at the Plaza Hotel, downtown Seoul.

Qualcomm had warned in April that it will have trouble meeting demand for some of its advance cellphone chips for the rest of the year due to manufacturing constraints and operating expenses will increase faster than expected.

The MSM8960 chipsets, which sport Long-Term Evolution (LTE) functionality, are currently being used in Samsung, LG and Pantech’s premium smartphones. Samsung’s Galaxy SIII LTE smartphone is also using the Qualcomm chipset.

But the Qualcomm executive said the chip shortage problem should soon ease, though he declined to say exactly when.

Qualcomm has attempted to appease its clients by offering an alternative in the form of the “Fusion 2” chipset; however the manufacturer is conceding; “We do expect to see some alternative non-Qualcomm chipsets being used to solve that issue as well.”

The executive said it will commercialize its quad-core one chip solutions from the latter half of next year and a smartphone that uses the latest chip solution will be released in July next year.

Qualcomm plans to put the VoLTE functionality on its upgraded MSM8960 chipsets in a goodwill gesture to help local carriers smoothly push their VoLTE services from September this year.

Qualcomm sources said the existing MSM8960 chipsets don’t support the VoLTE functionalities, which is impossible for consumers using Samsung’s Galaxy R Style, LG’s Optimus LTE2 and Pantech’s VegaRacer2 models to experience the VoLTE service.

During the conference, Qualcomm pledged business expansion to Internet-connected TVs, PCs and tablets and reiterated its bullish plan to support Microsoft’s Windows 8 software.

Globalfoundries to the “rescue”:

Globalfoundries to fab 28nm chips for Qualcomm, says paper [DIGITIMES, July 13, 2012]

Qualcomm has contracted Globalfoundries’ Dresden fab to manufacture 28nm chips, the Chinese-language Commercial Times cited unnamed equipment makers as saying in a recent report. The foundry chipmaker will start shipping the orders to Qualcomm in the fourth quarter of 2012, the paper said.

Commercial Timespreviously reported that UMC had secured orders for 28nm Snapdragon S4 chips from Qualcomm with volume production slated for the last quarter of 2012.

Rumors circulated earlier in the year that TSMC’s supply shortfalls at 28nm would likely drive its longtime partners toward other foundries. In addition to Qualcomm, Nvidia was identified as another TSMC customer considering a second-source supplier.

In fact, Globalfoundries has already entered into a non-binding MoU with Qualcomm to collaborate on leading-edge technologies. Globalfoundries said in a January 2010 company release that initially the firm intends to provide Qualcomm with access to 45nm LP and 28nm LP technologies, with an intended collaboration on future advanced process nodes.

In other news, IC design service company Socle Technology recently disclosed that the firm has developed and taped out its first ARM Cortex-A9 based 28nm ASIC design using Globalfoundries’ 28nm super low power technology (SLP) with HKMG. The ASIC design will soon be mass produced at Globalfoundries, Socle said.

Formerly a IC design service subsidiary of Chartered Semiconductor Manufacturing, Socle now works closely with Globalfoundries.

GlobalFoundries Interview with Subramani (Subi) Kengeri [BrightSideofNews YouTube channel, May 22, 2012]

An interview with Subramani “Subi” Kengeri, Vice President of Design Solutions at GlobalFoundries. We discussed topics such as 28nm and future nodes such as 20nm and 14nm, the future of Silicon-on-Insulator (SOI), as well as relationship with over 150 GlobalFoundries customers.

GLOBALFOUNDRIES Extending Fab 8 to Meet Strong Customer Demand [GLOBALFOUNDRIES press release, July 24, 2012]

Cleanroom extension to add hundreds of new jobs and 90,000 square feet of manufacturing capacity
GLOBALFOUNDRIES today announced it is moving forward with the final construction for the extension of Module 1 at the Fab 8 campus in New York. The project will add 90,000 square feet of manufacturing capacity, bringing the total capacity for Fab 8 Module 1 to 300,000 square feet. Construction activities are scheduled to begin in August and work is expected to be completed in December 2013.
“During the construction of Fab 8, we extended the shell of the Module 1 building with the expectation that our business would continue to grow. Today we see increasingly strong demand from our customers, especially at the 28nm node, and we are excited to be moving forward with this next phase in the development of the Fab 8 campus,” said Eric Choh, vice president and general manager, Fab 8, GLOBALFOUNDRIES. “By continuing to expand our investment in the project, GLOBALFOUNDRIES is delivering more options to our global customers, while helping to redefine upstate New York as a premier hub of the global semiconductor industry, creating thousands of new advanced manufacturing jobs, and contributing billions of dollars to the regional economy.”
Consisting of approximately two million square feet, Fab 8 is being developed as the world’s most advanced semiconductor foundry manufacturing facility and is consistently hitting all major development milestones. GLOBALFOUNDRIES began construction on Fab 8 in July 2009 and began moving people and equipment into the facility in mid-2011. Initial wafer starts began earlier this year and the facility is on track to begin risk production by the end of the year, with volume production in early 2013.
Extending the Fab 8 cleanroom is expected to increase the Fab 8 capacity to approximately 60,000 wafers per month and increase the capital budget by approximately $2.3 billion, taking the total capital budget from $4.6 billion to approximately $6.9 billion, once tools and equipment are installed.
Since breaking ground on Fab 8 in 2009, GLOBALFOUNDRIES has created more than 1,500 new direct jobs, developing a unique and diverse workforce drawn from local talent in the region as well as experienced professionals from across the United States and more than 30 countries.
In addition, the project has created an additional 4,300 construction-related jobs and established the largest private Project Labor Agreement in history, generating hundreds of millions of dollars of economic development throughout upstate New York during the worst economic downturn since the Great Depression.
GLOBALFOUNDRIES has a total of about 1,800 employees across New York, including research teams at the IBM facilities in East Fishkill and at CNSE at the University of Albany, and more than 12,000 employees worldwide with additional manufacturing campuses in Germany and Singapore.

Execution, Innovation, Location: 3 Reasons to Choose GLOBALFOUNDRIES at 28nm [thefoundryfiles.com blog by Michael Noonen, Executive Vice President, Worldwide Marketing and Sales, for GLOBALFOUNDRIES, July 5, 2012]

Refers to: – Rory Read, 2nd gen AMD A-Series APU using HKMG – Rambus: Joe Louis-Chandran @[6:06] Fab 8 in Saratoga County, New York is: fully operational ramping ahead of schedule shipping products for revenue in early 2013

We recently attended the Design Automation Conference in San Francisco, where we showcased our wide array of foundry offerings and met with customers, partners, and industry influencers. All of them asked how GLOBALFOUNDRIES can address the increased demand for 28nm.  We answered that we have three major reasons why our customers can depend upon GLOBALFOUNDRIES for their 28nm needs: execution, innovation and location.

Execution

GLOBALFOUNDRIES has a tradition of rapidly ramping leading-edge technologies to volume production.  We delivered the fastest time-to-volume for the 45/40nm production ramp, and we are leading the foundry ramp at 32/28nm in volumes well ahead of others foundries. In fact, earlier this year we reached a major milestone by shipping our 250,000th HKMG wafer, and we have shipped many thousands more since. Overall, we have shipped more HKMG wafers than all the other foundries combined.

Not convinced? Just ask our customers. For example, AMD CEO Rory Read said, “In just one quarter, we were able to see more than a doubling of yields on 32nm, allowing us to exit 2011 having exceeded our 32nm product shipment requirements. Based on this successful ramp of 32nm HKMG, we are committed to moving ahead on 28nm with GLOBALFOUNDRIES.”

Innovation

Everyone knows our industry faces huge challenges as we move to more advanced technology nodes. At 28nm, we worked tirelessly to maintain true scaling and deliver an industry-leading technology in a System-on-Chip (SoC) design platform based on our production-proven HKMG technology. Here are a few highlights of our 28nm technology in comparison to the previous generation:

  • ~100 percent density increase.
  • Up to 50 percent increased speed and 50 percent reduction in energy/switch.
  • Sustains 40nm layout style advantages: Bi-directional Poly, Poly Jogs, Large Caps.
  • ~20% smaller die relative to 28nm “Gate Last.”

Here again, our customers are seeing the benefits. Thucydides Xanthopoulos, distinguished engineer at Cavium, says with GLOBALFOUNDRIES, his company received outstanding levels of in-depth technical support: “This was essential in addressing the new technical challenges of the 28nm process technology to meet our stringent power requirements and demanding frequency goals. This ensured our product design timeliness and success.”

Location

Not only is GLOBALFOUNDRIES now the second largest semiconductor foundry in the world, but with manufacturing plants located in Europe, Asia and North America, we are the only truly global foundry.

Designed for 32/28nm and beyond, our newest location, Fab 8 in New York, is one of the most advanced semiconductor facilities in the world. Fab 8 is the largest public-private sector industrial investment in state history and a cornerstone of New York’s burgeoning “Tech Valley.” Forbes magazine recently said the Capital Region could become the “Silicon Valley of Nanotech and even surpass it in economic importance.”

To paint a clearer picture of how advanced the nearly 2 million square foot campus is, here are a few more facts:

  • The clean room is larger than 6 football fields and has 7 miles of track for overhead transport vehicles.
  • Fab 8 took over six million man hours to complete – that’s more man hours than it took to construct the Empire State Building in New York City.
  • Fab 8 has over 60,000 cubic yards of concrete, enough to build a 105 mile-long sidewalk.
  • 75 miles of pipe total square footage exceeds the Chrysler building in NYC.

Fab 8 is fully operational, ramping ahead of schedule, and shipping products for revenue in early 2013. Once fully ramped, the first fab module will be capable of 60,000 wafer starts per month.

These are just a few of the reasons why customers should work with GLOBALFOUNDRIES on 28nm—and they are. We taped out our first 28nm product in Q4 2011 and we have dozens in the pipeline. To learn more about our complete value proposition at 28nm, check out this video we created for DAC.

More information: Globalfoundries Vows to Ramp Up 28nm Production Quickly. [X-bit labs, July 5, 2012]

ChipEstimate.TV interview with Mike Noonen, GLOBALFOUNDRIES at Common Platform Tech Forum [chipestimate YouTube channel, March 21, 2012]

Sean O’Kane, producer/host ChipEstimate.TV interviews Mike Noonen, Sr. VP of Worldwide Sales and Marketing, GLOBALFOUNDRIES at Common Platform Tech Forum 2012 For more information about GLOBALFOUNDRIES go to:http://www.globalfoundries.com/.

GLOBALFOUNDRIES Dresden Fab Ships 250,000th 32nm HKMG Wafer [GLOBALFOUNDRIES press release, March 21, 2012]

… based on 32nm High-k Metal Gate (HKMG) technology

On a unit basis, cumulative 32nm shipments for the first five quarters of wafer production are more than double that achieved during the same period of the 45nm technology ramp, demonstrating that the overall 32nm ramp has significantly outpaced the 45nm ramp, despite the integration of a number of new and complex elements in both design and process technologies.

“AMD and GLOBALFOUNDRIES worked in close partnership during 2011, and today’s announcement is a testament to the progress we have made together,” said AMD president and CEO Rory Read. “In just one quarter, we were able to see more than a doubling of yields on 32nm, allowing us to exit 2011 having exceeded our 32nm product shipment requirements. Based on this successful ramp of 32nm HKMG, we are committed to moving ahead on 28nm with GLOBALFOUNDRIES.”

At Fab 1 in Dresden, GLOBALFOUNDRIES recently completed construction of an additional wafer manufacturing facility designed to add capacity at 45nm and below, which has the potential to increase the overall output of the Fab 1 campus to 80,000 wafers per month once fully ramped. The expansion project is adding more than 110,000 square feet of cleanroom space to the site, making Fab 1 the largest wafer fab in Europe for leading-edge technology. More than 50 percent of Fab 1’s production is now on HKMG technology. In addition to the 32nm technology, the company’s 28nm HKMG offerings are qualified and ready for design-in today.

28nm Ramp Starts At Globalfoundries. [Manerisms blog on ElectronicsWeekly.com, April 17, 2012]: “We’re starting the volume production ramp on 28nm. With our experience at 32nm we expect less issues on the 28nm,” Rutger Wijburg, vice president and general manager GLOBALFOUNDRIES Fab 1, told EW.

Globalfoundries opens up 28nm, 20nm FD-SOI process to all-comers[ElectronicsWeekly.com, June 20, 2012]:

Globalfoundries is to manufacture FD-SOI chips for STMicroelectronics and ST-Ericsson at both 28nm and 20nm process generations which will be made avaialble to anyone wanting to use them. ST has a limited availability of FD-SOI from its line at Crolles. “This arrangement ensures our customers will have a secure source of supply, says ST vp Joel Hartmann. 28nm FD-SOI, is currently in the ‘industrialisation phase’, says ST and is scheduled to be available for prototyping by July 2012.

The Rambus experience with GLOBALFOUNDRIES 28nm Super Low Power (28nm-SLP) technology see in the collaborative whitepaper: Designing into a Foundry Low Power High-k Metal Gate 28nm CMOS Solution for High-Performance Analog Mixed Signal and Mobile Applications [June 26, 2012]

Background video on GLOBALFOUNDRIES’ leadership in 28nm capacity:

Thomas Wong, Director Design Enablement, GLOBALFOUNDRIES. IP Talks speaker with ChipEstimate.com at DAC 2012 in San Francisco. Leadership in 28nm capacity.

Background video on Sand to Silicon [globalfoundries YouTube channel, May 9, 2012]

Have you ever wondered what goes in to making a semiconductor? Watch ths video.

Collaborative partner Samsung Electronics also joining the “rescue” effort:

Common Platform Technology Forum 2012, Ana Hunter, VP Foundry Services, Samsung interview on ChipEstimate.TV [chipestimate YouTube channel, Feb 13, 2012]

GLOBALFOUNDRIES and Samsung Extend Fab Sync to New High-Performance 28nm Technology for Mobile Applications [GLOBALFOUNDRIES  press release, Aug 31, 2011]

GLOBALFOUNDRIES and Samsung Electronics, Co., Ltd. broadened their collaboration, announcing plans to synchronize global semiconductor fabrication facilities to produce chips based on a new high-performance and low-leakage 28nm High-K Metal Gate (HKMG) technology. The technology has been specifically developed for mobile device applications, offering 60 percent of active power reduction at the same frequency or 55 percent of performance boost at the same leakage over 45nm low power (LP) SoC designs.

In 2010, GLOBALFOUNDRIES and Samsung announced a fab synchronization on low-power 28nm HKMG technology in collaboration with IBM and STMicroelectronics. This low-power technology is qualified and fully design enabled with standard cell libraries, memory compilers, and additional complex IP blocks. The high-performance offering announced today complements the low-power technology, extending the frequency of operation for high-performance smartphones, tablets, and notebook computers, while retaining ultra-low leakage transistors and memories to enable the long battery life needed for mobile environments.

The companies are proving the collaborative value of a synchronized platform by working with several customers to optimize processes and tooling for both the low-power and high-performance 28nm HKMG technologies. The synchronization process helps ensure consistent production worldwide, enabling customer chip designs to be produced at multiple sources with no redesign required, leveraging the customers’ design investments.

By virtue of the synchronization, the collaboration presents a “virtual fab” that derives manufacturing capacity from four geographically diverse fabs. Each company has two 300mm fabs that will qualify the technology: GLOBALFOUNDRIES Fab 1 in Dresden, Germany and Fab 8 in Saratoga County, New York; and Samsung S1 in Giheung, Korea and the company’s recently expanded fab, S2 in Austin, Texas. The four fabs represent a global footprint estimated to be the largest in the foundry industry for leading-edge capacity, offering customer choice enabled by close collaboration and an unparalleled de-risking of supply chain uncertainties.

The new high performance process is based on the 28nm “Gate First” HKMG technology utilized for the low power process announced in 2010. As with the low power 28nm technology that is fully design-enabled today, a comprehensive System-on-a-Chip (SoC) design platform will be implemented for the high performance offering to enable seamless customer design-in to the multiple global manufacturing sites.

Ana Hunter – Vice President of Foundry for Samsung Semiconductor Inc. [globalfoundries YouTube channel, May 29, 2012]

Qualcomm, Samsung to team up for chip [The Korea Times, July 5, 2012]

As part of efforts to solve a supply shortage Qualcomm will soon sign a deal with Samsung Electronics to produce chips used in the Korean firm’s smartphones, according to industry sources.

Industry and Samsung officials said Thursday that Samsung Electronics has “tentatively agreed” with Qualcomm to produce the latter’s Snapdragon S4 chipsets using Samsung’s 28-nanometer technology from the first half of 2013.

“The two companies have agreed in principle on chip production and are now trying to iron out details, including production volume,” an industry source said.

Samsung expects that the latest partnership will help the company strengthen its capabilities for non-memory chip management. The Korean technology giant plans to invest more in non-memory chips this year than in conventional memory chips for the first time since it started its chip-making business.

Qualcomm CEO Paul Jacobs has said his firm is seeing “very strong demand” for the S4 chipsets amid the rising popularity of data-intensive and speedier phones that also use advanced long-term evolution (LTE) networks.

Qualcomm’s MSM8960 chipsets are currently being used in the latest smartphones by Samsung, LG Electronics, Motorola and Taiwan’s HTC.
”Because Samsung is a long-time partner with Qualcomm for modem chips, it’s no surprise that the partnership has expanded to real chipsets,” said another industry source.

With the Taiwan Semiconductor Manufacturing Co. (TSMC) and Samsung producing the Qualcomm chipsets, analysts expect the supply will improve from early next year.

Qualcomm has also designated United Microelectronics Corp. (UMC) as another supplier with the capacity to help cope with tight supply of the leading-edge process at TSMC.

”The contract with Samsung, as well as UMC, means that Qualcomm plans to lower its heavy dependence on TSMC. It also means that Samsung’s foundry chip-making has reached a competitive level to guarantee the capacity that Qualcomm wants,” said an analyst at Semiconductor Equipment and Materials International (SEMI).

Samsung, which controls near 50 percent of the global memory chip market, is busy transferring its conventional chip lines to profitable non-memory lines such as foundry facilities.

Samsung’s global share for the foundry chip-making business was less than 2 percent as of the end of last year. However, market experts say Samsung is one of the few players that can threaten TSMC’s leadership as Samsung has abundant cash and top-class memory chip-making technology.

“It’s probable for Samsung to win more deals from Texas Instruments and Nvidia – which are key partners of TSMC. In the near future, Samsung will become a top-tier foundry chipmaker that could compete with TSMC,” said the SEMI analyst.

See also: Proven Track Record at 32/28nm [Samsung Foundry presentation, July 3, 2012]

A New Foundry Business Model [by Ana Hunter Voices@SamsungSemiconductor, June 26, 2012]

As we hit the half way mark of 2012, it’s been an eventful year so far.  Conversations swirl around:
  • The need for more 28nm capacity
  • Is 450mm wafer manufacturing really going to happen?
  • When will FinFET transistors become standard?
  • Will the foundry/fabless industry continue to thrive?
There’s no doubt we’re at a crossroads at the most advanced process technology nodes. In order to take positive steps forward, significant monetary and collaborative investments and resources are required from both the manufacturing and design sides of the equation.
The foundry/fabless semiconductor industry is not going to collapse or disappear as some have recently predicted. See the recent report from SEMI.org on equipment spending. But, a new approach to doing business is in order to stay competitive with pure IDMs [Integrated Device Manufacturer, like once Gobalfoundries was under AMD]. The foundry industry has taken huge strides on the ecosystem side to ensure that physical IP, libraries and design flows are all in place as a new process node comes online. That tight working relationship needs to be pushed beyond the partner ecosystem to include the customer’s design teams.
There is a lot to be said for mimicking a more IDM-like relationship between a foundry and its fabless customers. For faster product rollout and ramp to high-volume manufacturing at the most advanced process nodes, integrated relationships between the foundry and its strategic customers where quasi-IDM operating procedures are established is key to the health and growth of the foundry industry. Fabless companies and foundries need to collaborate on the factors that allow products to be manufacturable, crossing traditional customer and vendor barriers. This is already happening as leading fabless companies learn from experience that closer integration with foundry design flows and kits, starting very early in the development cycle, enables faster feedback and improvement to both the product design and the manufacturing process.
The industry is at an inflection point and the model is changing. A more simulated IDM environment will allow fabless semiconductor companies to be more competitive at the advanced process nodes. As an IDM foundry, Samsung is keenly aware of the advantages that can be gained by this approach. We strive to deliver these benefits to our foundry customers.

UMC is coming to the “rescue” as well:

Chip industry undergoing structural shift, says UMC CEO [DIGITIMES, July 27, 2012]

The semiconductor industry is in the process of structural change, and United Microelectronics (UMC) has a big growth opportunity in the advanced chip segment, according to Shih-Wei Sun, CEO for the IC foundry.

Sun said that he has observed some form of evolution in the IC sector which will likely lead to gradual changes in market leadership. UMC’s high-end foundry business has entered its next stage of growth, which will help strengthen its foundation for future growth, Sun claimed.

Sales generated from advanced process technologies are set to climb substantially and drive sales growth for the company in the second half of 2012, Sun noted. Growth momentum will continue into next year, when the fifth and sixth phase (P5 and P6) factories of its 12-inch plant in southern Taiwan are ready to come online, according to Sun.

UMC’s planned capex budget for 2012 of US$2 billion remains unchanged, said Sun, adding that the expenditure will be mainly used to expand 28nm manufacturing capacity and develop 20nm and more advanced technologies.

Sun indicated that 28nm process technology will account for about 5% of UMC’s revenues by the end of 2012. Moving forward, the foundry expects to start making small volume chips using 20nm process sometime in the second half of 2013, Sun said.

UMC also set a goal of moving 20nm FinFET process to volume production in the second half of 2014, according to Sun. The company has signed a licensing agreement with IBM to expedite the development of its 20nm CMOS process with FinFET 3D transistors.

UMC has long been ranked the world’s second-largest pure-play foundry, trailing only Taiwan Semiconductor Manufacturing Company (TSMC). However, it now faces tougher competition from Globalfoundries, and has been aggressively ramping up its foundry business. Globalfoundries recently claimed that the firm narrowed its gap with UMC in the foundry rankings in 2011, and moved up to second in the first quarter of 2012.

In other news, UMC has reported better-than-expected results for the second quarter of 2012. The firm estimated third-quarter sales will grow only slightly on quarter, but did not provide its guidance for the fourth quarter of 2012 citing uncertainty in end-market demand.

UMC 2Q12 results beat guidance [DIGITIMES, July 25, 2012]

… UMC CEO Shih-Wei Sun, said in a statement. “For the upcoming quarter, we expect mild revenue growth, with 40nm percentage contribution increasing significantly as volume production begins for several new products.”…. UMC saw 40nm and more advanced processes account for 9% of revenues in the second quarter, compared to 9% in the first quarter and 6% in second-quarter 2011. …

UMC reportedly seeking investment from Qualcomm [DIGITIMES, July 13, 2012]

UMC has approached Qualcomm to participate its upcoming private placement with an aim to establish a strategic partnership with the chip vendor, according to industry sources.

In response, UMC said it has no specific target investors for the fundraiser.

UMC’s board of directors in April approved plans to issue up to 1.292 billion new shares in a private placement, which is aimed at bringing in new strategic partners as well as strengthening its capital structure. The resolution later received the nod from the company’s shareholders.

UMC reportedly to start building 28nm chips for Qualcomm in 4Q12, says report [DIGITIMES, July 2, 2012]

United Microelectronics (UMC) reportedly has secured orders for 28nm Snapdragon S4 chips from Qualcomm with volume production slated for the fourth quarter of 2012, according to a Chinese-language Commercial Timesreport.

UMC’s monthly output for Qualcomm’s 28nm chips is initially estimated at 3,000-5,000 wafers, equivalent to 20-30% of Qualcomm’s total orders placed with Taiwan Semiconductor Manufacturing Company (TSMC)for the fourth quarter, the report indicated.

The report comes on the heels of a Bloomberg report citing Qualcomm CEO Paul Jacobs as saying that the firm would not rule out owning a manufacturing plat or consider “writing big checks” to its contract partners to ensure sufficient supply.

Previous reports cited industry sources saying that the tight supply of chips built using TSMC’s 28nm process technology would likely drive Qualcomm and TSMC’s other major client Nvidia toward other foundries as a second source.

TSMC has reiterated that supply of 28nm chips will come close to meeting demand in the fourth quarter of 2012, and satisfy demand completely by the first quarter of 2013.

UMC Aligns With IBM on 20nm Process with FinFET 3D Transistors [UMC press release, June 29, 2012]

Engagement will expedite the development of UMC’s next generation technologies

Hsinchu, Taiwan, June 29, 2012 – United Microelectronics Corporation (NYSE: UMC; TWSE: 2303) (“UMC”), a leading global semiconductor foundry, today announced that it has licensed IBM technology to expedite the development of the foundry’s next generation 20nm CMOS process with FinFET 3D transistors. Under the terms of the agreement, IBM will license its 20nm process design kit and FinFET technology to UMC so the foundry can use these technologies in order to accelerate the availability of these processes for UMC customers.

Dr. IC Chen, vice president of Advanced Technology Development at UMC, said, “We are happy to engage with a recognized technology leader such as IBM for this technology advancement effort. UMC’s position as a world-leading foundry involves timely introduction of leading-edge processes to enable next generation customer chip designs. Leveraging IBM’s technology expertise to shorten our 20nm and FinFET R&D cycle will create a win-win situation for UMC and our customers.”

This agreement between UMC and IBM is only inclusive of IBM’s 20nm CMOS and FinFET. UMC’s internally developed 20nm planar process will be aligned to IBM’s design rules and process/device targets, while UMC’s FinFET will be offered as a low-power technology enhancement option for mobile computing and communication products. Implementation will take place at the company’s Tainan, Taiwan R&D site.

About UMC
UMC (NYSE: UMC, TSE: 2303) is a leading global semiconductor foundry that provides advanced technology and manufacturing services for applications spanning every major sector of the IC industry. UMC’s customer-driven foundry solutions allow chip designers to leverage the strength of the company’s leading-edge processes, which include production proven 65nm, 45/40nm, mixed signal/RFCMOS, and a wide range of specialty technologies. Production is supported through 10 wafer manufacturing facilities that include two advanced 300mm fabs; Fab 12A in Taiwan and Singapore-based Fab 12i are both in volume production for a variety of customer products. The company employs approximately 14,000 people worldwide and has offices in Taiwan, Japan, Singapore, Europe, and the United States. UMC can be found on the web at http://www.umc.com.

Comment on that by X-bit labs [July 3, 2012]

It is necessary to note that UMC does not currently enter the so-called “IBM fab club”, or Common Platform alliance between IBM, Globalfoundries and Samsung Semiconductor that develops common process technologies for all three companies’ semiconductor manufacturing facilities. As a result, UMC will not be able to align its manufacturing processes with CP members.

Nonetheless, licensing technologies from IBM demonstrates inability of UMC to design competitive process technologies fully on its own. Potentially, it means that going forward UMC may either join the Common Platform alliance or to continue licensing fabrication processes from others.

Comment on that by EE Times [June 29, 2012]

Though he declined to disclose the specific cost of the license deal, the spokesman described the terms as “reasonable and insignificant to our financial statements after expense amortization.” The deal will enable UMC to save the considerable costs that would have been involved in developing 20-nm and FinFETs on its own, the spokesman.

FinFETs are three-dimensional, fin-based multi-gate transistors. Intel Corp. is currently in production of 22-nm devices featuring FinFETs—known by Intel as tri-gate transistors. Taiwan Semiconductor Manufacturing Co. Ltd., UMC’s biggest rival in the foundry business, is not planning to implement FinFETs until the 14-nm node. Globalfoundries and Samsung are also planning to implement FinFETs at the 14-nm node.

While Qualcomm’s long supplier TSMC is declaring:

TSMC reiterates supply of 28nm chips to come close to demand in 4Q12 [DIGITIMES, June 13, 2012]

Taiwan Semiconductor Manufacturing Company (TSMC) has reiterated its previous remarks that supply of 28nm chips would come close to meeting demand in the fourth quarter of 2012, in response to speculation that companies lining up for the foundry’s 28nm process capacity had dispersed.

At its most-recent investors meeting, TSMC also suggested that demand for the foundry’s 28nm manufacturing capacity would be completely satisfied by the first quarter of 2013.

TSMC chairman and CEO Morris Chang remarked at the company’s annual shareholders meeting yesterday (June 12) that the foundry’s 28nm foundry capacity will remain tight through the third quarter of 2012. Company efforts in production expansion will help supply catch up and come near the total market demand in the last quarter of the year, according to Chang.

Chang admitted that TSMC had failed to make a precise estimate of demand for 28nm chips this yearand therefore, the foundry could not immediately provide the needed additional capacity.

In order to accelerate its pace of 28nm capacity expansion, TSMC has revised upward its 2012 capex to US$8-8.5 billion. The foundry also unveiled plans to ramp up 20nm production ahead of schedule.

TSMC Reports Second Quarter EPS of NT$1.61 [TSMC press release, July 19, 2012]

28-nanometer process technology accounted for 7% of total wafer revenues, meeting our internal plan. 40-nanometer accounted for 28% of total wafer revenues, and 65-nanometer was 26%. These advanced technologies accounted for 61% of totalwafer revenues.

“Due to continuing strong demand for our 28-nanometer technology, we expect to double the shipments of 28-nanometer in the third quarter. This increase in 28nm business will account for more than 80% of revenue growth in the third quarter,” said Lora Ho, SVP and Chief Financial Officer of TSMC.

TSMC Reports First Quarter EPS of NT$1.29 [TSMC press release, April 26, 2012]

28-nanometer process technology accounted for 5% of total wafer revenues, 40-nanometer was 32%, and 65-nanometer accounted for 26%. These advanced technologies accounted for 63% of total wafer revenues. …

TSMC Reports Fourth Quarter EPS of NT$1.22 [TSMC press release, Jan 18, 2012]

28-nanometer process technology accounted for 2% of total wafer revenues, 40-nanometer was 27%, and 65-nanometer accounted for 30%. These advanced technologies accounted for 59% of total wafer revenues. …

TSMC Reports Third Quarter EPS of NT$1.17 [TSMC press release, Oct 27, 2011]

40-nanometer and 28-nanometer process technologies accounted for 27% of total wafer revenues, and 65-nanometer accounted for 27%. These advanced technologies accounted for 54% of total revenues. …

Taiwan Semiconductor Manufacturing Company Limited, 2012 Annual General Shareholders’ Meeting Minutes [June 12, 2012]

… We became the first foundry to offer volume production of 28-nanometer, with the first-to-market 28-nanometer high-k/metal gate (HKMG) technology portfolio. …

… Based on a record number of customer product tape-outs, TSMC entered volume production of superior 28-nanometer Gate-Last HKMG logic technology.  Revenue from the 28-nanometer node contributed 2% of fourth quarter 2011 wafer revenue, and is expected to contribute approximately 10% wafer revenue in 2012.  …

TSMC plans to make as small as 7nm processors, 28nm is now in volume production [Charbax YouTube channel, Oct 25, 2011]

TSMC is the worlds largest independent ARM Processor foundry. Here’s a video about how TSMC makes the processors of the present and the future, they do them for many of the major ARM chip designers such as Texas Instruments, Nvidia, Qualcomm and others.

More background information: ChipEstimate.com DAC 2012 IP Talks presenter Dan Kochpatcharin [chipestimate YouTube channel, June 26, 2012]

Dan Kochpatcharin, Deputy Director, IP Portfolio Marketing, TSMC. IP Talks presenter with ChipEstimate.com at DAC 2012 in San Francisco. TSMC OIP and IP Quality.

There are 41 IP partners in TSMC IP alliance program and also have 20-25 IP partners directly supported but not part of the IP alliance program.

image

And here are the number of titles in TSMC IP portfolio also vs. other foundries:

image

After that the whole discussion is about the IP quality, which is also discussed in the following video: IP Quality — It’s Imperative! – Voices of DAC 2012 [synopsys YouTube channel, June 11, 2012]

TSMC offers some of the most advanced processes in the industry. They are used to manufacture many of the most complex semiconductors ever produced. Semiconductor IP is a key ingredient to successful System-on-Chip design. Both the processes and the IP face big challenges. Dan Kochpatcharin talks with us about the latest TSMC process technology, the challenges in designing in the latest technology, and why IP quality is imperative. Links of Interest: http://www.tsmc.com/english/default.htm http://blogs.synopsys.com/conversationcentral/

In this video TSMC 9000 IP library is mentioned as critical to the TSMC’s foundry operation. See additional information on extension of that as well, the so called Soft-IP alliance program: A Comprehensive Soft IP Qualification System (Atrenta) [TSMC page, Nov 3, 2011]

Abstract:
Knowing the quality, completeness and integration risks associated with soft, or synthesizable semiconductor IP is critical to meeting power, performance, area and schedule targets for complex system on chip (SoC) designs. In many cases, over 80% of the SoC design is composed of reused IP, much of it synthesizable.

Atrenta has collaborated with TSMC to create a comprehensive system to automate the process of soft IP qualification. Based on the popular SpyGlass® platform, the system programmatically analyzes soft IP using an IP handoff methodology consisting of TSMC’s Golden Rule Set covering various design aspects (risk analysis, integration readiness, implementation readiness, reusability etc.) for an IP. These Golden Rules can help to detect various types of design issues such as simulation-synthesis mismatches, unsynchronized clock domain crossing paths, electrical/connectivity related issues, testability bottlenecks and timing constraints not fully aligned with the design topology/configuration. This approach also provides in-depth analysis reports on various design parameters such as power consumption and optimization, stuck-at and at-speed fault coverage, clock-reset propagation and timing constraints coverage. The results of all tests are summarized in a concise, portable, easy to read HTML-based Atrenta DashBoard report. Once all errors are addressed, the IP is further profiled through an Atrenta DataSheet report that summarizes many aspects of the IP, including estimated power consumption, IO profile, clock and reset trees, gate count, testability and timing constraints. These reports are then posted on TSMC’s online IP databases for customer review as part of the TSMC 9000 IP library.

In this presentation, we will describe the process used to develop the qualification flow. We will provide details regarding what aspects of the IP are checked and how the information is used to assess IP completeness, readiness and integration risks. We’ll review the process to install, setup and run the software and share some results of its application on production soft IP.

Also: Atrenta and TSMC IP Quality Initiative Gains Broad Industry Acceptance [Atrenta press release, March 5, 2012]

Atrenta Inc., a leading provider of SoC Realization solutions for the semiconductor and electronic systems industries, today announced that 10 intellectual property (IP) providers have qualified their soft IP for inclusion in the TSMC 9000 IP library using the Atrenta IP Handoff Kit.

Those companies, part of TSMC’s Soft-IP Alliance Program, include Arteris, Inc.; CEVA; Chips&Media, Inc.; Digital Media Professionals Inc. (DMP); Imagination Technologies; Intrinsic-ID; MIPS Technologies, Inc.; Sonics, Inc.; Tensilica, Inc.; and Vivante Corporation. The participating companies are able to provide quantitative information to TSMC’s customers regarding the robustness and completeness of their soft or synthesizable semiconductor IP that is part of the TSMC 9000 IP library.

In May 2011, TSMC and Atrenta announced the Soft-IP Alliance Program, which uses Atrenta’s SpyGlass® platform and a targeted subset of its GuideWare reference methodology to implement TSMC’s IP quality assessment program. TSMC requires all soft IP providers to reach a minimum level of completeness, as documented by Atrenta DashBoard and DataSheet reports, before their IP is listed on TSMC online.

Atrenta integrated all the software and methodologies needed to implement TSMC’s IP qualification requirements to form the IP Handoff Kit, which uses the SpyGlass register transfer level (RTL) analysis and optimization product suite. To qualify for inclusion in TSMC Online, soft IP must be verified for language syntax and semantic correctness, simulation-synthesis mismatches, electrical and connectivity rules, power consumption, synchronization of clock domain crossing paths, stuck-at and at-speed test coverage and timing constraints. All results are summarized in Atrenta DashBoard and DataSheet reports that capture the results of these SpyGlass tests in an easy-to-read and track HTML format.

“Given the complexity inherent in today’s system on chip (SoC) designs, TSMC is proactively helping our customers mitigate risk and meet their time-to-market goals,” said Suk Lee, director, Design Infrastructure Marketing Division, TSMC. “The IP qualification flow with Atrenta addresses many of the quality challenges inherent in re-using third-party IP. We are pleased with the number of IP providers that are participating in this program and the measurable improvement in delivered IP quality available for TSMC’s end customers.”

“As designers face the challenge of finding quality third-party IP, this program – a collaboration between TSMC, Atrenta and IP providers – is a powerful example of what teamwork in the supply chain can accomplish,” said Mike Gianfagna, vice president of marketing at Atrenta. “TSMC customers can now make more informed decisions that improve the handoff of IP between members of the semiconductor supply chain. This is one way to drive more effective SoC Realization.”

About Atrenta
Atrenta is a leading provider of SoC Realization solutions for the semiconductor and electronic systems industries. As one of the largest private electronic design automation companies, Atrenta provides a comprehensive SoC Realization solution that delivers higher quality semiconductor IP, predictable design coherence, automated chip assembly and improved implementation readiness. Its SpyGlass® and GenSys™ products and GuideWare reference methodologies open the way for broader deployment of system on chip (SoC) devices in the marketplace, improving time to market, reducing implementation costs and lowering risk. With nearly 200 customers, including 19 of the top 20 semiconductor and consumer electronics companies, Atrenta enables the most complex SoC designs in the world. Atrenta, the SoC Realization Company. http://www.atrenta.com.
Atrenta and TSMC IP Quality Initiative Gains Broad Industry Acceptance
Partner Quotes

 

Arteris
“Based on our long-standing relationship with TSMC, Arteris is pleased to participate in TSMC’s Soft-IP Alliance Program and TSMC Reference Flows 11 and 12. By validating Arteris’ configurable NoC interconnect IP with the SpyGlass platform, customers can choose our IP and handoff their design to TSMC with even greater confidence.”
K. Charles Janac, President and CEO, Arteris
CEVA
“CEVA is committed to streamlining the SoC design process and supply chain through a robust ecosystem that improves the efficiency of how customers use our DSP-based solutions. The link to the manufacturing process is critical as we move into the realm of 28 nanometer and beyond. We are pleased to be able to work with Atrenta and TSMC to certify our IP using TSMC’s soft IP validation kit. This will result in faster and more reliable manufacturability for our customers.”
Moshe Sheier, Director of Product Marketing, CEVA, Inc.
Chips & Media

 

“As consumers demand a better experience from their multimedia devices, SoC designs are becoming more complex. By working closely with TSMC and Atrenta, Chips&Media is capable of delivering its leading-edge video processing technologies to customers more efficiently and effectively.”
Steve Kim, CEO, Chips&Media,Inc.
Digital Media Professionals

 

“In support of our advanced graphics IP technology based on industry-standard OpenGL ES and DMP’s proprietary Maestro extension, we are able to leverage excellent semiconductor process technology from TSMC and comprehensive assessment metrics from Atrenta. With a wide-range of leading-edge technologies and eco-system support, DMP will provide highly optimized and validated graphics IPs for embedded markets.”
Tatsuo Yamamoto, President & CEO, Digital Media Professionals Inc.
Intrinsic-ID

 

“As SoC devices become more prevalent and customer needs become increasingly more complex, Intrinsic-ID offers a wide-ranging portfolio of IP available in the TSMC 9000 IP library. Working with TSMC and Atrenta, the quality of our IP is demonstrated and customers will be more informed when using it in their designs, reducing the risk in the handoff to other members of the supply chain.”
Pim Tuyls, CEO, Intrinsic-ID
MIPS

 

“The Atrenta IP Handoff Kit can help assure customers of quality and consistency across the variety of IP available for use at TSMC. As a member of the TSMC Soft IP Alliance Program, MIPS Technologies is committed to working closely with TSMC to speed our customers’ time-to-market. Starting with our superscalar multicore MIPS32® 1074K™ coherent processing system, MIPS is leveraging the IP Handoff Kit to validate that our IP meets and surpasses TSMC’s expectations of quality for soft IP.”
Gideon Intrater, Vice President of Marketing, MIPS Technologies, Inc.
Sonics

 

“As the number of unique IP cores increase with each process node, the need for a reliable, high-performance on-chip network is critical for successful SoC execution. As a partner in the Atrenta and TSMC IP Quality Initiative, and a TSMC Soft IP Alliance member, Sonics gives customers complete assurance and support from the initial design to TSMC hand-off. Our partnership with Atrenta continues to help semiconductor leaders realize their broad range of SoC designs, and the SpyGlass product suite will continue to play an integral part of Sonics’ RTL flow.”
Frank Ferro, Director of Marketing, Sonics
Tensilica

 

“Tensilica is pleased to participate in TSMC’s Soft-IP Alliance Program after many years of producing successful tapeouts for mutual customers. By validating our IP against quality metrics established by TSMC and measured using the SpyGlass platform, our customers can choose Xtensa processors and deliver their designs to TSMC with even greater confidence.”
Chris Jones, Director, Product Marketing, Tensilica, Inc.
Vivante

 

“Vivante is pleased to be part of TSMC’s Soft-IP Alliance Program, offering customers our full line of high performance, power efficient GPU/GPGPU cores. By going through extensive validation of our IP on the SpyGlass platform to ensure reliability and quality, customers can be confident that selecting Vivante products will reduce their risk and expedite time to market of their designs.”
Wei-Jin Dai, President and CEO, Vivante Corporation

And here is a video with Atrenta CTO Bernard Murphy about the current changes:
DAC Retrospective [SperlingMediaGroup YouTube channel, June 13, 2012]

Is DAC really a design automation conference, or has it shifted to a design enablement conference due to rising complexity breaking down traditional barriers and silos? Low Power High Performance Engineering talks with Atrenta CTO Bernard Murphy about the changes.

Qualcomm and TSMC Collaborating on 28nm Process Technology [joint TSMC and Qualcomm press release, Jan 8, 2010]

Cutting-edge Semiconductor Technology Enables Mobile Devices to Offer Greater Functionality and Lower Power Consumption

Qualcomm Incorporated (Nasdaq: QCOM), a leading developer and innovator of advanced wireless technologies, products and services, today announced that the Company is working closely with foundry partner Taiwan Semiconductor Manufacturing Company (TWSE: 2330, NYSE: TSM) on 28 nanometer (nm) process technology. The advanced process node enables more features to be integrated into smaller chips with a high level of cost efficiency, accelerating the expansion of wireless into new market segments.

Small form factor and low power consumption are important features of Qualcomm’s next generation of system-on-a-chip (SoC) solutions, including the Snapdragon™ chipset platform. The two companies are capitalizing on their long-term relationshipas Qualcomm works on migrating directly from the 45nm to the 28nm node.

“TSMC prides itself on its ability to deliver cutting-edge technology platforms, including the related design ecosystems. Our 28nm platform supports the high-performance, low-power products that deliver next-generation experiences,” said Jason Chen, vice president of Worldwide Sales and Marketing. “We are pleased to be working with Qualcomm, a market leader in wireless technology, on bringing these new experiences to reality.”

“Qualcomm’s close collaboration with TSMC has always been a key part of our ability to deliver significant advantages to our customers through the industry-leading integration, power efficiency and cost efficiency of our products – enabling them to do more with less,” said Jim Clifford, senior vice president and general manager of Qualcomm CDMA Technologies. “Qualcomm’s integrated fabless manufacturing model and migration to smaller geometries will allow us to continue enabling the best mobile user experience possible on handsets, smartphones and smartbook devices.”

Qualcomm and TSMC worked closely on 65nm and 45nm technologies. They are continuing their relationship into low-power, low-leakage 28nm designs for high-volume manufacturing. Delivering up to twice the density of previous manufacturing nodes, 28nm technology allows semiconductors that power mobile devices to do far more with less power. Qualcomm and TSMC are working on both high-k metal gate (HKMG) 28HP and silicon oxynitride (SiON) 28LP technologies. Qualcomm expects to tape out its first commercial 28nm products in mid-2010.

Close collaboration with strategic technology and foundry partners is a key part of Qualcomm’s Integrated Fabless Manufacturing (IFM) business model, which delivers greater efficiencies and accelerated technology advancement to the industry.

Background video on Semiconductor Technology at TSMC, 2011 [AndrewatEML YouTube channel, March 26, 2011]

An up to date and current overview of semiconductor manufacturing technology from TSMC in Taiwan. Nicely produced and informative if you tune-out the voice-over slightly. Better access than any Fab tour. Recommended if you have any interest in how semiconductors are made/manufactured in volume right now.

5 Comments

  1. […] capacity which will be lifted only by the end of the year as described in my earlier: Core post: Qualcomm’s critical reliance on supply constrained 28nm foundry capacity [July 27, […]

  2. […] TSMC for whom the capacity shortage of its leading 28nm nodes will end by December, 2012. See my Qualcomm’s critical reliance on supply constrained 28nm foundry capacity [this same ‘Experiencing the cloud’ blog, July 27-Nov 8, 2012] post as updated just 4 days ago. […]

  3. […] TSMC for whom the capacity shortage of its leading 28nm nodes will end by December, 2012. See my Qualcomm’s critical reliance on supply constrained 28nm foundry capacity [this same ‘Experiencing the cloud’ blog, July 27-Nov 8, 2012] post as updated just 4 days ago. […]

  4. […] Samsung Exynos 5250 [Dec 6, 2011]- for Samsung semiconductor foundry operation: see inside the Qualcomm’s critical reliance on supply constrained 28nm foundry capacity [this same ‘Experiencing the ‘Cloud’ blog, July 27 – Nov 13, 2012]- Intel targeting ARM based […]

  5. […] Nov 16, 2011]See also the post which described the availability problem of the company in 2012: – Qualcomm’s critical reliance on supply constrained 28nm foundry capacity [July 27 – Nov 13, […]

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