This is the month that the business model flip-flopped for SoC manufacturers.
First, Texas Instruments stuck a paragraph into an earnings report saying that it would rely on a yet-unnamed foundry partner for its core 32-nm process development.
Then, Freescale Semiconductor said it would join the Fishkill alliance starting at the 32-nm node and rely on the foundry partners that adhere to the Fiskkill-defined “Common Platform.”
Then, yesterday (Jan. 24th), STMicroelectronics said that it, too, would rely on an “industry leading partner” for its core 32-nm process, using the Crolles research center to develop modules on top of that digital foundation, including extensions supporting analog and sensors. This came after STMicro issued a Jan. 16 press release saying that it remained committed to the Crolles alliance and was searching for a replacement for NXP.
A year ago, companies such as Freescale, Philips/NXP, TI, and STMicro were voicing the mantra that manufacturing, design, and process development needed to be closely intertwined. As scaling proceeds, the major challenge is keeping variability under control, which requires close communications among the engineers developing the design tools, the circuit models, the processes, equipment, and the fab lines. Now, the industry will see whether these four IDMs can move to primarily a foundry manufacturing model that will try to cope with variability.
These historic business decisions are a recognition that Wall Street and the big private equity firms applaud an emphasis on design, but see manufacturing investments as a boat anchor.
The shift to foundries by these four large IDMs comes just 30 years after Morris Chang founded TSMC. His prediction that fabs would double and quadruple in cost as wafer sizes scaled up has proven true, driving IDMs into the willing arms of the foundries. A $5 billion factory spread among hundreds of customers certainly spreads the financial risk around nicely.
Perhaps 2007 is the year that Morris’s 1986 prediction stands alongside Moore’s Law as the two forces driving the industry.
About weQuest: weQuest's are written by G Dan Hutcheson, his career spans more than thirty years, in which he became a well-known as a visionary for helping companies make businesses out of technology. This includes hundreds of successful programs involving product development, positioning, and launch in Semiconductor, Technology, Medicine, Energy, Business, High Tech, Enviorntment, Electronics, healthcare and Business devisions.