The race to drive semiconductor technology to the bleeding edge has narrowed to three companies.

Globalfoundries suspended work on a 7nm node. It will lay off less than 5% of its workforce and make its ASIC group a wholly-owned subsidiary so it can partner with one of the remaining 7nm foundries.

It would have cost GF $2-4 billion to ramp up the 40-50,000 wafers/month capacity needed to have a chance of making a return on the node. “The financial investment didn’t make as much sense as doing something else,” said Tom Caulfield, the former general manager of Fab 8 named chief executive of GF in March.

In an interview in May, Caulfield said GF’s owners the Mubadala Investment Company in the United Arab Emirates, wanted improved financial performance. In June, the company announced a 5% layoff without cutting any products, affecting about 900 of its 18,000 employees.

“The lion’s share of our customers…have no plans for” 7nm chips. Industry-wide demand for the 14/16 node was half the volume of 28nm, and 7nm demand may be half the level of the 14/16nm node, Caulfield said.

“When we look out to 2022, two-thirds of the foundry market will be in nodes at 12nm and above, so it’s not like we are conceding a big part of this market,” he added.

The decision forces AMD, GF’s closest customer, to source all its initial 7nm chips from TSMC at a time when the graphics and x86 processor vendor is gaining market share. Whether AMD can get all the wafers it needs in the short term “is a good question,” said analyst Linley Gwennap of the Linley Group.

“AMD was hoping GF was a second source, so it could have as many wafers as it needed but now they have to compete with Apple and others for TSMC’s attention.” Given Samsung’s decision to start production by early next year on a 7nm node with EUV steppers “everyone is flocking to TSMC for 7nm, supposedly even Qualcomm,” said Gwennap.

IBM, GF’s other close partner, has more breathing room to find a new foundry for its Power10 processor, not slated to ship until 2020 or later. The two customers were part of the heritage of GF that started as a spin-off of AMD’s fabs, later acquiring Chartered in Singapore and IBM’s fab operations in 2015.

By: DocMemory
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