The next generation of semiconductor technology will cost about $10 billion to create. According to Ana Hunter, vice president of Foundry Services at Samsung, who kicked off the Common Platform Technology Forum 2012 conference in Santa Clara Wednesday this week,(see below) the cost includes process development, factory (fab), circuit design, and the creation of a library and intellectual property to produce complex systems-on-a-chip (SoC).
Currently only TSMC, Global Foundries, and Intel have been spending such amounts. I wonder how Hynix, Sandisk with Toshiba, and Micron are facing these challenges.
In a few years, when it will cost $15 - 20 billion, who will remain in the race? The tremendous cost will slow down the shrinking of semiconductor devices.
Rising Stakes In Semiconductor Game Squeeze Out All But A Few (Forbes.com / Roger Kay)
This alliance is about sharing the enormous risks of semiconductor development
Semiconductor development is not for the faint of heart.
Putting together a factory to make the next generation of semiconductors will cost about $10 billion, according to Ana Hunter, vice president of Foundry Services at Samsung, who kicked off the Common Platform Technology Forum 2012 conference in Santa Clara Wednesday this week.
Leading edge semiconductors for sale today have features 32 nanometers (nm) wide. The Common Platform’s next generation has 28nm features, and just this incremental improvement will involve parting with some serious coin. The creation of a library and intellectual property to produce complex systems-on-a-chip (SoC) will cost $250 million. Chip design will run another $100 million, not counting software. And tooling the actual factory will take a cool $7 billion.
And that’s the investment before the first dime of revenue is realized.
The club capable of sustaining this sort of outlay gets more exclusive by the day. Only a few short years ago, there were a half dozen players, back when the tab for membership was a mere $3 billion. Samsung was one of them. Now, it’s down to two foundries (which make chips for others) and one integrated device manufacturer (which makes chips for itself).
The integrated device manufacturer is Intel, which fights a lonely battle, doing all its R&D internally, building its own factories, making its own chips, and selling them to customers who build systems.
The foundries are Taiwanese behemoth TSMC, the incumbent, and GlobalFoundries, the challenger. GlobalFoundries, now fully spun out from AMD, where it used to be the company’s manufacturing branch, picked up Chartered Semiconductor out of Singapore to form the core of the company’s assets. AMD contributed technology to the venture. The main party sustaining GlobalFoundries at the moment is Advanced Technology Investment Company (ATIC), which invests on behalf of the government of Abu Dhabi. ATIC has committed $10 billion to sustain GlobalFoundries through profitability and growth, not to mention building and retrofitting a considerable number of factories pretty much continuously.
But beyond GlobalFoundries and its backers, the Common Platform extends the alliance further. IBM and AMD have worked together for years on chip development, and AMD remains Globalfoundries’ biggest customer. IBM contributes significant intellectual property to the alliance.
Samsung, which arguably competes with GlobalFoundries as a foundry, but also makes chips for itself, has thrown its lot in with the Common Platform, primarily to spread investment risk.
As Hunter of Samsung pointed out, technology choices are fraught with risk. After 28nm, the next “process node,” as they’re called, is 20nm, which is the last stop for so-called “planar structures,” or features laid out flat in two dimensions. After that, to get to 14nm, the Common Platform will need to create 3D features to drop the transistor size one more time. The transition to three-dimensional structures will be difficult and hugely consequential. Intel is already making 3D structures in its 22nm process, and products based on these new chips are due out later this year.
But the alliance has other reasons to hang together beside cost and technology risk.
There’s physical risk, which GlobalFoundries has mitigated by having factories in North America, Europe, and Asia. If an earthquake or tsunami disrupts one region, others can take up the slack. Intel has global production for the same reason.
The British company ARM, not officially a Common Platform member, but a key sponsor of the conference, has more than a passing interest in the success of the Common Platform. ARM architecture powers most smart phones and tablets, and SoC development is focused heavily on this high mobility market, which requires very low power devices. As complexity increases, ARM and its manufacturing partners need to establish a mutual feedback loop to optimize their designs and processes.
The intricacy of continued process node development is stunning.
Gary Patton, VP of IBM’s semiconductor R&D, gave a glimpse of things down the road. He talked of the limits of each successive generation of technology, how each innovation lasts for a decade or so, gets developers to a point, but hits a limit, and other means have to be found to reduce feature size further. Three-dimensional structure, which is next, will last for a decade, he noted, and the use of shorter wavelength light, extreme ultraviolet, will help get down to 10nm. But around 7nm, process node development will reach the limit of atoms.
At that point, lithography — the method of shining light through masks to create physical printed features — will run out of gas. After that, carbon nanotubes will need to take over. IBM has created functional 10nm circuits out of carbon nanotubes. Carbon electronics will begin to allow designers to put electronics and optics on the same wafer.
As a proof point of the possible, IBM has produced 5nm features in the lab.
But make no mistake, in the race for smaller transistors, Intel maintains a growing lead. Where not long ago this advantage was a year to 18 months, in some areas — 3D structures, for example — the gap is stretching toward three to four years. Intel touts its integrated nature as a key factor in this success. And Intel also has its sights set on 5nm.
But this race is a marathon, not a sprint, and Intel is by no means resting on its laurels. ARM is fueling the high growth form factors — smartphones and tablets — and ARM vendors like Qualcomm and Apple all produce in foundries.
The few remaining players in the increasingly exclusive club of those who can afford semiconductor development must bet billions before knowing the payoff. Their imperative: pour money and expertise into squeezing more performance out of processors in less space using less power.
The risks are huge … but so are the rewards of success.