Monday, February 10, 2014

IBM Selling Foundry Fabs

The article below discuss IBM announcement that it is selling its manufacturing operations. It will impact SOI (Silicon on Insulator), a process  that IBM specialized in.

It is not likely that Intel will buy an existing fab. Intel always duplicates an existing process in a current fab when they build a new fab 

It is just another example of consolidation chip manufacturing see in March 2012 Moore's Law End? (Next semiconductors gen. cost $10 billion
" chip industry without IBM will be a diminished industry."

IBM has been number 10 in foundry ranking for several years ( Top Semiconductor Ranking 2012 (Sales, Growth) 

More recent IBM dropped to number 11 in ranking (Top 13 Foundries Account for 91% of Total Foundry Sales in 2013)

Insightful, timely, and accurate semiconductor consulting.
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IBM fabs for sale – the semiconductor shockwave

Following the semiconductor shock of IBM pulling out of chip manufacturing, David Manners considers who could buy and run the IBM fabs, whose processes include SOI and SiGe, and which supply manufacturing process technology to half the world’s major companies: Samsung, GloFo, UMC, ST, Renesas, NEC, Freescale, Toshiba and Infineon.
The biggest shockwave the semiconductor industry has had for years is the IBM announcement that it is pulling out of chip manufacturing.

IBM CEO Ginni Rometty has decided that IBM’s future is in software and services and chip manufacturing clearly doesn’t fall in either of these categories .

Moreover IBM’s chip manufacturing business lost $130 million last year and is slated to lose another $130 million this year while the capital costs to stay in the game are $5 billion a factory and rising.
That’s one way of looking at it.

The other way of looking at it is that IBM has been a stalwart of the world semiconductor industry, inventing the DRAM, mastering SiGe, SOI and much more besides and supplies manufacturing process technology to half the world’s major companies: Samsung, GloFo, UMC, ST, Renesas, NEC, Freescale, Toshiba and Infineon.
It is shocking to think IBM’s legendary R&D operation may be curtailed but, without the justification of a business outlet for its innovations, it may be.

One rather assumes that the obvious candidates for buying IBM’s fabs have already been tapped and that the announcement that Goldman Sachs has been appointed to look for a buyer for the fabs is to find an unobvious candidate.

The obvious candidates are Intel, TSMC, GloFo and Samsung.

However, Intel has net cash of only $7 billion and makes only CMOS chips, while IBM’s capacity includes processes like SOI and SiGe which Intel won’t need and the IBM fabs are not as advanced as Intel’s.

TSMC says it doesn’t want to operate foreign fabs; GloFo’s owners are said to be getting fed up with their capital-greedy chip investment and may not want to expose themselves further to the chip industry; Samsung already has as much operational and planned capacity in the USA as it needs.

So how about the non-obvious candidates?
Suggestions have been that Apple could enter into a jv with IBM to run the fabs. This would involve Apple putting a lot of money in to upgrade the fabs to the latest processes, but Apple has lots of money and IBM has the latest processes.
TowerJazz is another suggestion. The company has just formed a jv with Panasonic in which TowerJazz has a 51% share and which will own three Panasonic fabs in Japan.

The Panasonic deal gives TowerJazz’s already impressive array of specialty processes the addition of Panasonic’s specialty flows such as High Definition FSI for sensors and high voltage SOI power management technologies.
If TowerJazz now added IBM’s specialty processes like SiGe and SOI to its stable, it would become the world’s No.1 specialty fab.

Another suggestion is China. China has been trying, unsuccessfully, to build an indigenous chip industry for 30 years. Following the successful integration of IBM’s PC business into Lenovo, followed by the recent sale of IBM’s x86 server business to Lenovo, it would seem quite logical that a sale of IBM’s chip manufacturing would be to China.
Of course the European authorities, wedded to the idea of gaining 20% world market share in IC manufacturing, may see the opportunity to acquire IBM’s world-class process development capabilities as a sufficient reason to buy the fabs. IBM’s proficiency in SOI would give a boost to the European-developed FD-SOI process.
Then, of course, there are other emerging national tech players like Brazil and India who could see this as a once in a lifetime opportunity to acquire the basis for a chip industry.

Whatever the outcome of this, a chip industry without IBM will be a diminished industry.

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