Semiconductor Value Chain

Why Globalfoundries Decision to Halt 7 nm Development Makes Sense

29 August 2018

Globalfoundries has made the strategic decision to no longer pursue its 7 nm FinFET program and instead will focus on high-volume, high-demand manufacturing at the 14/12 nm FinFET level.

Because the company will be putting more resources into its 14/12 nm production lines such as delivering a range of intellectual property, RF, embedded RF, embedded memory, low power and more, the company felt the need to restructure its strategy moving forward.

“Although this announcement may have caught a lot of people by surprise if you really dissect the information it is a well-positioned and strong long-term strategy,” Len Jelinek, senior director of semiconductor manufacturing at IHS Markit, told Electronics360. “Globalfoundries has one advanced fab in NY. They have never built an advanced fab for 7 nm/5 nm. Additionally as they pointed out they only have one major high volume client that uses advanced technology that is AMD. So their comment that a majority of clients they service do not need 7 nm and below technology is an accurate assessment of their market.”

Globalfoundries said that demand for semiconductors remains high, but the vast majority of its customers don’t require cutting-edge technology. So the company is doubling down on investments in differentiated technology across its portfolio to make its 14/12 nm nodes more strategically important for future production.

As a result of the move, GF said it will require a workforce reduction but many of these employees will be transferred to other parts of the company.

Globalfoundries is also forming a new ASIC business as a wholly-owned subsidiary that will be independent from the foundry and allow it to leverage the IP it got in a previous agreement with IBM while at the same time provide clients with access to an alternative foundry options at 7 nm and beyond.

Another key aspect to its ongoing strategy is developing 5G RF SOI technology, which Jelinek said Globalfoundries is well positioned to be a major provider in this specialty technology.

Jelinek added that this move puts additional pressure on Taiwan Semiconductor Manufacturing Corp. (TSMC), the largest foundry in the world, because its adds “responsibility to be the steward of technology.” While Intel and Samsung have a role to play, in terms of foundries, TSMC is really the one that will be responsible for pushing the leading edge of manufacturing, Jelinek said.

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