Reports of the upcoming IPO for privately-owned GlobalFoundries presents an opportunity to examine this pure-play foundry’s placement in the ever-dynamic semiconductor ecosystem. It’s important to take a step back to understand GlobalFoundries’ origin story.
Yole Développement‘s analysts, with on their technical & market expertise give you today, their vision of this new event. Their analysis is based on both quarterly market monitors, Application Processor and Microcontroller (coming soon) and both reports, Emerging Non-Volatile Memories and Status of the Memory Industry.
GlobalFoundries was spun out of AMD in 2008 when the parent company decided to change business models and go fabless. Mubadala Investment Company, through their subsidiary Advanced Technology Investment Company (ATIC), agreed to pay $700 million to increase their stake to majority ownership in the newly formed foundry company. This new entity was formally named GlobalFoundries in March of 2009. Over time the company grew through two major acquisitions, bringing Chartered Semiconductor (2010) and IBM’s microelectronics business (2015) into the fold. More recently GlobalFoundries has taken steps to reduce its footprint, dealing the ASIC business (named Avera) to Marvell and one of its US-based 300mm plants to onsemi (formerly On Semiconductor) in 2019. Just earlier this year, there were reports of chip giant Intel looking at a deal to acquire GlobalFoundries for $30 billion, but those were dismissed as “speculation” by GlobalFoundries CEO Tom Caulfield, leading to the upcoming IPO.
Sitting today, GlobalFoundries is positioned with a number of strengths in their corner. As a main supplier of Silicon-on-Insulator (SOI) and Fully-Depleted SOI (FD-SOI) fabrication technologies, GlobalFoundries is key in providing low-power logic and in leading-edge RF fabrication capabilities, driven by the growing semiconductor demand in IoT, Automotive, and Communications.
On the backend side of manufacturing, GlobalFoundries has an array of advanced packaging capabilities such as FC CSP and FC BGA, as well as the ability to manufacture Silicon interposers for TSV interconnection.
In terms of scale, the company operates with a capacity greater than 170K wafer starts per month (WSPM) of 300mm and 100K WPM of 200mm, placing GlobalFoundries in the top 5 of foundry services providers worldwide (Source: SEMI World Fab Forecast report, 2021).
The company has strategic relationships with some of the largest players in semiconductors today: a long-running wafer supply agreement with AMD and production of IBM’s Z-processor family have provided stability. With manufacturing located in Europe, US, and Singapore, GlobalFoundries is established in regions that have shown recent appetite for industry-friendly policies and investments.
GlobalFoundries is not without some weaknesses, some of which set it apart from the leading foundry companies TSMC and Samsung. In 2018, GlobalFoundries suspended plans on development of 7nm, relegating the company to the non-leading edge of semiconductor manufacturing. This has caused a decline in business from a main customer as AMD has moved its designs ahead to 7nm for Zen 2 products.
High performance computing products will tend to follow Moore’s Law with the next generation always seeking out smaller process nodes. Therefore, if GlobalFoundries stops node shrink at 12nm, they are taking themselves out of the running of a large portion of foundry business. For example, TSMC has earned over $40 billion from 7nm and 5nm processing since the start of 2019, making up 38% of their revenue. One aspect that hinders GlobalFoundries is their scale relative to the rest of the foundry industry: the company makes up just 6% of the wafer capacity of the semiconductor foundries tracked by SEMI.
As we look forward on GlobalFoundries prospects, we see some opportunities.
As sensors, RF, MEMS, and the broader ‘More-than-Moore’ business continues to thrive and grow, there is still growing demand for the technologies that GlobalFoundries can service. According to Yole’s analyses, the More-than-Moore wafer production is expected to grow to 88 million equivalent 12’’ wafers by 2026 with a compound annual growth rate (CAGR) of ~5%. Within the embedded memory space, chip designers are looking for higher density, lower power consumption, and high performance, for which GlobalFoundries has a well-positioned solution. The company is among the first to integrate embedded Magnetoresistive RAM (eMRAM) as an eFlash replacement. It is also the foundry partner of the leading MRAM player Everspin Technologies, manufacturing discrete 1Gb MRAM solutions on 28nm with plans to scale to 12nm. GlobalFoundries has also licensed the Adesto’s CBRAMTM technology from Dialog Semiconductor, further expanding its non-volatile memory offering for process nodes beyond 28nm, which is typically considered to be the scaling limit for Flash-based embedded memory.
Finally, in the current environment of scarce semiconductor capacity, premiums should be placed on any available foundry capacity, even at lagging process nodes and at the smaller end of market share like that of GlobalFoundries.
The present situation and GlobalFoundries’ position bring some threats as well. Spurred on by the semiconductor shortage, new investments in foundry capacity are on their way near-term and in the coming decade: $20 billion announced from Intel near-term for the new Intel Foundry Services fab in Arizona, $100 billion expected from TSMC over the next three years, and $151 billion from Samsung through 2030. This new capacity will not just apply to the sub-10nm realm where GlobalFoundries may want to compete but will also go head-to-head with capacity running on lagging nodes, like that of present-day GlobalFoundries. Questions remain about the firm’s ability to invest competitively in such a capitally intensive environment.
In the push to go towards 10nm or 7nm (or beyond), GlobalFoundries finds itself in a legal tangle with one of its major partners. The cost to invest in developing 10nm and 7nm is at the root of dueling lawsuits filed earlier in 2021 between GlobalFoundries and IBM, putting the status of that relationship in jeopardy. Lastly, US-China trade tensions have created further motivations for Chinese OEMs and ODMs to work with China’s foundry SMIC, who has similar scale and technology position as GlobalFoundries. This can hinder GlobalFoundries’ ability to attract customers from within the Chinese sphere of influence.
The semiconductor industry is always dynamic, particularly within the fabless/foundry relationships. As GlobalFoundries looks to go public, there are various factors in the company’s favor while others pose challenges. How will the capital markets value a newly public GlobalFoundries? Will there be sufficient capital raised for the firm to further meet growing semiconductor demand and/or take some large strategic steps? How will the foundry industry peers react to any changes in GlobalFoundries’ positioning? After a year that has seen semiconductor supply chains strained to new levels, these are among the questions that analysts at Yole and elsewhere will be asking as 2021 turns into 2022.
About the authors
John Lorenz is a Technology and Market Analyst, Computing & Software within the Semiconductor, Memory & Computing division at Yole Développement (Yole), part of Yole Group of Companies. John is engaged in the development of market and technology monitors for the logic segment of advanced semiconductors, with an initial focus on processors. Prior to joining Yole, John held various technical and strategic roles at Micron Technology.
On the engineering side, his roles included thin film process development and manufacturing integration on DRAM, NAND, and emerging memory technologies and industrial engineering / factory physics for the R&D fab.
On the strategic side, John ran the memory industry supply & capex model for corporate strategy / market intelligence and established the industry front-end costing model within strategic finance.
John has a Bachelor of Science degree in Mechanical Engineering from the University of Illinois Urbana-Champaign (USA), with a focus on MEMS devices.
Tom Hackenberg is a Principal Analyst for Computing and Software in the Semiconductor, Memory and Computing Division at Yole Développement (Yole). Tom is engaged in developing processor market monitors and research into related technology trends. He is currently focused on low and ultralow power solutions such as MCUs.
Tom is an industry leading expert with more than a decade’s experience reporting on markets for semiconductor processors including CPUs, GPUs, MPUs, MCUs, SoC ASICs & ASSPs, FPGAs and configurable processors. Tom is also well-versed in related technology trends including IoT, heterogeneous processing, chiplets, AI and edge computing.
Prior to joining Yole, Tom was a principal analyst at OMDIA, IHS Markit and began processor market research in 2006 for IMS Research. He worked with market-leading processor suppliers developing both syndicated and custom research. Tom holds a BSECE from the University of Texas at Austin specializing in Processors and FPGAs.
Simone Bertolazzi, PhD is a Senior Technology & Market analyst, Memory, at Yole Développement (Yole), working with the Semiconductor, Memory & Computing division. As member of the Yole’s memory team, he contributes on a day-to-day basis to the analysis of nonvolatile memory markets and technologies, their related materials and fabrication processes.
This article has been written in collaboration with Adrien Sanchez, Technology & Market Analyst, Computing & Software, and Emilie Jolivet, Director of the Semiconductor, Memory & Computing Division at Yole.
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