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Are we heading for a 28nm traffic jam?

by Scott Bicheno on 9 September 2011, 17:02

Tags: GLOBALFOUNDRIES, TSMC

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At the recent Global Technology Conference, hosted in Silicon Valley by Global Foundries, much of the talk was about the 28nm manufacturing process, which is the focus for the next year or two of not just the mobile SoC space, but the GPU market too.

Conversation among the tech hacks over the dinner table inevitably tended towards Apple, and what its plans are. Since Apple became so successful, its activities have started to have significant knock-on effects to the rest of the industry. This is because Apple buys components, such as chips, storage and displays, in very large quantities, which enables it to drive hard bargains with suppliers.

So when Apple decides to shift suppliers, as it's supposedly doing with the manufacture of its own SoCs - from Samsung to TSMC - there are bound to be ripples. One of the hacks at the GF event was Charlie Demerjian of Semi Accurate, who has had his fair share of semiconductor industry scoops over the years. So it intrigued us to see his recent exclusive claiming TSMC has raised the prices on its 28nm wafers for AMD and NVIDIA.

While AMD gets its CPU manufacturing done by Global Foundries, of course, the GPU side is still done by TSMC, for now. NVIDIA, to the best of our knowledge, contacts all its chip manufacture to TSMC. But Apple is probably the biggest fab customer of all these days, and you can bet TSMC did everything it could to secure Apple's business. But at what cost to the rest of its customers.

Even a fab company as big as TSMC has finite capacity, and assuming it didn't have a ton of 28nm equipment sitting idle before Apple came knocking, it stands to reason that some other customers will have to move down the pecking order if Apple is now at the top of the 28nm list. When the rumours of Apple leaving Samsung first appeared we figured GF was the more obvious move, but something seems to have persuaded Apple otherwise.

So Demerjian proposes that TSMC is now in the luxurious position of being to raise the prices for AMD and NVIDIA, reasoning that it will either solve its Apple-induced capacity issues by forcing them to go elsewhere, or make sufficient extra cash from them to make the hassle worthwhile.

There are several potential consequences of this news, if true. Firstly AMD and NVIDIA will have to either charge more for their 28nm GPUs, or lose a lot of their profit, secondly GF may well benefit as one of the only alternative fabs, and thirdly we might see a shortage of, not just 28nm GPUs, but SoCs too.

Let's not forget that all NVIDIA's Tegra manufacture currently happens at TSMC, and we expect that to move to 28nm soon. Qualcomm is also a major TSMC customer and hopes to get its first 28nm Snapdragons out of the door early next year. And then there's TI, which expects to be one of the first companies to produce an SoC based on ARM's 28nm Cortex A15 design, also next year. Something's got to give, and it's unlikely to be Apple.

 



HEXUS Forums :: 17 Comments

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The problem is Apple may buy a lot of wafers but they are still not most of the market though. So basically TSMC is playing a very dangerous game in the long run. They risk not only loosing the not insubstantial custom of both AMD and Nvidia in the long run but also many other companies which design SOCs for many other devices too.

The other fabs are probably rubbing their hands in glee. TSMC better hope their current process does not have the problems and delays the 40NM ones had, otherwise the competition will catch up or expand their capacity(they are not the only company working on 28NM and smaller processes).

I suppose in one way AMD may not be as bad off as they do have experience with Llano being built on another process.
GF and UMC will likely both benefit - especailly since UMC annonced:

http://www.eetimes.com/electronics-news/4218494/UMC-predicts-declines-in-revenues-fab-use

decline in fab use and revenue - now they even might have short use or even stopped lines….. makes for ` cheaper offers` to amd and nv who want to move
Well we should just do away with discrete graphics cards. Bung a decent one in with the CPU and keep the development rate stable over a 5 year period so there's some level of performance parity across the market.
HalloweenJack
GF and UMC will likely both benefit - especailly since UMC annonced:

http://www.eetimes.com/electronics-news/4218494/UMC-predicts-declines-in-revenues-fab-use

decline in fab use and revenue - now they even might have short use or even stopped lines….. makes for ` cheaper offers` to amd and nv who want to move

TSMC also stated a similar thing recently:

http://www.xbitlabs.com/news/other/display/20110810153308_TSMC_Lowers_Expectations_for_28nm_Revenue_in_2011.html
I seriously doubt Samsung would be bothered in all of this as crApple sues them for anything and everything, and I doubt AMD will be upset because they can us GloFo for everything if they wanted…so that really leaves NV and the other SoC people struggling…..which is what Apple want of course