AMD spinoff seeks to rival chipmaking giants

The chipmaker's spinoff Globalfoundries is preparing to take on world's largest chipmakers.

Brooke Crothers Former CNET contributor
Brooke Crothers writes about mobile computer systems, including laptops, tablets, smartphones: how they define the computing experience and the hardware that makes them tick. He has served as an editor at large at CNET News and a contributing reporter to The New York Times' Bits and Technology sections. His interest in things small began when living in Tokyo in a very small apartment for a very long time.
Brooke Crothers
3 min read

Advanced Micro Devices' spinoff Globalfoundries will use a groundbreaking ceremony this Friday to proclaim that it's ready to go head to head with the world's largest chipmakers.

Globalfoundries, formerly the chip manufacturing operations of AMD, will break ground next week in Malta, N.Y., on a $4.2 billion facility that may put it among the elite chipmakers of the world. But to get there, it needs big customers. One--or more--of those names will be announced in the next 30 days, according to Jon Carvill, director of corporate communications at Globalfoundries.

Early customers may include companies that design low-power and wireless chips for the consumer electronics market. "There are a lot of benefits to being a significant player in that space," Carvill said.

Globalfoundries also has graphics chip companies in its sights. One large company cited as a potential future customer--though not necessarily among the first customers--is Nvidia, the No.1 graphics chip supplier. Nvidia's CEO, Jen-Hsun Huang, has already stated publicly that he is "seriously evaluating and discussing" the possibility of using Globalfoundries as a contract chip manufacturer, or so-called foundry.

An even more likely customer is ATI Technologies, AMD's graphics chip unit. Carvill said that Globalfoundries has "not run any volume (manufacturing) of AMD graphics processors...not yet," which may imply that there will be volume manufacturing at some point down the road.

Globalfoundries will compete aggressively for graphics chip business at the 28-nanometer manufacturing process level, which is still a few years away. Nvidia and ATI now use a 40-nanometer process in their most advanced graphics chips. Typically, the smaller the chip geometries, the faster and more power efficient the chip is.

It is no coincidence that both Nvidia and ATI currently use the world's largest contract chip manufacturer, Taiwan Semiconductor Manufacturing Company (TSMC) as their foundry. Nvidia and ATI are the kind of elite client that Globalfoundries is looking to wrest away from TSMC. Graphics chip companies are typically among the first to move to a new manufacturing process because they need to pack as many transistors--now up to a billion--as possible into a chip in order to maintain a performance leg-up on the competition.

Globalfoundries may have an advantage here. "They (TSMC) don't have the advanced engineering that AMD does," said Dan Hutcheson, CEO and chairman of VLSI Research, a market researcher that covers the chip manufacturing industry, referring to Globalfoundries in its previous incarnation as AMD. And TSMC has been struggling with its 40-nanometer-class manufacturing process, providing an opportunity for Globalfoundries, according to Hutcheson.

But that doesn't mean it will be a cakewalk. "TSMC is incredibly cost effective and they're very quick at turning things around," Hutcheson said. "That's why they hold 60 to 70 percent of the market."

Why is a quick turnaround important? "If you're late to market, you lose most of your market share in a few weeks," according to Hutcheson. "A chip has to be designed into a socket that's going to go into some electronics product that's going to show up on shelves at Christmas. You can't delay Christmas," he said.

When the facility in Malta is completed and up and running by 2012, it should be among the world's most advanced chip plants. Globalfoundries' current plan is to get started on 28-nanometer technology in the second half of 2012 and then make a quick transition to 22-nanometer. Currently, the most advanced chips are manufactured on 40- and 45-nanometer processes. Intel, whose production is used strictly for its own products and therefore is not a contract chip manufacturer like Globalfoundries, is expected to transition--on a volume basis--to 32-nanometer late this year or early next year.

Joint work with IBM
Another advantage Globalfoundries will have over its competition is close cooperation with IBM, also one of the world's premier chip manufacturers. "That's one of the reasons it's being put there," Hutcheson said, referring to the Malta facility. IBM develops and manufactures chips in New York, with a lot of activity concentrated in East Fishkill.

Last month, Globalfoundries announced at the 2009 Symposium on VLSI Technology in Kyoto, Japan, that it is working with IBM on a technique that allows transistors to be scaled down below 22 nanometers.

And if there's any doubt about Globalfoundries' commitment to work with IBM, the headcount speaks for itself. A total of 70 Globalfoundries engineers work at IBM. "And that number is growing," Carvill said.