Blurred strains: the distinction between fabless and foundry firms
What do you name a semiconductor firm that makes a speciality of mixed-signal chips produced in a trailing-edge manufacturing course of? Those aware of the trade would say that is an analog semiconductor firm. By the identical definition, perhaps we must always consider GlobalFoundries as simply one other analog chip firm.
An outdated buddy pointed this out, and we thought it was price exploring, because it not solely helps us perceive the GlobalFoundries panorama, however how we take into consideration trade definitions.
At first look, this equivalence doesn’t make sense. GlobalFoundries is a foundry that manufactures chips for third events. Analog firms equivalent to Texas Instruments design their very own chips and typically manufacture them.
Guest writer Jonathan Goldberg is the founding father of D2D Advisory, a multi-purpose consulting agency. Jonathan develops development methods and alliances for firms within the cellular, net, gaming, and software program industries.
Over the previous three years, the world has discovered the distinction between fabless firms and foundry firms. It’s often the primary level we make after we present up on a podcast. But dig slightly deeper, and similarities begin to emerge.
Both firms truly make comparable chips, or not less than chips that find yourself in comparable finish markets — industrial, automotive, wi-fi infrastructure, and so on. All of those chips carry out very properly on the trailing-edge course of. GlobalFoundries broke away from Moore’s Law at 16nm, and most of Texas Instruments’ chips use an older course of. This is the analog area, and analog indicators aren’t scaled like digital processors, so mature processes will work effective more often than not.
One would argue that GlobalFoundries has no chip designers, a serious functionality that’s utterly unstaffed. This is true, besides that fabless analog firms are inclined to work extra intently with their fab operations. There was extra backwards and forwards, so whereas GF did not actually speak to the top buyer, they ended up doing a variety of design work.
So the 2 firms aren’t precisely the identical, however they’re very comparable. They produce comparable merchandise for comparable finish markets and are in comparable positions within the semi-finished course of. Going ahead, it’d make sense to think about GlobalFoundries as an analog firm. For GF, this might imply that its future is dependent upon convincing a number of the smaller analog firms to outsource their manufacturing to GF and forego capability growth.
In idea, GlobalFoundries might even begin working instantly with finish purchasers. We know they signed a cope with Ford through the crunch, however so far as we all know, it is not an affordable endeavor with a transparent strategic finish objective. But it isn’t unattainable for them to go down this highway.
We’re more likely to see extra blurs like this. There was a time when semiconductor firms made their very own. While there are nonetheless loads of explanation why modern fabs needs to be constructed by foundries ($20 billion every), for everybody else, the financial case for separating the 2 must be reconsidered.
The current capability scarcity has made many individuals conscious of this actuality. With Moore’s Law not working at its most, many firms will as soon as once more begin eager about manufacturing as a core competency. The pendulum won’t ever flip again all the way in which to overshadow the fabless mannequin, nor will the pendulum stand nonetheless.