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GlobalFoundries CEO on semiconductor scarcity and IPO 

GlobalFoundries campus in Malta, N.Y.

Mary Thompson | CNBC

GlobalFoundries, the third-largest foundry, is planning to take a position $1.4 billion in its chip factories this yr, and can probably double that funding subsequent yr, CEO Tom Caulfield advised CNBC in an interview.

Caufield stated the corporate’s manufacturing capability is totally booked and that industrywide semiconductor provide may lag behind demand till 2022 or later.

“Proper now all our fabs should not solely greater than 100% utilized, we’re including capability as quick as we will,” Caulfield stated.

A scarcity of semiconductor microchips is inflicting havoc around the globe, delaying automobile manufacturing and affecting the operations of a few of the largest shopper electronics producers.

The scarcity has highlighted the function of a handful of foundries, that are the factories contracted by semiconductor corporations to construct chips. Many, like GlobalFoundries, are investing billions in new manufacturing traces and upgraded gear to maintain up with the surge in demand and shortfalls in provide.

GlobalFoundries is the most important U.S.-headquartered “pure” foundry, with factories within the U.S., Germany and Singapore. It manufactures semiconductors designed by firms like AMD, Qualcomm and Broadcom. It is at present a personal firm owned by the federal government of Abu Dhabi. The corporate is contemplating an IPO within the first half of 2022 or sooner, Caulfield stated.

Main investments and rising demand

GlobalFoundries continues to be a comparatively small participant, with solely a 7% share of the foundry market in accordance with Trendforce. Different foundries are investing large {dollars} too.

Taiwan-based TSMC, the most important firm within the house with a 54% market share, stated on Thursday it plans to take a position $100 billion over the following three years to extend its capability to satisfy demand.

Intel, which designs and manufactures its chips, introduced on March 23 it plans to change into a foundry and manufacture chips for different firms. It is investing $20 billion U.S. chipmaking crops.

Caulfield stated he welcomes Intel’s shift and would not see the corporate as a brand new competitor. One key distinction is Intel is expert at “bleeding edge” manufacturing or making chips with the smallest and most dense transistors, that are required for highly effective CPU chips on the coronary heart of a pc or smartphone.

However Caulfield says the business shortages, particularly for the automotive world, aren’t due to demand for main node chips. The shortages are for different elements automobiles want, like radar chips, which do not essentially require probably the most superior manufacturing accessible on the time.

“The auto business isn’t having a chip scarcity as a result of it would not have CPUs. Nobody’s saying I can not construct sufficient computer systems, it is all the opposite chips,” Caulfield stated.

Chips which are designed to allow particular options are what GlobalFoundries makes a speciality of.

GlobalFoundries manufactures safe chips for contactless funds, battery energy administration and contact show drivers. These chips first had been utilized in massive portions for smartphones, however are actually included in a variety of merchandise from automobiles to home equipment, which has created a surge in demand.

Nevertheless, a lot of the investments within the foundry world have been for constructing bleeding-edge, high-speed chips. That every one modified final yr when the pandemic hit, and gross sales of electronics together with laptops, displays, and recreation consoles rose when folks purchased gear to work or go to highschool from house.

These merchandise require quite a lot of extra chips past the CPU, seeding the beginning of the chip scarcity and highlighting the necessity for extra capability to construct what Caulfield calls “feature-rich” chips. Smartphones and computer systems additionally more and more want non-leading node chips to hook up with 5G networks or add extra cameras.

GlobalFoundries warned it can take months earlier than it will probably enhance the variety of chips in the marketplace, however that the capability enhance is sensible for long-term investments. “The minute you say, I need to make extra capability, it is a 12-month cycle,” Caulfield stated.

“The semi business going into Covid was projecting a 5% annual development fee for 5 years. We’re projecting that to virtually double now,” Caulfield stated. “It is not a one-time factor. It is a structural shift, that the pervasive want for semiconductors is accelerating.”

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