July 9-10, 2013
San Francisco, CA

Early Bird Tickets on Sale

An unconfirmed report suggests that Apple has turned to Taiwan Semiconductor Manufacturing Co. to produce its upcoming A7 processor for mobile devices.

The Taiwanese contract manufacturer is the largest foundry, or maker of chips that are designed by other companies. DigiTimes reported that the company is expected to tape out Apple’s next A7 processor in a 20-nanometer manufacturing process in March and then begin volume production in May and June. That could pave the way for commercial shipments in the first quarter of 2014. TSMC declined to comment to DigiTimes. (Note, DigiTimes has had a spotty record on reporting rumors).

If true, the move makes sense for Apple, as it is locked in litigation with Samsung, the current supplier of its A series chips. A chip is “taped out” when the circuit design process is completed (such designs used to be put on computer tapes). But it takes a while to stamp the bugs and move into large-scale production. TSMC spends about $9 billion a year on capital expenses and it competes with the likes of Samsung, UMC, and even Intel. Traditionally, Intel just made its own chips, but it has begun a serious effort to become a foundry for other chip designers.

Earlier this year, rumors surfaced that TSMC had begun trial production of A6X chips for Apple’s fourth-generation iPad. The move was said to be part of a long-term diversification program.

Intel’s contract chip manufacturing business, or foundry work, took a big step forward today as it announced it will manufacture chips designed by Altera. The deal is likely the biggest one yet where Intel manufactures chips that other companies design.

In the past, Intel’s foundry business has been relatively small. But Altera plans to launch a major family of chips, dubbed field programmable gate arrays, using Intel’s wafer fabs, or chip fabrication plants. The deal will kick in as Intel launches its 14-nanometer manufacturing process, which is still in development. Right now, Intel makes most of its chips with a 32-nanometer process and it is shifting to 22-nanometers. The smaller the number, the more advanced the manufacturing process.

In the past, Intel has been so busy making its own chips that it didn’t make sense to do foundry deals. But over time, Intel can spread its risk out by making chips for others, and it can play it safe, too. After all, Intel could face a sudden drop in demand if the shift from PC chips — where Intel dominates — to chips for mobile devices accelerates.

Altera considers the deal to be a big part of its future, said Misha Burich, chief technology officer at San Jose, Calif.-based Altera in an interview with VentureBeat.

“This high-end product will be built only with Intel,” he said. “We look at the best available technology. Intel is ahead of the industry in process node advantages.”

In the past, Burich said his chip design firm, which had $1.8 billion in sales last year, used Taiwan’s TSMC exclusively as a chip manufacturer. But he said he believes Intel is racing ahead of the pack with its multibillion-dollar investments in Tri-Gate tansistors and other manufacturing advances.

Burich said that the FPGAs will see use in Altera’s typical markets, including ultra high-performance systems for military, wired communications, high-end broadcast equipment, cloud networking, compute, and storage applications.

Intel has foundry deals with Tabula and Achronix, but those chips will be built with a 22-nanometer process.

“Altera’s FPGAs using Intel 14 nm technology will enable customers to design with the most advanced, highest-performing FPGAs in the industry,” said John Daane, the chief executive of Altera. “In addition, Altera gains a tremendous competitive advantage at the high end in that we are the only major FPGA company with access to this technology.”

A year ago, Intel chief executive Paul Otellini said that Intel’s foundry business was in a “crawl, walk, run” learning process. This is probably more like “walk.”

“We look forward to collaborating with Altera on manufacturing leading-edge FPGAs, leveraging Intel’s leadership in process technology,” said Brian Krzanich, Intel’s chief operating officer. “Next-generation products from Altera require the highest performance and most power-efficient technology available, and Intel is well positioned to provide the most advanced offerings.”

The deal will trigger a $703 million charge for AMD, which separated from Globalfoundries three years ago to focus on designing and selling microprocessors. AMD will pay $425 million to Globalfoundries over two years and give up its 8.8 percent stake in the foundry. In return, AMD re-negotiated chip pricing with Globalfoundries and it will not have to make a $430 million payment during 2012.

AMD will also no longer give Globalfoundries exclusivity in manufacturing AMD’s 28-nanometer accelerated processing units (APUs). That will give AMD more flexibility in sourcing its chips.

Milpitas, Calif.-based Globalfoundries will still have AMD as primary customer, but Globalfoundries will now be wholly owned by the Advanced Technology Investment Company (ATIC), the investment arm of Abu Dhabi.

“Today marks the start of a new era for Globalfoundries as it becomes a truly independent foundry,” said Globalfoundries chief executive Ajit Manocha.  “Globalfoundries has a clear vision to be the leading semiconductor foundry partner to AMD and one of the world’s top technology companies. We continue to execute on our strategy to propel ATIC’s long-term investment philosophy into true value creation for our shareholder and customers.”

Globalfoundries showed an 80 percent increase in the number of 32-nanometer microprocessors shipped to AMD in the fourth quarter, compared to the third quarter. In January, Globalfoundries said it would spend more than $3 billion in 2012 to expand its chip factories in Singapore, Germany (pictured above), and New York. The company is building a new 300-millimeter-wafer manufacturing plant in New York as part of a plan to make chips for IBM.

Sunnyvale, Calif.-based AMD said that its gross profit margin guidance remains unchanged as a result of the deal.

Intel

The Wall Street Journal reported that Intel will formally ally itself with Achronix, which designs a variety of high-performance programmable chips used in high-speed communications. Normally, Achronix would have to go to a contract chip manufacturer known as a foundry, such as Taiwan Semiconductor Manufacturing, to have its chips made.

Achronix says the deal with Intel will allow its chips to have 300 percent better performance, 50 percent lower power, and 40 percent lower cost than its previous generation of products. Achronix’s Speedster chips are used in high-speed networking, broadband communications, encryption, high-performance computing, video and imaging, and military and aerospace.

Intel’s manufacturing process is usually a couple of years ahead of manufacturing rivals. Intel spends billions of dollars per year to stay ahead of rivals and build factories that are so advanced that they help Intel differentiate its chips. The company usually dedicates all of its advanced factory capacity to making its own microprocessors, which are the brains of PCs.

Sometimes Intel farms out older manufacturing lines to other companies. But the Journal says that Achronix will get access to the top of the line at Intel, including a new 22-nanometer production process to be used in factories that won’t start pumping out chips until late 2011.

John Lofton Holt, chief executive of Achronix in San Jose, Calif., said the new development will let Achronix grab a bigger share of the market for field programmable gate arrays (FPGAs), or chips that are programmed for specific tasks after they are received by customers.

Gartner estimates that the market for FPGAs will grow 44 percent in 2010, outpacing the overall chip market. Achronix competes with two large chip design firms, Xilinx and Altera. Achronix is expected to account for a lot less than 1 percent of Intel’s available capacity for 22-nanometer production. Achronix has raised $90 million in funding since 2004.