The year started with numerous semiconductor IDMs announcing their intention of going fab-lite, and ended with silicon foundries saying they were reducing capex and limiting capacity.
Then there were the IDMs (integrated device manufacturer) who announced they were giving up doing their own core CMOS process development. It seems that they are being charged more for buying this from IBM than they were paying to do it themselves.
Yet in buying it from IBM they lose their future ability to develop core processes. IBM may give them reasonable terms now, but what sort of terms will it offer when it knows its customers have lost their core process design expertise?
Make no mistake about it, once you have given up on a process development generation it is extremely difficult, and hugely expensive, to get back on that treadmill of process R&D.
Some might argue that they are co-developing the process with IBM. Sources who know the situation say: ‘It is eight companies buying technology from IBM.’
The biggest victim from these moves is the European microelectronics community which has seen European independence in microelectronics abandoned.
The annual cost, $150m after tax concessions, seems laughably small to abandon such a fundamental resource. The reason seems to be that two Crolles partners got taken over by Wall Street private equity firms which pulled the plug. A sad end to an unbroken series of European collaborative process development.
A similar thing is happening with the IDMs going fab-lite, and the foundries. The foundries are fed up with seeing the price of wafers go down. So, just as the IDMs start to give up their independence in manufacturing, and become more reliant on foundries, the foundries say they’re limiting their capex to keep capacity tight and prices high.
It is an old equation: give up your strengths, and someone will take advantage of your weakness.