TSMC’s GigaFabs are claimed to be the source of TSMC’s advantage over the rest of the foundry industry. By utilizing such huge fabs, the company is thought to have the lowest cost per wafer in the industry and the highest margins.
This allows it to dictate the cost of a foundry wafer to the rest of the industry, and accounts for TSMC’ consistent profitability while the rest of the foundry industry is congenitally loss-making.
Fab 15 won’t have any effect on the current shortage of capacity which is causing customer queues at the foundries, and has given rise to reports that customers are being asked to stump up higher prices to jump the queue.
With Fab 15 unlikely to come on-stream until the end of 2012, the investment can be seen as a continuation of normal investment schedules rather than a reaction to the current tight supply situation.
However it is a powerful shot across the bows of Globalfoundries, the Abu Dhabi-backed foundry, which has taken over a couple of AMD’s conventional 30,000 wafer a month fabs in Dresden, and is building another in New York.
Globalfoundries will have to significantly up its stake and invest in a GigaFab of its own, if it hopes to compete with TSMC on cost and, consequently, on price.