GlobalFoundries Enters Consolidating Industry


New chip foundry GlobalFoundries will break ground on its massive New York State chip plant in ten days (July 24).

Let’s hope the joint venture isn’t buried by the $6 billion it hopes to spend ($4.2 billion of which will go into the foundry itself).

The company is the latest entrant in a crowded market, one that many think will consolidate in the next few years as the global slowdown trims demand and generates more excess capacity.

GlobalFoundries hopes to transform the foundry business by offering only the most advanced manufacturing techniques to customers. It will start producing at 28 nanometers in 2012 and ramp to volume at 22 nanometers. (Intel’s most advanced lines make chips today with 45 nanometer features).

“We see a huge opportunity to bring leading edge technologies to the foundry space,” said Vice President Thomas Sonderman at the Semicon West trade show on Tuesday in San Francisco.

But the strategy is no guarantee. There are already more fabs than business to fill them. By some estimates 35 outmoded fabs will close this year and another 12 next year.

“The trend I would expect is consolidation,” said IBM Vice President Dan Armbrust.

So far, excess capacity is less of a problem among the most technically sophisticated fabs that produce using 12-inch silicon wafers and produce small electronic ciruits. But it is not clear how long that will last.

“I think we have to hope the economy recovers,” says Sonderman. “We have to fill our fabs to make money.”