GlobalFoundries‘ plan to spend billions of dollars at its Fab 8 computer chip factory in Saratoga County in the next several years is part of the company’s strategy to get ahead of what it believes will be a sustained period of growth for the semiconductor industry.
While some see evidence that ebbing consumer demand for smartphones and tablets may slow the growth of the chip industry, Tom Caulfield, the general manager of Fab 8, said a new wave of digital technologies coming to market will create sustained demand for cutting-edge chips.
GlobalFoundries announced Thursday that it would spend more than $2 billion to move into production of 7-nanometer chips at Fab 8 next year just as it has been ramping up manufacturing of 14-nanometer chips.
The transistors on 7-nanometer chips are half the size of those on 14 nanometer chips, and they are both 30 percent faster and 30 percent cheaper.
“What 7 does, it’s a big improvement over 14,” Caulfield said.
GlobalFoundries can make 7-nanometer chips using about 80 percent of the equipment that it uses to make 14-nanometer chips, allowing it to make both architectures going forward. The multibillion-dollar investment by GlobalFoundries at Fab 8 will be for additional equipment needed for 7 nanometer as well as for development and testing, some of it at SUNY Polytechnic Institute in Albany. Caulfield said Fab 8 will start taking customer designs for 7-nanometer chips next year, and it will take about two years to get up to full production.
While the 14-nanometer chips that GlobalFoundries is making at Fab 8 have received rave reviews, the more powerful 7-nanometer chips will be in huge demand in the coming years as a whole new generation of computing devices hits the market.
These new technologies include new virtual-reality platforms and Internet of Things technologies that talk to other computers such as self-driving cars and require sophisticated sensors, data processors and graphics capabilities.
But such consumer devices are only the tip of the iceberg of future chip markets, with the bulk of the next generation chip supply needed for the new wireless networks, cloud computers and data centers that will be needed to support all these new devices.
The Internet of Things is expected to add $11 trillion annually to the economy by 2025, according to McKinsey & Co., and the semiconductor industry would be one of the major beneficiaries as a key supplier.
Last year, semiconductor industry totaled $347 billion, a 2 percent decline from 2014, according to IHS, a technology data-tracking firm.
“People wonder, is the golden age of semiconductors starting to plateau?” Caulfield said. “The answer is, We’ve only just begun.”
Caulfield says Americans are already embracing the Internet of Things, in which their devices talk to one another through wireless connections such as the Nest thermostat and the Ring Video Doorbell, both of which are operated by smartphone.
“I counted it again last night, 153 devices in my house are connected to the Internet,” Caulfield said. “I have two doorbells that are cameras. If my doorbell rang right now, if my phone wasn’t on silent, you’d hear it here, and I can actually talk to someone at my door. My vacuum, the little Roomba vacuum, I can start it from here.”
GlobalFoundries is one of just four chip companies in the world that is making cutting-edge computer chips after years of consolidation, which included the company’s acquisition of IBM’s chip-manufacturing division last year in a $1.5 billion deal.
GlobalFoundries is a relative newcomer to the semiconductor scene, having been spun out of Advanced Micro Devices in 2009. The company, which is based in Santa Clara, Calif., and financed by the government of Abu Dhabi, has relied on revenues from its factories in Germany and Singapore as it poured $12 billion into building the Fab 8 campus, which now employs 3,000 people. During that ramp-up period, Fab 8 was largely run as a research and development operation although it did produce 28-nanometer chips.
It was the move to 14-nanometer chip production in 2015 that signaled Fab 8’s shift toward becoming a full-scale manufacturing enterprise.
The company’s patient approach finally appears to have paid off this summer. Fab 8 is working on 20 different 14-nanometer chip orders, with the workload expected to double in the next 12 months.
In June, AMD released its new Radeon RX 480 graphics card designed for high-end online video gaming and virtual-reality play. Tech reviewers loved it, saying it was the fastest graphics card ever made in the $250 price range.
The graphics processor that powers the Radeon RX 480 was made at Fab 8.
That’s a major accomplishment for the team in Malta considering that for the past 10 years AMD had turned to other companies to make the chips.
“GlobalFoundries was never in a position to win the business,” Caulfield said. “Today the entire production is here. It’s being built here for the first time in the history of AMD and GlobalFoundries.”
Last month, AMD made another stunning announcement. CEO Lisa Su stunned tech analysts and journalists when she showed off the performance of the company’s new 14-nanometer Zen processor in a head-to-head test against Intel’s top Broadwell-E chip in a San Francisco ballroom. The Zen chip was slightly faster than the Broadwell-E, a coup for AMD, which has always lagged Intel in size and reputation.
Zen, which will hit the market next year, is being made at Fab 8. Su, who on Thursday praised the “solid execution” of GlobalFoundries, visited Fab 8 on Sept. 9 to congratulate employees there, said Caulfield, who worked with Su when they both were at IBM years ago.
“She gave a little recognition to us all,” Caulfield said.
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