CEO of largest U.S. chip foundry explains why semiconductor shortage could last through 2022

GlobalFoundries campus in Malta, N.Y.

Mary Thompson | CNBC

GlobalFoundries, the third-largest foundry, is planning to invest $1.4 billion in its chip factories this one year, and could perchance perhaps quiet seemingly double that funding subsequent one year, CEO Tom Caulfield told CNBC in an interview.

Caufield acknowledged the corporate’s manufacturing capacity is entirely booked and that industrywide semiconductor present could perchance perhaps dash within the assist of ask till 2022 or later.

“Perfect now all our fabs are no longer easiest greater than 100% utilized, we’re including capacity as rapidly as we are in a position to,” Caulfield acknowledged.

A shortage of semiconductor microchips is inflicting havoc round the world, delaying car manufacturing and affecting the operations of a couple of of the largest consumer electronics manufacturers.

The shortage has highlighted the neutral of a handful of foundries, that are the factories contracted by semiconductor corporations to create chips. Many, fancy GlobalFoundries, are investing billions in new manufacturing lines and upgraded tools to withhold with the surge in ask and shortfalls in present.

GlobalFoundries is the largest U.S.-headquartered “pure” foundry, with factories within the U.S., Germany and Singapore. It manufactures semiconductors designed by corporations fancy AMD, Qualcomm and Broadcom. It be currently a non-public company owned by the federal government of Abu Dhabi. The company is pondering an IPO within the first half of 2022 or sooner, Caulfield acknowledged.

Essential investments and rising ask

GlobalFoundries is quiet a relatively runt participant, with easiest a 7% portion of the foundry market essentially essentially based mostly on Trendforce. Varied foundries are investing huge dollars too.

Taiwan-essentially essentially based mostly TSMC, the ideal company within the spot with a 54% market portion, acknowledged on Thursday it plans to invest $100 billion over the following three years to amplify its capacity to fulfill ask.

Intel, which designs and manufactures its chips, announced on March 23 it plans to changed into a foundry and function chips for other corporations. It be investing $20 billion U.S. chipmaking vegetation.

Caulfield acknowledged he welcomes Intel’s shift and doesn’t perceive the corporate as a new competitor. One key distinction is Intel is educated at “bleeding edge” manufacturing or making chips with the smallest and most dense transistors, that are required for noteworthy CPU chips on the coronary heart of a computer or smartphone.

Nonetheless Caulfield says the industry shortages, namely for the automotive world, are no longer due to ask for main node chips. The shortages are for other parts vehicles need, fancy radar chips, which don’t necessarily require essentially the most developed manufacturing available on the time.

“The auto industry is no longer having a chip shortage due to it doesn’t hang CPUs. No one’s asserting I cannot create sufficient computer programs, or no longer it is a long way the whole other chips,” Caulfield acknowledged.

Chips that are designed to enable particular facets are what GlobalFoundries specializes in.

GlobalFoundries manufactures compile chips for contactless payments, battery energy administration and touch picture drivers. These chips first had been dilapidated in huge portions for smartphones, nonetheless are in actual fact integrated in a huge series of products from vehicles to home equipment, which has created a surge in ask.

On the other hand, a lot of the investments within the foundry world had been for constructing bleeding-edge, excessive-flee chips. That every person modified final one year when the pandemic hit, and gross sales of electronics including laptops, monitors, and game consoles rose when americans equipped tools to work or dash to faculty from home.

These products require plenty of extra chips beyond the CPU, seeding the originate of the chip shortage and highlighting the need for more capacity to create what Caulfield calls “neutral-prosperous” chips. Smartphones and computer programs also more and more need non-main node chips to join to 5G networks or add extra cameras.

GlobalFoundries warned this can buy months earlier than it’ll amplify the series of chips on the market, nonetheless that the capacity enhance is smartly-behaved for long-term investments. “The minute you advise, I are searching to glean more capacity, or no longer it is a long way a 12-month cycle,” Caulfield acknowledged.

“The semi industry going into Covid changed into once projecting a 5% annual growth payment for 5 years. We’re projecting that to almost double now,” Caulfield acknowledged. “It be no longer a one-time thing. It be a structural shift, that the pervasive need for semiconductors is accelerating.”

0 0 vote
Article Rating
Subscribe
Notify of
guest
0 Comments
Inline Feedbacks
View all comments
0
Would love your thoughts, please comment.x
()
x