It seems profits are too low and FABs are too expensive to build

Jul 16, 2012 02:41 GMT  ·  By

During the past decade, the costs of building a new and high-end semiconductor factory have risen quite a bit. From two or three billion dollars back in the days of AMD’s Dresden FAB, the costs are now over ten billion for a 450 mm wafer FAB.

IBM has historically pulled back from any kind of business that manifested low margins and high investment costs.

For readers that might overlook this, we should remind you that IBM is the inventor of the Personal Computer (PC), but it has eventually sold its PC and laptop divisions to Lenovo once it has concluded that these were bringing in unsatisfactory profits.

The semiconductor business is heading in the same direction and even if margins wouldn’t be too low for IBM, the initial investment for a top-of-the-line FAB is high enough to convince them to pull out. GlobalFoundries seems to be the single semiconductor player with the necessary funding to be able to buy IBM’s FABs and rumors regarding such a move are starting to surface over the internet.

IBM has always been on the forefront of semiconductor manufacturing technology and it is currently the biggest company in the research and development alliance for 450-millimeter wafer technology.

Moreover, taking into account that a 450 mm wafer FAB is estimated to cost over $10 billion to build, we are not surprised that IBM is willing to share its technology advances while also sharing the research costs.

Currently, IBM is the biggest promoter of SOI technology, but the company also seems to be reorienting towards FinFET bulk manufacturing as we reported here.

Considering that GlobalFoundires is now manufacturing for two of the world’s biggest fabless chip designers, Qualcomm and AMD, they would certainly have use for bigger manufacturing capacities.