iPhone now the apple of GloFo’s eye
I’m showing my age with this metaphor, but I think Apple and GlobalFoundries could be Warren Beatty and Natalie Wood, ducking through the shrubbery in a little prairie town.
The quieter the youngsters want to keep their budding interest in each other, the more the tongues around town — or in the high-tech community — will cluck.
Neither company is talking about the possibility of future iPhone processing chips being made at GlobalFoundries Fab 8, though it’s been buzzed about at industry conventions and in the technology press for months.
Nothing is a sure bet, and if anything does happen, it wouldn’t be for several years, as GlobalFoundries continues to build up production capacity in Malta.
But since last summer, there has been informed-sounding speculation that Apple — a tech mammoth that sold 125 million phones in 2012, and is worth $475 billion on the stock market — would take some future work to GlobalFoundries.
Because Apple sells so many smartphones, the contract to make the processing chips inside each device is tremendously lucrative. And Apple’s business model is to hire other companies to make its chips, rather that get into the costly and risky semiconductor manufacturing business itself.
Its iPhone work has been done by Samsung Electronics, but it’s widely believed that the work for the next-generation iPhone 6 — due out in a year or so — went to TSMC, the Taiwan company that is GlobalFoundries’ biggest competitor in the chip foundry business.
Apple may be looking to change suppliers because Samsung makes its own devices that compete with some Apple products, that line of thinking goes.
This week, Digitimes, a Taiwan newspaper that covers the technology industry, reported on rumors that the contract to make the next-next-generation iPhone 7 chip, called the A9, may go back to Samsung, with GlobalFoundries playing a major supporting role.
“Under the reported tie-up, Samsung will provide related patents and GlobalFoundries will handle wafer production,” the paper reported.
“GlobalFoundries will have its Fab 8 complex in Malta manufacture the reported A9 processor chips for Apple, while Samsung will collect royalties for licensing its patents,” the report continued.
Another widely discussed scenario would have Samsung still make the Apple chips at its plant in Austin, Texas — but have GlobalFoundries hired to help if Apple demand exceeds Samsung’s production capacity.
Samsung and GlobalFoundries are already close. They are among the partners in advanced chip research at Albany’s College of Nanoscale Sciences and Engineering. In 2011, the companies entered into an agreement to “sync” four of their global fabs, including Fab 8 and Samsung’s Austin facility, according to the DailyTech website. That would allow customers to freely swap orders between the factories.
U.S. Sen. Chuck Schumer, D-N.Y., never one to pass up an opportunity, said he’d love to see some kind of deal come together involving Apple, Samsung and GlobalFoundries.
“An agreement between these three companies would not only bring Apple and Samsung to New York for the first time, but would also be a huge job magnet in the Capital Region and make our area one of the premier chip fab centers in the world,” he said in an emailed statement this week.
About 2,300 people now work at Fab 8, and another 1,000 jobs are expected by late next year.
GlobalFoundries is still installing and testing manufacturing tools at Fab 8, a $7 billion fabrication plant that began commercial production last year. Full-scale production in an expanded 300,000-square-foot cleanroom probably won’t happen until the end of 2014.
Meanwhile, work is underway at Fab 8 on a $2.3 billion Technology Development Center that will also be finished around the end of 2014. That facility will have another 90,000 square feet of cleanroom, with the flexibility to either do research production or commercial production.
“One of the things we pride ourselves on is that that’s a space where we can collaborate with all our customers,” Mike Russo, GlobalFoundries’ director of government relations, said at an open house earlier this week.
Still out there on the horizon is the possibility of a second production plant, Fab 8.2, which would be larger than the first plant and cost upward of $15 billion. Nothing more has been heard about it since the company got the necessary zoning approvals for the plant from the towns of Malta and Stillwater in August.
“We have not made a decision on that. It will depend on customer need,” Russo said.
GlobalFoundries also has factories in Germany and Singapore, but there are reasons both practical and patriotic that customers may want U.S.-produced chips.
GlobalFoundries’ worldwide customers include IBM, AMD, QualComm, Nvidia, and more than 150 other companies.