Qualcomm and some other companies are leaving money on the table because they can't get enough 28-nm chips to meet demand out of foundry partner Taiwan Semiconductor Manufacturing Co. Ltd. Horror of horrors some customers are looking for ways to switch other companies' chips into slots previously designed around those vendors' ICs.
Could this be one of the ways Intel gets a leg up in the smartphone and tablet computer markets? Whether or not that happens to any significant degree, the current undersupply situation looks set to trigger refinements to some business models.
But that does not mean the immediate end of the foundry-fabless model that has served and driven the electronics industry for the last couple of decades. More likely it will stimulate a return to a strategy tried before: the funded joint-venture wafer fab. But this time with the additional wrinkle that process R&D will be front and center of the collaboration.
Those with sufficiently long memories will remember that Altera Corp., Analog Devices Inc. and Integrated Silicon Solutions Inc. each took stakes in a joint venture wafer fab back in the mid-1990s. That joint venture was controlled by TSMC and was used by the fabless participants to try and ensure their future supply of chips after a period of undersupply and allocation.
A $1.2 billion leading-edge 200-mm wafer fab was built in Camas, Washington, and became Wafertech. The fact that Wafertech is now a wholly-owned subsidiary of TSMC, illustrates that the story did not go particularly smoothly for all concerned. Altera committed about $140 million to gain an 18 percent share in the joint venture but by the time the plant was up and running the market was in oversupply again. In 1997 TSMC announced it would cut prices due to excessive capacity and fierce competition. So some might say Altera put its money down to no great effect on that occasion.
So why would Qualcomm, or indeed Altera, do the same again now?
Next: Time to get closer to foundries and process R&D?