Welcome to the New (York?) Dawn of the 21st century semiconductor industry. GLOBALFOUNDRIES [yes it really is officially in all uppercase - and no, we won't use it], formerly part of AMD, has just broke ground on the construction of Fab 2, a $4.2 billion chip plant in upstate New York, near the state capital of Albany. BSN was on hand for the groundbreaking ceremony as well as briefings on current and future prospects for the recently divorced physical side of the now fabless AMD.
Is East the New West?
The decision to construct a state of the art chip fab in New York may seem a bit odd, especially to those of us living in the United States who have grown up with the perception of California’s Silicon Valley being the heart of America’s digital revolution. But some of us (or our parents, or grandparents) may be likely to remember that IBM, which has entered a technology alliance with GlobalFoundries to research new semiconductor manufacturing processes, was once the giant of the East Coast, having been incorporated in Endicott New York in 1911. Even today IBM’s headquarters is maintained in the small town of Armonk, a bit north of New York City. Or perhaps some people remember Grumman, the aerospace industry company from eastern Long Island responsible for the venerable F-14 Tomcat and the legendary Apollo Lunar Lander. But for a long time, the east coast of the US has seemed to be in decline in terms of the forefront of technology. Having the world’s most advanced semiconductor plant in NY will definitely change that.
However, while GlobalFoundries’ headquarters are in Sunnyvale, California, its reach already spans the globe. In addition to the new plant being constructed in Saratoga County, NY, there is the existing Fab 1 in Dresden Germany [formerly known as AMD's Saxony], as well as technology and IT departments in Austin, TX, research and development in Fishkill, NY, and 65.8% of the company’s investment capital being provided by the Advanced Technology Investment Company of Abu Dhabi, capital of the United Arab Emirates. The remaining capital and half the voting rights come from AMD, which serves as GlobalFoundries first, largest, and currently only customer. Though as we’ve reported this last part is about to change shortly.
Service to the State
But why build it in New York? In the end it comes down to the bottom line. New York has a long history of public-private investment in infrastructure development, dating back to the construction of the Erie Canal, a 323 mile (584km) waterway connecting the Great Lakes to the Atlantic Ocean. Several attempts were made in the 18th century to construct such a canal, but attempts by private companies had gone bankrupt and it was thought financially impossible. But then the Niagara Canal Company managed to convince New York Governor DeWitt Clinton to back the project with $7 million of government funding in a move that was called "a little short of madness" by President Jefferson and often became known as "Clinton’s Folly" for the next few years. Nevertheless, the canal started construction in 1817, began limited use in 1819 as it expanded, and eventually was completed in 1825. Part of the success was innovations in tree and earth removal, which saw the development of specialized equipment such as new stump remover designs. In the end, the canal was a major factor in the rise of New York City to become the dominant port on the eastern US coastline, as well as the eventual westward migration and settlement of the rest of the USA.
New York State has put up $1.2 billion to aid in the construction of Fab 2. According to current CPI data, the conversion factor to 1817 dollars is 0.062, meaning the Erie Canal’s public investment today would be worth about $113 million dollars now, or Fab 2’s would be worth $74.4 million then. So despite the current economic conditions, New York State is putting up over ten times the investment in the future of semiconductors than what it put into a ditch from Albany to Buffalo. For the price, it might even be possible to dig the fabled Northwest Passage explorers searched for in hopes of easily navigating from the Atlantic to the Pacific. But since global warming has already done that for us as of November 2008, it’s probably better invested in a growth industry like semiconductors than one shrinking like the polar caps.
The backing of New York was not always a sure thing however. Current Governor David Paterson was initially a bit less receptive than former Governor Clinton had been almost 200 years ago. At the groundbreaking ceremony he admitted his prior opposition, stating ”I said this was one of the poorest investments we could make. It would be wasteful. It would not create jobs.” But he went on to admit he now believes that was a mistake, and changed his mind after heavy persuasion by former Governor George Pataki and former Senate Majority Leader Joe Bruno, who in his own speech noted that "after a few hundred million dollars for his district then-Senator Paterson saw the light." Governor Paterson is obviously not blind to the economic realities of what he called "the worst depression in over a hundred years" [although he is blind in the literal sense, so our apologies for any remaining evil heard or spoken in this article], and GLOBALFOUNDRIES building their new plant in Saratoga County looks good for the region.
Over 4300 construction jobs will be involved during the projected 24 month construction of the plant itself, and then 1400 permanent jobs are expected to be created for workers at the Fab itself, plus another estimated 5000 "spin-off jobs" that should arise as a result. This is also just the initial phase – if all things go according to plan and Fab 2 expands from one to three clean rooms, the potential number of jobs would more than double. Paterson has evidently become a believer in the project, saying "Whatever investments we made will be paid back over and over."
Founding a Global Empire
For the rest of the world, GLOBALFOUNDRIES’ new foundry is definitely an event to take notice of. Even if it weren’t the first Fab built in the USA in 30 years [take a look at Intel's seven billion USD investment in new and existing sites in the US], it would be hard for anyone in the semiconductor industry to ignore. Coupled with the decoupling of AMD from the foundry business that allows it to open up to other customers, even potential rivals, its impact on the industry is already being felt. Even though it may be almost two years before the first chip rolls off the line, or even three before volume production.
But several things make it smart for the construction of an independent foundry right now. Investment required to improve manufacturing processes is increasing, to battle leakage issues that waste power and prevent scaling to higher frequencies. More and more companies are going fabless, outsourcing the production of their designs to those who can afford the immense investment in the manufacturing capability.
Thus demand for "fab for hire" services is going up as everyone finds it too expensive to make chips in-house. Also, since things are effectively a buyer’s market now, the fab can be built somewhat cheaper, as it rides a wave of cutbacks in construction and demand for specialized equipment. However, when (if?) economic conditions improve, its generated income will mirror the times, meaning that the best time to be off-line and building new capacity is when things look worst. GlobalFoundries executives assured us that there are "several options for acceleration should the need arise" in case the economy does a sudden revival, which could cut the construction time by up to a year in an extreme case. But for now, the company has decided that it’s better to be efficient, and eschewed things like 24/7 construction timetables in order to reduce the cost of investment.
Fab 2 also is designed with expansion in mind. The site layout is such that up to three "modules" can be constructed, each one an independent fab. So what’s actually under construction is Fab 2 Module 1. Dresden already has two modules at Fab 1, with space for a third. So this means even after Fab 2 is built, GLOBALFOUNDRIES can potentially still build a lot more clean room space for additional capacity. If they get the customers, which they obviously hope they will. The capacity of Dresden is currently about 600,000 wafers per year, each one of which can hold dozens to thousands of chips, depending on the design. Fab 2 Module 1 alone will potentially add another 400,000 per year to this, and the new wafers are expected to be fabbed using next-generation processes starting with 22nm and eventually moving forward. Current CPUs are made on 45nm and some other devices on 40nm "half step" [e.g. half-node] processes that have a different performance/cost balance better for things like consumer electronics. The plan is to move to 32nm on the high end state of the art process early next year, along with 40nm low power processes. These will then be succeeded by a 28nm "half step" on the low power side in 2011, which adds features from the current high end like high-K metal gate technology for more efficient cooler running transistors.
The 22nm process that Fab 2 reaches production on isn’t expected until 2012, when it should be complete and operational. Producing such chips is a challenge, but GlobalFoundries partnered with IBM and the nearby College of Nanoscale Science and Engineering at SUNY Albany, which is working on state of the art EUV [Extreme UltraViolet]immersion lithography. We’ll have some more details on that and even more distant future technologies in upcoming articles. But what it all comes down to is the fact that GlobalFoundries is going to make the kind of state of the art fabrication technology usually only affordable by a few companies such as Intel, AMD, and IBM, and make it available to other companies for their own products, effectively changing the entire playing field.