Last Friday, TSMC made a surprise change in their top management. TSMC said its board named Morris Chang to serve as chief executive, along with his current position as chairman. Chang assumes the CEO title from Rick Tsai, who was appointed president and CEO of TSMC in 2005.
In May, GlobalFoundries snared some of TSMC's top staff. At the head of the list, they lured Subramani Kengeri away from TSMC to serve as GlobalFoundries' vice president of design solutions. Kengeri had served as TSMC's senior director of design and technology and head of its North America Design Center. Kengeri will report to Mojy Chian, who recently joined GlobalFoundries as senior vice president of design enablement from Altera Corp. Mojy Chian will be the executive who contacts prospects and evangelizes GlobalFoundries story.
Then, there was the hiring of former Freescale Semiconductor executive Gregg Bartlett as GlobalFoundries' Senior Vice President of Technology and R&D. Bartlett will oversee GlobalFoundries' collaborative R&D activities with the IBM Alliance. AMD/Global Foundries plan to take advantage of IBM's advanced manufacturing technology and jump from 45/32nm directly to 28nm.
Rick Tsai was TSMC's lead person for the Intel and TSMC strategic alliance announced on March 2. Hosts for the March surprise announcement were Intel executives Anand Chandrashekar and Sean Maloney, and TSMC executives Rick Tsai and Jason Chen. The two companies are bringing the Intel Atom Architecture and the TSMC technology platform together.
The management shakeup by TSMC is a shock. Tsai was seen as the heir apparent to Chang. Under Tsai's leadership, TSMC has seen huge growth. But in recent times, the company has seen a major drop in business, lost share and some technical issues amid the downturn.
Tsai was at the top of his game during the month after the Intel - the TSMC alliance to put the Intel Atom architecture into play. Intel's Executive Vice President and resident evangelist, Sean Maloney, said that TMSC embedded customers who want to add the Atom core to their SoC [system-on-a-chip] feature set will have previously unforeseen advantages. He emphasized that Intel will maintain full control of the Atom core IP and will decide which OEM and ODM manufacturers will benefit from the collaboration. TSMC will not be selling the Atom CPU as a standalone SKU.
But since then, GlobalFoundries has put on a full court press to ship the first 28nm GPUs. TSMC is the fab for Nvidia and they both want to be seen for their leadership. Whoever ships the first functional 28nm products will have a business win that will put them into a leadership role. If GlobalFoundries does it first, they will become the Fab number two, and tighten the screws on TSMC.
Over at TSMC, Morris Chang, 77, will assume day-to-day control of the foundry giant. In his new role, Rick Tsai will serve as president of the New Business Development Organization, reporting directly to Chang. According to Digitimes, the new group will focus on new growth markets, such as LED and solar. Morris Chang said that looking to the future, TSMC needs to develop long-term growth opportunities and this needs the best qualified manager to take charge.
It's unclear if Tsai is still the heir apparent at TSMC. However, what this clearly means is that Chang is reassuming control of the foundry giant. Chang has been the founding chairman of TSMC since 1987.
Observers believe that Chang's goals include plans to jump-start the foundry’s growth and re-assume its technology leadership position. For example, TSMC has acknowledged that there have been some snags in terms of its 40nm ramp. During a recent conference call with analysts, Tsai acknowledged that the company had some "yield" issues with its new 40nm process. TSMC claims the issues have been fixed. Meanwhile, IBM Corp. and its foundry partners - such as Chartered and Samsung - are slightly ahead of TSMC in high-k technology. IBM's "fab club" plans to ship a high-k/metal-gate scheme at the 32nm node by year's end. Also, TSMC joined the SOI Alliance, but the company is yet to show a wafer with the Silicon On Insulator tech.
TSMC saw its fortunes tumble in the first quarter, but it is seeing a rebound. TSMC posted a net income/profit of NT$1.56 billion ($44 million USD) on consolidated revenue of NT$39.5 billion ($1.164 billion USD) for the first quarter of 2009. First quarter revenue decreased 54.8 percent while net income decreased 94.5 percent over the previous year. Compared to fourth quarter of 2008, first quarter results represent a 38.8 percent decrease in revenue, and a decrease of 87.5 percent in net income. On Friday, Goldman Sachs downgraded TSMC from 'buy' to 'neutral,’ citing an outlook for slower growth and the lack of industry consolidation. Research notes quoted in Forbes said that unless end-demand improves substantially in the U.S. and Europe, TSMC is likely to suffer from a moderate correction in inventory in the fourth quarter 2009 and/or the first quarter of 2010, offsetting the gains from the third quarter.
Clearly TSMC is fighting to keep their top slot, while GlobalFoundries is showing themselves to be a serious competitor to take away some of the new projects that will appear as the global recession winds down.