AMD mulls new chip manufacturing partners amid supply chain jitters
TSMC has too much capacity when China has made no secret of its desire for Taiwan
AMD is considering broadening chip production suppliers as it believes it is too reliant on semiconductor giant TSMC and this places the supply chain at risk of disruption.
The latest 4th generation Epyc processor from AMD is manufactured using TSMC's 5nm production node technology. However, while previous generations used an I/O die produced by GlobalFoundries, the latest CPU also has its I/O die manufactured by TSMC.
During a visit to Tokyo late last week, AMD CEO Lisa Su told Nikkei Asia that her company would consider "other manufacturing capabilities" besides TSMC to produce its chips to ensure it has a more resilient supply chain. As a so-called "fabless" chip company, AMD relies on others to manufacture its products.
However, Su admitted this would not be easy as TSMC occupies such a dominant position in the semiconductor manufacturing space. As The Register reported last year, TSMC accounted for 48 per cent of the foundry market and had 61 per cent of the world's capacity to make chips with a 16nm or more advanced process node.
Yet the vast majority of TSMC's manufacturing capacity is located in Taiwan, and tensions have been growing with China threatening to invade the island to reclaim what it regards as a rogue province. These tensions have perhaps not been helped by Washington's separate campaign to block Chinese advances in semiconductors, leaving Beijing eyeing Taiwan's nearby high-tech chip industry.
TSMC is building some manufacturing capacity outside Taiwan, such as two fabrication plants under construction in the US state of Arizona, but these are not scheduled to start production until 2025 due to a shortage of skilled workers. TSMC is also building a fab in Japan and is involved in another planned in Europe, but these are not expected to produce cutting-edge chips.
Su told Nikkei Asia that AMD is planning to use some of TSMC's Arizona plant capacity to have its chips manufactured, but added: "We would like to use manufacturing [sites] across different geographies to give us some flexibility."
Other semiconductor manufacturing companies that could have the fabrication capabilities that AMD needs to make its processor chips include Samsung Electronics and GlobalFoundries. However, AMD effectively shifted from GlobalFoundries to TSMC several years ago when the former halted work on its 7nm process technology.
Ironically, GlobalFoundries was created from the spinoff of AMD's own semiconductor manufacturing division some 15 years ago.
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The Japanese government is also trying to start its own advanced semiconductor fabrication company, Rapidus Corporation, with help from US giant IBM. It is aiming to have a facility open to produce chips sometime between 2025 and 2027 – if it gets off the ground at all.
There is another alternative, of course. Intel has ambitions to ramp up Intel Foundry Services as a contract manufacturing business to help revitalize the company's fortunes as part of its IDM [Integrated Device Manufacturing] 2.0 strategy, and the previous head of the business unit, Randhir Thakur, said he expected Intel Foundry Services to overtake Samsung's contract chip manufacturing business by 2030, which would make it second to TSMC.
Intel signed an agreement with Brit chip designer Arm earlier this year to enable Arm licensees to have their products manufactured by Intel Foundry Services despite some of these being competitors for Intel's own products, so the unthinkable is possible.
We asked Intel if it would consider becoming AMD's silicon manufacturing partner, and we await its response with interest.
The US disclosed earlier this year that it would sooner see TSMC's semiconductor facilities in Taiwan destroyed than allow them to fall into Chinese hands in the event of an invasion. Not surprisingly, Taiwanese officials have asked Washington to row back on some of its anti-Beijing rhetoric.
Alan Priestly, Vice President Analyst at Gartner, told us: "AMD’s initial Zen architecture designs used TSMC for the core complex dies and Global Foundries for the IO die, it switched to using TSMC for both die for Milan and later generation products, I believe the CCX die are now on TSMC N5 and the IOD is N7."
He said the "only alternatives" to TSMC for leading edge semi manufacturing are Samsung and Intel.
"If Intel is to be successful as a foundry service provider, it will have to be able to accept business from its chip competitors as these are the only companies that need access to high volume leading edge foundry services, apart from the smart phone application processor companies – such as Qualcomm."
A spokesperson at Intel sent us a statement: "Intel's Foundry Services (IFS) is open to work with all foundry customers; IFS is currently engaged with 7 of 10 of the largest fabless customers in the industry. Our differentiated approach goes beyond traditional foundry offerings, and IFS customers will have access to Intel's global factory network and leading-edge process and packaging capabilities in support of a resilient, globally diverse supply chain." ®