GlobalFoundries SVP: How should the semiconductor industry respond to market shrinkage?

On June 27, SEMICON China 2020 officially opened in Shanghai. This is the first exhibition of China's semiconductor industry since the outbreak of the epidemic this year. The guests at the conference presented their own research on the development of semiconductors under the epidemic. Zhou Zixue, chairman of the China Semiconductor Industry Association, said that from a global perspective, the epidemic is not over yet, and whether it will be severe in the second half of the year or even next year requires further analysis. If the world economy declines on a large scale and the market shrinks, it will have an impact on the semiconductor industry.

Ju Long, global vice president and president of SEMI China, pointed out that the role of semiconductors in promoting economic development has become increasingly obvious. After the semiconductor industry experienced a correction in 2019, the industry originally expected growth this year, but the COVID-19 pandemic and other comprehensive factors have had an impact on the global economy. This year, the semiconductor industry's sales will have a negative growth of 5% or more, and will resume positive growth in 2021. According to SEMI's latest report on global semiconductor wafer fab equipment investment, 2020 will be better than previously predicted, but there will still be a 4% decline.

Americo Lemos, Senior Vice President of GF In addition to the impact of the COVID-19 pandemic, the rise of global trade protectionism and the intensification of regional trade frictions have also brought more uncertainty to the semiconductor industry. Faced with multiple uncertainties, how should the upstream semiconductor industry, especially the manufacturing link, respond? In the opening keynote speech of SEMICON CHINA 2020 yesterday, Americo Lemos, Senior Vice President of GF, pointed out that "if our industry and companies are to continue to thrive in the coming new era, we must rethink our business practices now to meet the challenges that have already emerged, not in 6 months or 12 months."

●A changing world and a divided system●

"In the past month, our industry has experienced a series of external events. These events, taken individually, will obviously bring great challenges to the industry. But I believe that we can cope with them with little lasting damage." Americo Lemos emphasized, "These events are changing our world and our business. These events have made us question some of the most basic assumptions, but our technology industry, especially the semiconductor industry, is built on these assumptions." He explained that the first is that we can no longer rely on continued free and open trade in goods. This means that companies must be prepared to operate in a more decentralized world, rather than in a global market open to everyone as we are used to.

This also means that having one country or region as the only major source of critical materials is no longer so commercially advantageous, but may instead be an operational weakness. Secondly, we can no longer rely on the free and open cross-border flow of technology. Because the flow of intellectual property rights is increasingly restricted, licensing technology in some places is also increasingly restricted. Third, due to the growing divergence between competing innovation centers, it is now possible to face two or more independent platforms, including standardization in areas such as 5G, artificial intelligence, and self-driving cars, which runs counter to everything that has been established so far (global, open standards, etc.). However, he also pointed out that despite all these challenges, there are also positive aspects such as new applications driving change, and that if the semiconductor industry zone actively adapts to the above three restrictions, a large amount of innovation will be generated, mainly in the following aspects:

1. Local problems require local solutions. The innovation required to solve local problems in Asia is different from the innovation required in Europe, America or elsewhere in Africa. Therefore, this opens the door for the industry to promote innovation.   

 2. Geopolitical challenges mean rethinking the way we do business. In fact, changing geopolitical and technological trends are not the only factors at work. Last December, we were able to travel freely. But the COVID-19 pandemic has highlighted the fragility of supply chains: dependence on a single source of supply, a single country, a single supplier, and in some cases, a single production facility.

3. The flow of people will no longer be taken for granted. He pointed out that this is the loudest alarm bell for us, perhaps the first time in the history of the semiconductor industry, but we can no longer take it for granted that the cost effectiveness of producing products in a single location is more important than avoiding the risks brought about by it.

On the contrary, the risks of such an approach are increasing day by day. "All of this clearly shows that, as I said, it is time to rethink the way we do business and adapt to a completely different new normal," he pointed out. "What does all this mean for GF? We need to start with a little history of GF." He reviewed the development of GF in the past 11 years, pointing out that GF is a truly global company - shareholders are in the UAE and operations are spread all over the world. GF's slogan is to build a "global wafer factory". He admitted that he did not have any special feelings about this slogan before, but after 2019, as some governments began to implement some policies related to national security and economic reasons, the idea of ​​operating in different countries after localizing semiconductors became important. “We began to see the value of our global presence, and clients began to recognize the value of globally dispersed operations,” he noted. “In 2020, the COVID-19 pandemic emerged. The consequences, the impact on the industry, as you all know, are that not only governments see supply chain disruptions and risks, but the entire industry does. Supply security has become a key issue facing the industry. At GF, our global coverage, which was once seen as a ‘nice to have’ advantage, is now a key advantage for our clients.”

He pointed out that GF is a pure-play global foundry with large-scale production facilities on three continents, which can seamlessly deploy technology in each factory and use the advantages of its multi-location operations to reduce supply risks. "Our company's geographical deployment is not only around three large fabs, but also related to the technology ecosystem, and not just fabs, but also technology. We are able to deploy technology in these fabs, giving customers flexibility and reducing supply risks." He pointed out, "We are able to design for some customers and manufacture on two different continents. For example, we can produce 40nm NVM processes in both Singapore and Dresden, thereby reducing risks and reducing R&D costs for launching products. This is all thanks to our global operations. Another example is our 55nm BCDLite technology, which is also deployed in Singapore and Dresden. This is a 55nm BCD technology that is tailored for high-density digital, high-performance analog and power functions, all integrated into a single chip."

GlobalFoundries' Ecosystem Both the 40nm and 55nm platforms reflect GlobalFoundries' technological differentiation in terms of technological innovation and supply flexibility. He said that although some American customers prefer to produce in the United States, they will feel at ease if they know that RF manufacturing can be deployed in multiple different locations to reduce risks and ensure market supply. "If the semiconductor industry is to thrive, it needs unimpeded access to all markets. The Chinese market is no exception." He pointed out. "The best way for a company to protect technology is not to prohibit the company from selling the technology in the form of products around the world, but to maintain a competitive advantage and continue to innovate." "The environment characterized by division requires local solutions to solve local problems." He emphasized, "At GlobalFoundries, we continue to innovate through our global manufacturing service infrastructure, while formulating local strategies to meet customer needs with differentiated solutions. We are also constantly expanding our global ecosystem partnerships. In China, this includes developing local IP, innovation in the design field, and building capabilities to help customers shorten design cycles."

Why does GlobalFoundries choose the path of distinctive technology?

He shared GF's development ideas from the macro perspective to the onlookers. The current world economy is valued at $85 trillion. Of the $85 trillion, $2 trillion is contributed by the electronics industry, of which $475 billion is from the semiconductor industry. In the semiconductor industry, about $65 billion comes from wafer fabs that provide foundry services to fabless companies or IDMs. GF ​​provides special processes in this $65 billion industry, and he estimates that special processes can cover about 75% of the foundry market. In fact, 85% of the global foundry industry is mainly served by five wafer fabs.

Wafer Business and the Global Economy

He said that the 25% general process market that GlobalFoundries gave up followed Moore's Law and had evolved into multi-nanometer processes, but more and more industry growth in the vast semiconductor market, such as 5G, Internet of Things, edge AI, and autonomous driving, came from the 75% special process market where GlobalFoundries is located.

Specialty and general-purpose processes Why are specialty process technologies becoming increasingly important? He believes that the industry needs alternatives to these advanced nodes. "Currently, it is extremely expensive to develop single-digit nanometer technologies, put them into production, and drive fabless companies to design chips and IP based on these technologies. For such a small market share, the cost of manufacturing is becoming increasingly prohibitive. No matter how fast and how well digitalized, it cannot support this cost." He pointed out, "Today, 25% of the foundry market is in leading-edge processes. Ten to 15 years ago, this figure was 60-70%. At that time, everyone was doing node miniaturization, building platforms, and migrating to the next node. But today, customers and applications are less and less dependent on using smaller nodes. They can work with us or other foundries to continue to create value and innovate at existing nodes, at the IP level, at the semiconductor product level, and at the system level."

So what are special processes? They are processes for special needs, such as customers needing high voltage to power manage batteries and AMOLED display drivers. Or they want to integrate RF connectivity with digital processing. Or they want to perform edge computing and artificial intelligence on image sensors, but without sending data to the cloud for processing. All of these are areas where special process semiconductor foundries excel. He said iGlobalFoundries has a large number of complete solutions for special process needs, such as 8SW, 45RFSOI and 22FDX technologies for 5G, and only GlobalFoundries can provide these technologies. Among them, 8SW for sub 6GHz RF FEM is of great appeal to customers. For millimeter wave technology, GlobalFoundries has 45RFSOI or 22FDX. 45RFSOI supports higher power, and 22FDX provides 5G customers with higher RF integration. "In today's 5G mobile phones, we use a large number of chips to implement these special functions. From cellular and WiFi front ends to NFC, power management and audio devices, our special process semiconductor foundry is required. The total chip area is larger than the application processor area using single-digit node technology." He pointed out, "Some people in the industry tend to say that single-digit nanometer technology is necessary. I asked a question, which is more important? Is it important to use advanced processes to manufacture application processors, or is it important to be able to achieve all these functions?" Of course, both aspects are necessary for manufacturing mobile phones, so that customers can be satisfied with mobile phones. Special processes are also required in the field of the Internet of Things. The 22FDX solution provided by GlobalFoundries is one of the best technologies for the Internet of Things, and its active/leakage power consumption is very low. In addition, RF functions and eMRAM are implemented in the solution. Therefore, customers can develop complex integrated Internet of Things while achieving connectivity and security. He gave an example that in the field of edge AI and cloud computing, GlobalFoundries provides technologies that will realize and enhance infrastructure. GlobalFoundries' silicon photonics technology can accelerate the interconnection of data centers. In terms of computing processing, GF provides the most advanced technology 12LP+ and low-voltage custom SRAM to adopt the next-generation sub-nanometer technology, which can realize AI applications while reducing power consumption by 2 times. He emphasized that GF is the only global special process wafer foundry, and we have a global IP ecosystem that customers can use in China and overseas. GF ​​is also a global special process semiconductor foundry with operations in three continents.

"GF's global presence gives it enough experience to accumulate strength during this difficult period and better serve customers in the next stage. Because our business covers the world, Chinese customers can also use our global partner system in the United States and Europe to develop specific products for terminal applications in China. For example, SiFive is GF's comprehensive RISC-V SoC design partner in the United States. Our partners in Europe also specialize in RF and analog/mixed signal design, and they are all able to support our Chinese customers." He emphasized, "As China leads the world's economic recovery from the COVID-19 epidemic, innovative Chinese companies, as long as they are ready to rethink their way of doing business and embrace the opportunities brought by the completely different new normal, have the potential to seize the once-in-a-lifetime opportunity, take a big leap, and seize the vast market." He also promised on behalf of GF's leadership: GF will play an active role in China, make high-quality investments, support innovation, provide opportunities for common development, and work together to open up new markets in the future. "Our values ​​are simple: let Chinese innovation occupy a place in the global market!" he pointed out.