Qualcomm turns to SMIC in attempt to sidestep TSMC supply crunch


Qualcomm (QCOM +1%) has struck a deal with SMIC (SMI +2.5%) to have the Chinese foundry to produce 28nm Snapdragon processors. SMIC has previously manufactured (less demanding) power management and connectivity ICs for Qualcomm.

The deal comes ahead of Apple/Samsung's fall hardware refreshes, and undoubtedly has much to do with tight 28nm capacity at main foundry partner TSMC (TSM +1.5%). Digitimes has reported Qualcomm and MediaTek (among others) are looking to secure 28nm capacity from SMIC, UMC, and Globalfoundries due to TSMC's supply constraints.

Digitimes states Qualcomm has booked over half of SMIC's 28nm capacity, and that MediaTek will be placing orders of its own. The site has also reported Qualcomm has placed orders with Globalfoundries and Samsung for their next-gen 14nm process (set to go live in early 2015).

TSMC's efforts to ramp 20nm production for Apple could be contributing to its 28nm crunch. JPMorgan expects TSMC to produce 120k-130k 20nm wafers for Apple in Q3, up from just 30K-40K in Q2. It sees Apple respectively making up 13% and 15% of TSMC's Q3 and Q4 revenue vs. just 4% of Q2 revenue.

Yesterday: Qualcomm buys WiGig chipmaker Wilocity

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Comments (4)
  • Philip Marlowe
    , contributor
    Comments (1579) | Send Message
     
    Needless to say the foundry for hire industry is red hot. TSMC is booked solid and production is spilling over to other foundries. Anyone that can manage a 28nm process can look forward to full employment (with the exception of Intel who turn their noses up at contract work).

     

    The small investors that want to make some quick money from this should take a look at the Taiwanese packaging companies SPIL and ASX. Every chip that is produced has to be packaged. ASX and SPIL are growing their revenues faster than TSMC because (i) they are getting the benefit of growth from all foundries not just TSMC (ii) they can raise their capacity much faster and for significantly less capital expenditures than TSMC (iii) there is another secular trend towards more complex and more expensive packaging necessitated by the small form factors of smart phones.

     

    The above is especially true for SPIL. It is growing revenues at a 30% rate as compared to TSMC's 11%.
    3 Jul 2014, 03:55 PM Reply Like
  • trader_xx
    , contributor
    Comments (1452) | Send Message
     
    Hey I hear INTC has plenty of fab capacity and wants to be a foundry too ! Wonder why they're not in the mix ?
    3 Jul 2014, 04:02 PM Reply Like
  • Cincinnatus
    , contributor
    Comments (6187) | Send Message
     
    Because they don't want to be a foundry.
    6 Jul 2014, 07:49 PM Reply Like
  • SemiWiki.com
    , contributor
    Comments (305) | Send Message
     
    The Great 28nm Debacle!

     

    http://bit.ly/1q2UaJD

     

    Intel is not in the mix because their fabs are optimized for CPUs and there is no ecosystem (tools and IP).
    4 Jul 2014, 11:38 AM Reply Like
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