IFTLE 114: 28nm capacity nickels, and a "symbiotic relationship"

28nm yield reported to be up at TSMC

While Nvidia is the only customer to complain about poor 28nm yields at TSMC [link], other customers like Qualcomm and Altera have reported that "constrained supplies of 28nm" has affected their sales figures. Circulating rumors suggest that Qualcomm has looked for 28nm capacity at UMC and GF but has returned to TSMC since things were even worse at its competitors.

TSMC has announced a goal of getting its 28nm supply and demand into balance by the end of this year. According to the Taiwan Economic News, TSMC’s 28nm capacity is now running at 100,000 wafers a month, up from the 25,000 wafers a month capacity in Q2. TSMC’s fab 15 in the Central Taiwan Science Park is said to be ending Q3 with 69,000 28nm wafer per month capacity and will expand that to 135,000 wpm in Q4.

While there were widespread reports earlier in the year of severe 28nm yield issues at TSMC [link] according to Taiwan’s Commercial Times, equipment suppliers are reporting that TSMC’s 28nm yield is now over 80%.

But capacity shortage appears real and may constrain smartphone launches…….

There appears to be some concern that a shortage of available 28nm chip supply might constrain the new smartphone / mobile device launches this fall. Samsung and Sony lifted the wraps on new smartphones on Wednesday; Nokia, Motorola and Amazon.com are expected to do the same next week; and all leads up to the much-anticipated announcement of Apple’s iPhone 5, which many expect to happen on Sept. 12. [link]

At a recent investment conference, Qualcomm, maker of baseband chips and application processors (like Snapdragon) for smartphones and tablets, reported that it has had trouble meeting customer demand and is trying to ramp the supply as quickly as possible.

Would financial partners get better access to the available capacity?

Bloomberg reports that Apple and Qualcomm have made investment offers of more than $1B each, in order to set aside production capacity exclusively for them — but have been rebuffed by TSMC [link]. The report said that Apple’s proposal was aimed at securing an alternative supplier to Samsung for chips for its iPhones and iPads, while Qualcomm, leading supplier of application processors to the rival Android platform, needs to boost supply as shortages have impacted its earnings.

While TSMC refused to respond to what it called "market speculation," CFO Laura Ho did say that that "Dedicating one facility to a single product or customer creates the risk of a fabrication plant becoming a burden if the product, client or technology changes….You have to be careful. Once that product migrates, what are you going to do with that dedicated fab?"

The Bloomberg report says the smartphone chip market that is worth US$219.1 billion worldwide.

…And speaking of Apple and Samsung……

At present Apple relies on Samsung for its leading-edge A5 processor — but we all know about the high-profile legal dispute with Samsung over smartphones patents, and how Apple has been reported to be working with TSMC (Hsinchu, Taiwan) to bring up a 28nm A6 processor.

Apple may have won the recent Samsung suit concerning smartphones, but it appears that the joke was on them! [link] Google / Nexus reports that 30 trucks arrived at Apple’s headquarters in California to pay the required fine. Minutes later, Apple CEO Tim Cook received a call from Samsung indicating that over the next week they would be paying the $1 billion dollar fine in nickels. Do the math: this is 20 billion nickels.

Lee Kun-hee, Chairman of Samsung Electronics, told the media that his company is not going to be intimidated by a group of "geeks with style" and that if they want to play dirty, they [Samsung] also know how to do it. "They can use the coins to buy refreshments at the little [vending] machine for life, or melt the coins to make computers, that’s not my problem, I paid them and fulfilled the law."

IFTLE wants to know: (1) where Samsung was able to come up with 20B nickels ?? And (2) will Apple will use the nickels to pay for the next delivery of A5 chips??

ASE response to TSMC packaging expansion

A few weeks ago we discussed the fact that TSMC was recruiting engineers away from ASE and SIliconware to staff their 400 man packaging & test team raising questions about whether it might eventually challenge ASE and Siliconware in the packaging arena [ see IFTLE 112, "TSMC Staffing up for 2.5/3D Expansion…."]

The Taipei Times now reports that ASE is "brushing off concerns" of a potential rivalry with TSMC amid reports that the world’s largest foundry has put together a large team to make further inroads into ASE’s bread-and-butter market. They quote a senior ASE executive saying that "…the company hopes to have a symbiotic relationship with TSMC" in the future.

The traditional definition of symbiosis is "a mutually beneficial relationship involving close physical contact between two organisms that aren’t the same species," like birds eating insects of the back of a rhino.