When GlobalFoundries abandoned development of 7nm-level process technology in 2018 and refocused on specialty process technologies, it ceased pathfinding, research, and development of all technologies related to leading-edge sub-10nm nodes.At the time, this was correct (and arguably only) made the move for the company, which is losing massive amounts of money and lagging behind TSMC and Samsung in the race for cutting-edge nodes. But in a competitive fab market, the trade-off of reduced investment will eventually have further consequences, and it looks like they are finally starting to bite the company. During its recent earnings call, GlobalFoundries revealed that some of the company’s customers are switching to other foundries because they are adopting sub-10nm technology faster than GlobalFoundries expected.
“Our Communications Infrastructure and Data Center businesses continue to experience weakness in 2023, driven in part by longer channel digestion times for our customers’ wireless and wireline infrastructure inventory levels, as well as data center and digital-centric customer demand for GlobalFoundries “Single digit nanometers,” CEO Tom Caulfield said during the company’s earnings call with financial analysts and investors (via SeekingAlpha ).
There are four key reasons why companies are migrating to “single-digit nanometers” (e.g., 5 nm, 7 nm): they want to achieve higher performance, they want to achieve lower power consumption, and they want to reduce chip size by size to keep costs down, and in most cases they want a combination of all three factors. There may be other reasons, such as supporting lower voltages or needing to reduce the form factor. Currently, the best node offered by GlobalFoundries is its 12LP+ manufacturing process, which is significantly better than its 12LP and 14LPP process technologies and should be comparable to other foundries’ 10nm-class nodes.
At the same time, based on the characteristics of 12LP+ demonstrated by GlobalFoundries, it cannot truly compete with 7nm-level process technology in terms of transistor density, performance and power consumption. Assuming that TSMC or Samsung OEMs offer competitive prices for their 7nm-class nodes, at least some 12LP+ customers may be inclined to use 7nm manufacturing technology, which GlobalFoundries also confirmed.
“We are actively [watching] These are industry trends and execution opportunities to reshape some of our excess capacity to meet demand in more durable and growing segments such as automotive and smart mobility devices,” Caulfield said.
As early as 2022, communications infrastructure and data center revenue accounted for 18% of the company’s earnings, but by 2023, this dropped to 12%. The shares of PCs and smart mobile devices will fall to 3% and 41% respectively from 4% and 46% in 2022. Meanwhile, the share of automotive-related revenue will increase from 5% in 2022 to 14% in 2023, which is reason for optimism as GlobalFoundries expects automotive growth to offset declines in other applications transitioning from 12LP+ to newer nodes.
“[Automotive] “Our products span the entire portfolio from 12 LP+, our FinFET platform, to our expanded voltage handling capabilities on 130 nm and 180 nm technologies,” said Caulfield. “With these products, we believe GF will be a key player in the automotive industry.” plays a key role in long-term transformation, and our client partnerships are critical to this.
Due to inventory adjustments by some customers and migration of other customers to different foundries and nodes, GlobalFoundries’ full-year revenue in 2023 exceeded US$7.392 billion, down from US$8.108 billion in 2022. At the same time, the company remained profitable, with net profit of $1.018 billion, down from $1.446 billion a year ago.