Chip companies must co-operate to manage costs

SANTA CLARA: The rising cost of production and design is forcing chip companies to collaborate rather than build their own chips, according to senior industry figures.
Chia Song Hwee, chief operating officer at GlobalFoundries, said at the Common Platform Technology Forum that the huge cost of bring a new chip to market is eliminating integrated processing techniques in favour of production without a proprietary fabrication plant.

"The fabless model is well understood. IBM is doing this in US, and we are also seeing the market shift in the European Union," he said.

"In the last two or three years even the Japanese market is moving in that direction. There is no talk in the industry of going back to the integrated model."

For example, a manufacturer would have to pay $50m (£30m) to develop the base designs for a new 28nm chip, not including the software, and another $250m (£155m) to build libraries for the chip.

The fabrication plant would cost $5bn to $7bn (£3bn to £4.5bn), and development costs would be $1bn to $2bn (£625m to £1.25bn) over a four-year period.

"To continue the roadmap forward, co-operation is key," said Gary Patton, vice president of IBM's R&D Center.

"The escalating cost of development needs a different model for advanced R &D. IBM recognised this 10 years ago and has moved to a partner model."

Patton pointed out that technologies like High-K Metal Gate took over a decade to move from research to manufacturing. Research into new areas, like silicon nanowires, phase change memory and silicon photonics, needs a group effort, he said.

Qualcomm, the world's largest fabless chip designer, is also committed to the co-operative route, according to Jim Thompson, senior vice president of engineering at the company.

"We are committed to the fabless model," he said. "Co-operation can be difficult, but it's the way forward."