GlobalFoundries is halting development work on 7nm technology and laying off workers after AMD said it would shift its 7nm business to TSMC.
Instead, the company will focus development on its 12nm and 14nm FinFET platform to make it "more relevant" to clients.
It continued: "To support this transition, GlobalFoundries is putting its 7nm FinFET program on hold indefinitely and restructuring its research and development teams to support its enhanced portfolio initiatives.
"This will require a workforce reduction, however a significant number of top technologists will be redeployed on 14/12nm FinFET derivatives and other differentiated offerings."
GlobalFoundries, which was spun-out of AMD ten years ago but continued to manufacture all of the company's microprocessors until recently, portayed the move as part of its transformation under new CEO Tom Caulfield.
"GlobalFoundries is reshaping its technology portfolio to intensify its focus on delivering truly differentiated offerings for clients in high-growth markets," the company claimed in its statement.
Caulfield suggested that demand for 7nm products simply wasn't there, with its clients looking to get more out of existing technology on 12nm and 14nm instead.
"The vast majority of today's fabless customers are looking to get more value out of each technology generation to leverage the substantial investments required to design into each technology node," said Caulfield.
He continued: "Essentially, these nodes are transitioning to design platforms serving multiple waves of applications, giving each node greater longevity.
"This industry dynamic has resulted in fewer fabless clients designing into the outer limits of Moore's Law. We are shifting our resources and focus by doubling down on our investments in differentiated technologies across our entire portfolio that are most relevant to our clients in growing market segments."
Instead of competing directly with TSMC, Samsung and Intel at the cutting edge of semiconductor technology, which it has struggled to do, the company will intensify "investment in areas where it has clear differentiation and adds true value for clients, with an emphasis on delivering feature-rich offerings across its portfolio".
It continued: "This includes continued focus on its FDXTM platform, leading RF [radio frequency] offerings (including RF SOI [silicon on insulator] and high-performance SiGe [silicon-germanium), analog/mixed signal, and other technologies designed for a growing number of applications that require low power, real-time connectivity, and on-board intelligence."
According to the EE Times, Caulfield has been under pressure from GlobalFoundries' owners, the Mubadala Investment Company, based in the United Arab Emirates, to improve the company's financial performance. It comes after the company announced the lay-off of five per cent of staff back in June.
In an interview with EE Times in May, Caulfield indicated that he was planning such a move. "The lion's share of our customers…have no plans for" 7nm chips, he said.
Industry-wide demand for the 14/16 node was half the volume of 28nm, Caulfield told the EE Times, and 7nm demand was expected to be half the level of the 14/16nm node.
"When we look out to 2022, two-thirds of the foundry market will be in nodes at 12nm and above, so it's not like we are conceding a big part of this market," he added.
Equinox's Dave Millett explores how phone, mobile and broadband could be affected by a no-deal Brexit
Dust storm on Titan only the third Solar System body where such storms have been observed
New technique could enable quantum computers to scale-up to millions of qubits
Systrom and Krieger taking time off "to explore our curiosity and creativity"