Adrian Weck­ler

Irish Independent - Business Week - - TECHNOLOGY -

best chip­maker in the busi­ness. Last year, the Tai­wanese com­pany amassed a big­ger mar­ket value than its US ri­val for the first time.

Pro­duc­tion brag­ging rights in semi­con­duc­tors are judged by the width of the space be­tween lines on the tiny cir­cuits that give chips their func­tion. Shrink­ing that gap – mea­sured in nanome­tres, or bil­lionths of a me­tre – gives de­sign­ers the abil­ity to make chips that count faster, use less power, store more data or sim­ply cost less.

In the high­est-end pro­ces­sors, where In­tel makes most of its money, space is at a pre­mium. A Xeon server pro­ces­sor crams bil­lions of tran­sis­tors into an area the size of a postage stamp. In­tel was the first to use 14-nanome­tre tech­nol­ogy at scale in 2013, ac­cord­ing to Gold­man Sachs. It won’t have 10-nanome­tre ready for prime time un­til the end of 2019 – by far the long­est wait in its his­tory.

TSMC has gone from 20-nanome­tre to 7-nanome­tre pro­duc­tion in the same time. In­tel’s holdup re­volves around yield, the num­ber of good chips that emerge from each pro­duc­tion run. In plants that cost about $7bn and run 24 hours a day churn­ing out mil­lions of chips each month, the slight­est hic­cup can be dis­as­trous fi­nan­cially. In­tel hasn’t ironed out enough of these man­u­fac­tur­ing wrin­kles yet, and the com­pany won’t shift to 10-nanome­ter pro­duc­tion un­til it’s sure ev­ery­thing works prop­erly.

San­ders’s cur­rent suc­ces­sor at AMD, CEO Lisa Su, doesn’t have to worry about this be­cause the com­pany sold its fac­to­ries and lets TSMC han­dle the com­plex pro­duc­tion. “That’s one of the best de­ci­sions we’ve made,” said Su. “It al­lows us to man­age risk and fo­cus on the things that make the prod­uct great.”

With TSMC’s help, Su is pur­su­ing a goal that San­ders never at­tained: a cred­i­ble and last­ing chal­lenge to In­tel’s hold on com­put­ing.

AMD is now telling in­vestors and cus­tomers that its new chip de­signs will sur­pass those from In­tel. TSMC makes this com­pe­ti­tion pos­si­ble, even though AMD has about a tenth of In­tel’s work­force and R&D bud­get.

TSMC didn’t catch In­tel all by it­self, though. The com­pany’s real break came a decade ago when the smart­phone be­gan fill­ing con­sumers’ pock­ets. In­tel dab­bled in mo­bile chips, but never com­mit­ted its best pro­duc­tion and de­sign to the area, pre­fer­ring to pri­ori­tise its ex­ist­ing cash cow PC and server chip busi­nesses.

When smart­phone sales took off, phone mak­ers used other pro­ces­sors from com­pa­nies like Qual­comm, or they de­signed their own us­ing ARM tech­nol­ogy, like Ap­ple.

TSMC fac­to­ries churned these com­po­nents out. The smart­phone busi­ness is now al­most six times as big as the PC in­dus­try by vol­ume. That’s given TSMC the ad­van­tage of high-vol­ume man­u­fac­tur­ing ex­pe­ri­ence that pre­vi­ously be­longed to In­tel. With bil­lions of tran­sis­tors on chips, a prob­lem with a small num­ber of those tiny switches can ren­der the whole com­po­nent use­less. Pro­duc­tion runs can take up to six months and in­volve hun­dreds of steps re­quir­ing mani- acal at­ten­tion to de­tail. Each time there’s a mis­take, the fac­tory op­er­a­tor has a chance to make tweaks and try a new ap­proach.

If the change works, that in­for­ma­tion is re­tained to try on the next chal­lenge. The more pro­duc­tion runs, the bet­ter. And TSMC has the most nowa­days.

“TSMC just con­tin­ues to de­liver lat­est chips on sched­ule without any mis­takes,” said Mark Li, an an­a­lyst at San­ford C Bern­stein. He thinks In­tel’s lead­er­ship in PC and server chips, plus its pric­ing power, are at risk be­cause of its smart­phone slip and TSMC’s hard-earned con­sis­tency.

Still, this is far from the first chal­lenge In­tel has faced. The com­pany is work­ing on its pro­duc­tion prob­lems, and in the mean­time will de­liver new chips built with ex­ist­ing pro­duc­tion tech­nol­ogy that it says will keep the op­po­si­tion at bay. Navin Shenoy, head of In­tel’s server di­vi­sion, ar­gues nanome­ter-based pro­duc­tion mea­sures have never been the only fac­tor of suc­cess (al­though the com­pany liked to talk about this more in the past). In­tel’s near-term so­lu­tion is to de­sign bet­ter chips us­ing the old pro­duc­tion tech­nol­ogy.

“I’m con­fi­dent that we’re go­ing to de­liver what our cus­tomers care about, which is sys­tem per­for­mance,” he said.

His­tor­i­cally, the com­pany has squashed ri­vals us­ing a re­search bud­get that dwarfed any­thing else in the in­dus­try. But TSMC’s ap­proach is even un­der­min­ing

Space odyssey:

chips like In­tel’s Ir­ish-de­signed Galileo de­vel­op­ment board, fea­tur­ing Quark SoC X1000 tech­nol­ogy, are be­ing over­taken by TSMC’s drive to the lat­est 7-nano pro­duc­tion

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