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The chairman of Taiwan Semiconductor Manufacturing Company, the world’s largest contract maker of semiconductors, said that while Globalfoundries, a joint-venture between Advanced Micro Devices and Advanced Technology Investment Company, is a very dangerous competitors, TSMC will still remain the largest and the most successful contract manufacturer on the globe.

“We consider Globalfoundries to be a formidable competitor. I really think the battle will be a high casualty one. My job is to minimize the casualties on my side,” said Morris Chang, the chairman of TSMC, during a conference with analysts, reports IDG News Services agency. Casualties will be represented by money, he clarified.

Mr. Chang believes that Globalfoundries’ fab 2 that will worth $4.2 billion represents a strategy of “total commitment”. The fab 2, which will be the most advanced semiconductor manufacturing facility when it is built, requires tremendous investments and costs more than the factories operated by contract makers. As a result, Globalfoundries targets mostly leading-edge customers who require very advanced process technology. Nevertheless, Mr. Chang claims that TSMC will still remain the world’s largest contract maker with clients willing to pay a lot for manufacturing state-of-the-art chips.

The chairman of TSMC brought an example: at the Battle of Stalingrad during the World War II, the German generals were ordered to maintain their position at Stalingrad after they were surrounded by the Russian troops.

“Like Stalin, I have no doubt of the outcome,” said Mr. Chang.

One of the advantages that Globalfoundries has over TSMC is its leading-edge bulk and SOI manufacturing processes that are co-developed with IBM and other partners. As a result, Globalfoundries does not have to spend tremendous amounts of money on development of fabrication processes. However, TSMC already has a large customer base as well as an array of process technologies aimed at mainstream chips, which means that the company receives relatively consistent revenue streams.

Answering the question about potential acquisitions, Mr. Chang said that among the rest of the contract chip business, only Chartered Semiconductor of Singapore was worth buying.

For Chartered it is crucial to have a new investor willing to help the company. According to sources with knowledge of the matter, the semiconductor company has not started to invest into next-generation fabs, which means that in about a year or two from now Chartered will not be able to compete for designs that require 32nm or 28nm process technologies. Earlier this year unofficial information transpired that Advanced Technology Investment Company had made a take-over proposal by Chartered.

Tags: TSMC, Globalfoundries, Semiconductor, Business, AMD, TFC

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