Qualcomm Would Not Rule Out Building Its Own Semiconductor Fab

Qualcomm Weighs Spending Big Cash to Ensure Stable Chip Supply

by Anton Shilov
06/28/2012 | 11:49 PM

The recent woes with the inability of Taiwan Semiconductor Manufacturing Co. to ship enough chips made using 28nm process technology could not be left inattentive by the customers. Qualcomm, the world's largest supplier of system-on-chips for mobile phones, is bewildered by the fact that the success of its latest Snapdragon S4 SoC is constrained by TSMC's inability to ship chips in volume. Thus, Qualcomm is now weighing different new possibilities to fulfill demand for its products


Earlier this year Qualcomm announced that it started to redesign its latest application processors and system-on-chips to manufacture them not only at TSMC, but also on facilities owned by other contract makers of semiconductors, such as United Microelectronics Corp., Samsung Semiconductors and Globalfoundries. Any re-spin of any chip design costs millions, therefore the redesign will affect Qualcomm's financial performance. But the communication processor company does not want to stop here: it is mulling to build its own semiconductor manufacturing facility in the future, something that contradicts all of the today's trends.

"We certainly are looking at different business arrangements. [We do not want problems with 28nm] to occur again. Today is not [a time for use] to [build our own fabs], but in the future I would not say no to that. We will weigh those issues," said Paul Jacobs, chief executive officer of Qualcomm, at Uplinq 2012 conference.

Given the fact that modern factories can cost $5 to $10 billion to build, need to be kept utilized at around 100% of the time and require latest process technologies (which also cost hundreds of millions) to be efficient, it generally makes no sense for Qualcomm to own a whole fab on its own. Therefore, for now it makes more sense for the company to sustain its current fabless model.

"For now, our inclination is to maintain the fabless model we have. The reason for this is because when you do not have a fab, you do not have to spend a lot of [management thoughts] on how to keep that fab full. We do not spend our thoughts on that, we spend all of our management thoughts on the new technologies. [...] [Still], we have skills, we have people inside the company who built fabs, people who worked on process technologies, we have core [team inside the company] to do it. But if we can continue to [prosper] with our fabless model, I think we are in a better position that way," stressed Mr. Jacobs.