Qualcomm could invest in chip foundry
As chip giant struggles with supply of its new 28nm processors, it is reported to be considering 10% stake in UMC
Published: 31 July, 2012
Qualcomm has been dogged by shortages of its newest Snapdragon processors so far this year, and has been searching for new suppliers to supplement its main foundry TSMC. It may even invest in a foundry itself, and is considering taking a 10% stake in the world's number two operation, UMC.
The chip giant's CEO Paul Jacobs said recently that Qualcomm was exploring various options to ramp up the flow of its 28nm processors - and longer term, to increase its ability to control and guarantee its sources of supply. Early in July, it was reported to be negotiating foundry deals with UMC, GlobalFoundries and Samsung, to add to that with TSMC, but now sources indicate it will go further and invest in the former firm. That would increase its power to influence UMC's directions and ensure it takes first place in the queue for capacity.
UMC recently offered a 10% stake to anyone wanting to become a 'strategic partner', as it seeks to catch up with the dominant TSMC. At the smaller firm's current market valuation, 10% would be worth $540m.
If a closer relationship with Qualcomm materializes, it would fit in with an industry trend for chip giants to assert stronger control over their manufacturers. Intel has made much of Qualcomm's discomfiture, stressing that, because it owns most of its own fabs, it can adapt process innovation precisely to its roadmap, as well as guaranteeing supply. And TSMC recently said it might set up dedicated factories earmarked for single customers, to enhance the level of influence they could promise their most important clients. TSMC has been trying to win significant Apple business away from Samsung, and such an arrangement might well suit Apple's famous desire for control.
Announcing its plan to secure an investor, UMC's CEO Shih-Wei Sun told analysts: "This is not for financial purposes, really we are looking for strategic partners." He added: "As you know, the industry landscape is shifting aggressively now. The structure is changing. The radical supply chain partnership is getting more and more important. So we very much welcome the partnership." He would not, of course, comment on the reports that Qualcomm was in the running, but said the stake could be open either to a customer or a technology partner.
As EETimes points out, Dutch semiconductor tools maker ASML recently engaged in a similar push, offering up to 25% in the company in return for strategic investment in developing its next generation process and R&D. Intel has signed up for 15%, for about $3bn, and Samsung and/or TSMC may take the remaining 10%.