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Thread: Exclusive: Chipmaker GlobalFoundries asks EU to investigate bigger rival TSMC -

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    Exclusive: Chipmaker GlobalFoundries asks EU to investigate bigger rival TSMC -

    WAFER WARS!

    A serious shot across the bow... A very interesting time in semiconductor history, absolutely!

    According to Reuters:

    (Reuters) - U.S. electronic chipmaker GlobalFoundries has asked European antitrust regulators to investigate market leader TSMC accusing the Taiwanese firm of unfair competition, an industry source said on Monday.

    Exclusive: Chipmaker GlobalFoundries asks EU to investigate bigger rival TSMC - source | Reuters

    GlobalFoundries has told the European Commission that TSMC is unfairly using loyalty rebates, exclusivity clauses and bundled rebates and even penalties to discourage customers from switching to rivals, the source said.

    The practices, which go back several years, have affected GlobalFoundries’ ability to compete, the source said, adding that the tactics escalated after a key GlobalFoundries product started to win new customers.

    And TSMC responds:

    “Our customers always have the freedom to choose, which we respect greatly, and they choose us because of the value we deliver toward their long-term success,” a spokeswoman said.“Any accusation that TSMC threatens or harms customers is absolutely baseless, and we will vigorously defend our hard-earned trust and our most valued reputation.”

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    Last edited by Daniel Nenni; 4 Weeks Ago at 08:42 AM.
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    Wow. Big news. What could be the "key GF product which has started to win new customers" in their statement . 22FDX ? Daniel your thoughts.

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    Quote Originally Posted by raghu78 View Post
    Wow. Big news. What could be the "key GF product which has started to win new customers" in their statement . 22FDX ? Daniel your thoughts.
    Could be but my guess would be the FinFET processes. 22FDX has 15 confirmed tape-outs thus far but that number is growing. This really is Deja Vue QCOM vs APPL. First you start with the regulatory agencies then once you get a favorable ruling go after the company itself. China was the sweet spot for getting a favorable ruling against QCOM and EU is definitely the place for TSMC.

    GF itself is no match for TSMC legally but let's not forget who owns GF....... Samsung may jump in as well....

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    Quote Originally Posted by Daniel Nenni View Post
    Could be but my guess would be the FinFET processes. 22FDX has 15 confirmed tape-outs thus far but that number is growing. This really is Deja Vue QCOM vs APPL. First you start with the regulatory agencies then once you get a favorable ruling go after the company itself. China was the sweet spot for getting a favorable ruling against QCOM and EU is definitely the place for TSMC.

    GF itself is no match for TSMC legally but let's not forget who owns GF.......
    By FINFET processes do you mean upcoming processes like 7LP / 12LP or processes in production like 14LPP. Looking forward to semiwiki's article on Globalfoundries Technology conference 2017. :-)

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    Quote Originally Posted by raghu78 View Post
    By FINFET processes do you mean upcoming processes like 7LP / 12LP or processes in production like 14LPP. Looking forward to semiwiki's article on Globalfoundries Technology conference 2017. :-)
    The FinFET processes since that is where the big money is (14nm, 12nm, 7nm...). Just my opinion of course. I have no first hand knowledge here.

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    I wouldn't bet on TSMC in this case. Look at their press release --- it's classic non-denial denial. TSMC are happy to claim that they do all sorts of wonderful things for their customers, but aren't willing to actually state for the record that the concrete claims GloFo is making ("using loyalty rebates, exclusivity clauses and bundled rebates and even penalties to discourage customers from switching to rival") are false. Which is really all you need to know...

    The only question, then, is whether the PRECISE tactics TSMC is using are illegal or not. And in many ways, that's less important. Even if TSMC wins on that technicality, they'll lose in the court of public opinion, and they'll be forced to stop using those tactics in future.

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    Even if TSMC loses I doubt it will be significant long term. AMD won it's case against Intel, Intel was forced to pay a fine and change some of it's practices, but in the end Intel continued it's dominance over AMD (although perhaps those winds are finally starting to shift with Ryzen and with AMD embracing the fabless model). Similarly, if TSMC loses it will likely pay a fine, be forced to change some business practice, but it will almost certainly maintain it's fabless leadership. Not knowing the specifics, I doubt GFs case is as airtight as AMDs either. Volume discounts and bundling are not illegal, neither are exclusivity clauses if there is a good reason for that exclusivity clause. For example, if you are building a process specifically for a customers product, you can probably justify it. Probably the customer will have exclusivity on the process as well, Apple likely doesn't want Samsung building chips on their custom process. If there are penalties specifically designed to discourage customers from using competitors, there might be a case, but there needs to be some proof that those penalties exist and that they were specifically designed to be anticompetitive.

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    It all depends what you are interested in!

    What generally happens with these consent decrees (think IBM, ATT, MS, even Intel), is that the company becomes forced to second guess itself and behave much less aggressively. This does not result in immediate "punishment", but it does mean that the competitive landscape over the next ten or twenty years becomes a lot flatter. All things considered, this is probably healthiest for society as a whole.

    So, yes, consequences may be minor if your measure is something like "is TSMC forced to shut down", but if your measure is more something like "in fifteen years do we still have four viable leading edge manufacturers, rather than at least one of GloFo and/or Samsung being forced into irrelevance" then we're (IMHO) looking at a positive outcome.

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    Am I missing something here?!

    GlobalFoundries says TSMC has unfairly used loyalty and bundled rebates, exclusivity clauses, and penalties to prevent customers from switching to the competition
    Talk about the pot calling the kettle black! Did GlobalFoundries forgot it currently has a wafer agreement with AMD featuring exclusivity clauses and penalties that severely limits AMD from switching to TSMC?
    AMD Amends GlobalFoundries Wafer Supply Agreement Through 2020, Gaining New Flexibility & New Costs
    Examples:
    1. AMD paying $100M for the ability to work with other foundries
    2. AMD has to PAY GlobalFoundries for wafers purchased from third-party foundries
    3. AMD had to issue a stock warrent allowing GlobalFoundries' parent company (Mubadala Development Company) to purchase shares below-market price

    Is this the same Globalfoundries that FAILED to deliver on its 14XM process & was FORCED to PAY Samsung to get access to its 14 nm technology in 2014? I imagine that Globalfoundries' customers weren't too thrilled having to go back to the drawing board on their designs OR having their products delayed while their TSMC-supplied competitors ate their lunch.

    Mark Papermaster (AMD's CTO) said that going fab-less helped AMD focus on chip-design without worrying about manufacturing. Production is no longer a bottleneck for AMD, as it can now put out manufacturing contracts to a wider variety of foundry partners. (Source) Does THAT sound like a ringing endorsement from your BIGGEST client (who your parent company happens to own close to 20% of)?!

    Now compare what Papermaster said to what Moshe Gavrielov (Xilinx's CEO) said in his company's Q4 2017 conference call:
    Well, we're delighted to be with TSMC. It's one of the best decisions I've ever made. Maybe professionally, it's the best decision I've ever made. We don't regret it for one minute. They are great. You know, look at everyone who has tried someone else, including Intel. Great company, great manufacturing technology, great CPU provider. The foundry business is a service business. It requires technology leadership. It requires support. It requires an ecosystem. TSMC is second to none, absolutely second to none.
    Or let's put it another way...GlobalFoundries should be EMBARRASSED that their biggest client (and former owner) is paying them to NOT to fab their products. Can it be AMD doesn't have faith GlobalFoundries can deliver on-time? Or maybe AMD feels their (GlobalFoundries') ecosystem to be lacking? Whatever it is...the optics of having your biggest customer pay you over $100M for the right to use someone else's fabs is NOT GOOD!!

    Here's a couple thoughts GlobalFoundries (Mubadala Development Company)....START EXECUTING AND DELIVERING ON YOUR PROMISES! STOP OVER-PROMISING & UNDER-DELIVERING. I have no idea if TSMC has ever engaged in any "unfair" competition. But from an outsider's perspective, GlobalFoundries certainly sounds like a company that's unable to compete technologically & views litigation as its own means to "win".

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    AMD's agreement with Globalfoundries is different though, because at one point Globalfoundries was part of AMD. Mubadala would have never agreed to buy Globalfoundries in the first place without that agreement being in place.

    On another note: Wouldn't loyalty rebates make it impossible to have a second source?
    Assumably, the loyalty rebates only apply to small customers, otherwise Nvidia wouldn't be manufacturing some of its GPUs with Samsung.

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