Intel might fab your next POWER chip

The Wall Street Journal is reporting that Intel is in talks to buy GlobalFoundries ("GloFo")' manufacturing assets for potentially as much as US$30b (via Reuters). Much of the amusement on the Internet tech sector side is because GloFo started life in 2008 as the divestiture of AMD's manufacturing arm, an admittedly entertaining historical irony, but GloFo is important to us in OpenPOWER-land too because they manufacture the POWER9.

GloFo's fabbing of POWER and OpenPOWER comes from a July 2015 deal with IBM where IBM basically paid GloFo US$1.5b to take and operate their U.S.-based chip manufacturing business unit. In return, GloFo would provide chips to IBM through 2025. The POWER9 in your servers and workstations was initially manufactured at IBM's former East Fishkill, NY plant, which became GlobalFoundries Fab 10 and was sold to ON Semiconductor in 2019, and are now produced at GloFo Fab 9, which was IBM's previous plant in Essex Junction, VT.

This arrangement was odd even at the time, and admittedly wouldn't have been IBM's first choice, but semiconductor production has obvious national security implications and regulators wouldn't let it just sell off or shut down its entire domestic manufacturing arm. Predictably the deal doesn't seem to have gone well. In a lawsuit last month, IBM alleged that by fall 2015 GlobalFoundaries told IBM they wouldn't proceed further on development of a 10nm process and instead would move to 7nm, jeopardizing the POWER9 which was originally supposed to be produced at 10nm. IBM claims that despite what it views as a contract breach, it nevertheless continued the payout to bring up a 7nm process instead by Q3 2018, which didn't happen either. At that point IBM says GloFo asked it for another $1.5b, which IBM refused, and GloFo suspended further development. The POWER9 was eventually manufactured with a 14nm node size using FinFET technology instead.

Intel's interest in GloFo is to secure a manufacturing pipeline for its silicon in the midst of the global chip shortage, and, as voiced earlier this year by CEO Pat Gelsinger, to get a piece of the chip manufacture business from companies other than itself. While GloFo is only about 7% of the market, they have a customer base and support infrastructure Intel completely lacks. While GloFo's current node size is still not highly competitive, there is still a lot of money to be made in larger process sizes for less performance-sensitive applications. Chipzilla certainly has its own fabs but their technology has not been nearly as advanced (certainly not as much as, say, TSMC), and they cater nearly exclusively to Intel in-house designs. However, AMD still relies on its former facilities at GloFo for its own chips, which would certainly attract regulator scrutiny if Intel were to control its supply chain. The deal does not seem to involve GloFo the company, but would have to involve its physical assets and operations to be at all worth the headache.

The POWER9 is still made at Fab 9, but IBM, chastened by its problems with GloFo, has turned to Samsung and its 7nm process for POWER10. However, Intel has a strong interest in improving its node size and although exact numbers have lately gotten more and more meaningless, Cannon Lake, Tigerlake and others are "still" at 10nm, whatever that means. Plus, Intel would presumably have control over IBM's old facilities which they would still know relatively well, and while IBM doesn't have the volume of other chip designers anymore, they're still considered a significant player and their parts are higher-end. AMD may not like their next chips being fabbed by Intel but IBM may not have a problem with it, and if Samsung can't deliver on POWER10 after all, stranger things have happened.