May 13 2017

Despite SUNY Poly scandal, region’s chip industry takes off

Times Union

By: Larry Rulison

The region’s computer chip industry appears to have emerged almost unscathed from the bid-rigging scandal that led to federal charges.

Anchored by GlobalFoundries’ $12 billion Fab 8 factory, the sector is about to hit its stride.

It is coming to fruition after multiple fits and starts that led many to believe that the “chip dreams” of the Capital Region were a fantasy, and a billion-dollar waste of money. Evidence of the payoff has been like the tiny transistors on computer chips — hard to see with the unaided eye.

Lisa Su, CEO of Advanced Micro Devices, shocked Silicon Valley last August when she showed off the speed of a new chip the company had developed.

The chip, code-named “Zen,” only narrowly edged out rival Intel’s top-performer.

Since that day, AMD’s market value has risen more than 40 percent.

It was also a huge day for the Capital Region since AMD had the Zen chip manufactured at GlobalFoundries’ Fab 8 factory, which for years struggled to meet industry expectations.

The launch of Zen, which uses an innovative 14-nanometer chip design with “FinFET” transistors shaped like fins, marked a major turning point for GlobalFoundries, which was created from AMD’s manufacturing unit in 2009. The FinFET technology was licensed from Samsung.

Fab 8, a foundry that makes chips for other companies, began production in 2011. But the facility, which received more than $1.5 billion in state funding initially approved in 2006, at first failed to live up to its claim as one of the most technically advanced chip fabs in the world.

Dan Hutcheson, a highly respected Silicon Valley semiconductor analyst, who visited Fab 8 in April, said he believes the transformation began with the hiring of Tom Caulfield. The former IBM executive was named Fab 8’s new general manager in May 2014. Hutcheson said the transformation was further advanced with GlobalFoundries’ 2015 acquisition of IBM’s microelectronics manufacturing business.

“The reputation of the Malta fab has dramatically improved since the IBM acquisition but also since you came here,” Hutcheson told Caulfield during a video interview for Hutcheson’s weSRCH website. “I saw that today when I walked around the fab. It was just an amazing difference in the people and the quality of the people.”

Hutcheson called Fab 8’s 14-nanometer production flawless, with 100 percent yield on 14-nanometer chip “tapeouts” — the process when a design is transferred from a customer to the fab.

“It used to be unheard of in the foundry business,” Hutcheson said. “It’s become more common, but 14 nanometer is a cutting edge process, and it takes a lot of teamwork to do that 100 percent kind of capability,”

The effort is revealed in GlobalFoundries’ financial results, which surged during the second half of last year as the company posted record revenue of $5.49 billion, an increase of $500 million over 2015. GlobalFoundries won’t confirm those numbers, which were included in the financial statements of its parent company, Mubadala Development Co. of Abu Dhabi. But a company spokesman said the success of Fab 8 contributed to the revenue growth.

“We saw significant revenue growth in 2016, driven in large part by the 14nm FinFET ramp at Fab 8,” Steven Grasso said.

Because of the 14-nanometer success at Fab 8 — and efforts under way to bring the first 7-nanometer chips to market — there is hope again that a second fab could be built at the Fab 8 campus, although GlobalFoundries won’t comment.

That hope has fueled a lot of interest and excitement in two upcoming semiconductor industry conferences in Saratoga Springs. The Advanced Semiconductor Manufacturing Conference begins Monday at the Saratoga Springs City Center and features some of the industry’s top technologists and manufacturing leaders.

The Saratoga County Prosperity Partnership, the county’s official economic development arm, is sponsoring the Saratoga reception Wednesday night at the Canfield Casino with Applied Materials. The reception is the social highlight of the four-day event and gives people like Marty Vanags, president of the Prosperity Partnership, a chance to pitch semiconductor industry leaders on the benefits of moving their operations to the Capital Region and Saratoga County. Vanags said GlobalFoundries as well as SUNY Polytechnic Institute are the two magnets that can help bring them to this region, as well as other facets such as chip design firms.

“For the future of Saratoga County, the semiconductor industry is critical and very important,” Vanags said. “It will help us to leverage more economic development.”

There is also tremendous excitement for the 87/90 Semiconductor Summit, a new event created by the Center for Economic Growth in Albany that will take place June 8 at the Saratoga Springs City Center. The one-day conference will feature business and economic development leaders, including Gary Patton, the chief technology officer at GlobalFoundries, and Jim Feldhan, president of Semico Research, a major semiconductor consulting firm based in Phoenix. Other speakers include Tom Salmon, executive director of the Fab Owners Association, and Howard Zemsky, Gov. Andrew Cuomo’s economic development chief.

Andrew Kennedy, CEG’s chief executive, said the 87/90 name given to the summit is a moniker for Interstate 90 and Interstate 87, the two major highways that intersect in Albany and crisscross the state. In addition to the Luther Forest Technology Campus in Malta, the state has other sites it is marketing to semiconductor companies that are in Utica, Syracuse and between Rochester and Buffalo. Those sites will also be discussed at the 87/90 summit.

“As part of that industry attraction effort, CEG has determined that global industries look at a much larger geographic and demographic target when making major business decisions,” Kennedy said. “We think it’s important to highlight New York’s full tech corridor — from the Canadian border to New York City and from Albany to Buffalo — and our program reflects that diversity.”

When asked if the SUNY Poly scandal had tainted the Capital Region in the eyes of the industry, Kennedy said that too many research advances and commercial success have happened to cause permanent damage.

“That’s a critical mass that has been built over several decades and has put us on the map for these industries,” Kennedy said. “We need to continue to highlight those successes… so the corporate decision-makers in this sector know we’re still here, still aggressive and still mean business.”

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