UMS Holdings

[mrEngineer]

3) Why is there a shortage of 28nm Snapdragon S4 chip?

4) Why Qualcomm had to plan to launch 4 new lines for 28nm Snapdragon S4 chips?

5) There is an over-capacity issue in the semiconductor industry as claimed by many, but on the other hand, there is a shortage of 28nm Snapdragon S4 chips? Why there exists such a mismatch?

6) Is there a production overcapacity in of chips (IC or Integrated Circuit) that the market does not want?

7) Is there an under-capacity in the production of chips (IC) that the market wants?

8) Is there an under-investment in new technological capabilities (facilities/semi-tools etc) in producing semiconductor devices that the market demands?

Hi Boon,

In order for you to understand a bit better on IC industry. Take a look at how UBS tried to teardown Iphone 4s. (http://9to5mac.com/2011/10/11/iphone-4s-...-analysis/) There are many more components that are required to put together in order to form a single electronic product on top of the processor and the industry needs that to survive.

No doubt the processor (S4 or A5 or whatever) can be found at every electronic product as it serves as the brain of the product, but one should note that one wafer can already give you 500+ A5 chips (depending on yield, http://www.anandtech.com/show/5789/the-i...a5-tested/ ), with typically one lot is 25 wafers. Based on the demand for Samsung Galaxy S2, 10 million units were sold ( http://www.appolicious.com/tech/articles...5-upgrades ), you work it backwards you will get 10mil/500chips = 20,000 wafers for the entire S2 product line. Maximum production capacity of our Global Foundaries Singapore Fab 7 (and there are Fab 1-13) approximately 60,000 wafers per month, (http://www.globalfoundries.com/manufacturing/300mm.aspx ). Let say even if the yield is 20% for advanced technology (which is ridiculous as the fab will confirm make a loss), you will need 20,000/0.2 = 100,000 wfrs. This can all be produced within one fab in few months. Now, think about the number of fabs around the world.

In summary of what I am trying to say here, it is not conclusive to use one single component to justify the entire semicon supply chain is unable to meet production demands and require capex to buy new equipments to do so. The whole semicon supply chain supplies different components for different parts of one electronic product and we should look at it on an overall basis. Furthermore, I have previously explained, it is not so easy for any fab to commission any new process, let alone the equipment for any products. Such commissioning needs alot of justification and time from the management, engineers etc. Another point I want to make is that we should sometimes take news or reports with a pinch of salt.