Foundry Giants Forced to Transform
Foundry giants like UMC and GlobalFoundries pivot from mature to advanced processes amid Chinese competition and AI chip demand. Can they succeed?
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Once upon a time, "not burning money, steady profits" from mature processes was the lifeblood of numerous second-tier foundries.
In the wave of TSMC and Samsung frantically burning money to chase 3nm and 5nm advanced processes, they made what seemed like a rational choice: exit the bottomless money-burning advanced process race and focus on the more "stable" mature process track.
GlobalFoundries announced in 2018 that it would suspend development of processes below 7nm, shifting its focus to mature processes of 12nm and above; while UMC also made it clear in 2019 that it would focus on processes of 28nm and above.
Their logic was simple and clear: mature processes required relatively less investment, had a stable customer base, and although profit margins were not as high as those of advanced processes, they were stable and controllable.
However, times have changed. What was once a safe harbor is now turbulent. The fierce impact from Chinese domestic foundries, intense price wars in the mature process market, and accelerating customer losses have made these once "smart" players increasingly restless.
What's even more surprising is that they have turned their attention back to the advanced processes they once scorned.
Is this an inevitable strategic adjustment or a desperate gamble? Let's explore.
"Changing Heart" Mature Process Manufacturers
Not long ago, Nikkei Asia broke major news: UMC is evaluating the feasibility of developing a 6nm process, targeting support for future AI accelerators, automotive SoCs, Wi-Fi/RF chips, and other high-complexity applications. This is undoubtedly a major shift for a company that had publicly stated it would no longer pursue advanced processes.
More noteworthy is that UMC is not fighting alone this time, but has partnered with Intel. The two companies have announced they will expand cooperation in Arizona, USA, by 2027, establishing a production line supporting 6nm nodes. UMC CFO David Liu stated bluntly that the company has no intention of bearing the high investment costs of advanced processes alone and must share financial and technical risks through a "partnership model."
Another "retired veteran," GlobalFoundries, has also begun to signal renewed interest in advanced processes. As early as 2018, GlobalFoundries announced the termination of process development below 7nm, completely abandoning direct confrontation with TSMC and Samsung. However, with changing customer demands and increasing anxiety about products above 10nm being unable to meet certain markets, GlobalFoundries has had to reassess its technical roadmap. Although it has not explicitly proposed restarting processes below 7nm, its recent frequent appearances in AI chip foundry rumors reveal an intriguing attitude.