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Why Did Apple Buy a Fab?

Why Did Apple Buy a Fab?
by Scotten Jones on 12-16-2015 at 4:00 pm

 It was announced today that Apple has purchased a 200mm fab located in San Jose from Maxim Integrated Products for $18.2 million dollars. My initial reaction to this announcement was shock but then I started thinking through what Apple might use the fab for and I concluded this announcement is less significant and surprising than it may appear at first look.

The first point to make is this is a relatively old and small 200mm fab and is not suitable for production of Apple’s applications processors. According to the SEMI World Fab Watch Database the fab was built in 1987 and that is really old by fab standards. The same database also indicates that the capacity of the fab fully ramped was 10,000 wafers per month and that is also low by fab standard. Apple’s latest applications processors are made using 16nm/14nm FinFET processes with 10nm in development. 200mm equipment has only been pushed down to around 45nm and is simply not available for smaller nodes. Even if it was possible to make applications processors in this fab, low volume 200mm production wouldn’t be economical.

So if they aren’t going to make the applications processors in the fab what are they going to do with it.

There are two scenarios that I can envision:

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  • Apple may use the fab to develop sensors or displays using MEMS technology. This would likely be a good fab for MEMS development. Potentially it could be used for analog applications as well but I think that is less likely. Apple has historically outsourced all of their production and some kind of R&D usage fits their corporate strategy.
  • Convert the fab to a data center. Over the last several years the practice of buying older fabs and converting them to data centers has emerged. Fabs have large power feeds and large air conditioning systems both of which are needed for data centers. Fabs also typically have raised floors that are useful for connecting all of the servers together.

    In summary, although at first look Apple buying a fab may be surprising, a deeper look into the specifics of the fab they bought signals that this is likely less significant than it first appears. It is most likely for small scale R&D most likely into some kind of MEMS technology. Alternately it may not even continue to be used as a fab and instead be converted to a data center. It certainly doesn’t present any threat to TSMC and Samsung as Apple foundry providers.


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