You may already have heard today’s big news in the semiconductor fabless ecosystem that Intel is apparently in talks to buy Altera. I embarrassed myself predicting that Samsung were in talks to buy Freescale (which, of course, they might have been but NXP won that particular race). But this time it is definite enough that the WSJ covered ittoo. Altera had a market cap of $10.4B so this is a big acquisition, up there with the aforementioned NXP/Freescale merger.
The Wall Street types (by which I mean people who work in finance, not the WSJ people) are all trying to predict the effect that this will have on TSMC, since they assume that if the deal is done tomorrow morning that Intel will be making all Altera FPGAs from, maybe, tomorrow evening onwards.
But here is the reality. Altera used TSMC down to 20nm. Then it famously switched to Intel foundry for 14nm. It is right now working on taping out those first parts. On their earnings call they admitted that this was slipping from Q1 to Q2 (to be fair, Xilinx said the same thing about their parts in TSMC 16FF+). I would not in the least bit be surprised to find that they slip further still since I have heard that the program is not going smoothly. Switching from a foundry that truly knows what is doing, TSMC, to one that is just starting in the business, Intel, was never going to be easy.
Once those parts tape out (let’s be generous and keep to the Q2 estimate) they need to be prototyped and then early production parts shipped to customer to design them into things like LTE base-stations or routers, then those systems need to go into manufacturing and get into volume and then Altera will get volume orders. That will be in 2017 or 2018. Until then, every FPGA that Altera ships will be manufactured by TSMC. If that sounds a little unlikely, it is just the same as Intel’s LTE modem line which is also manufactured by TSMC and not in-house at Intel, and is unlikely to be until 2017 it seems. And that is a part that they would dearly love to bring inside since it means they can then integrate it with their application processors for tablets and mobile.
In the meantime, every part shipped by Xilinx will also be manufactured by TSMC (or maybe there are some very old parts still shipping from UMC, Xilinx’s old foundry until 28nm) and every Lattice part will ship from UMC.
This makes it all sound very important but actually the number of wafers that FPGA companies need is not that high compared to anything going into mobile devices.
In my opinion this is really negative for Intel foundry. The implication is that Intel cannot compete in foundry without owning its customers. The only other publicly announced foundry partners for Intel I know of are Tabula (who shut down recently) and Achronix. Both Tabula and Achronix have Intel as an investor, so partially owning their customer. Also they were both in the FPGA business and so compete with Altera. I’m guessing that Achronix will not be happy if this happens.
See also Tabula Closes Its Doors
Another wrinkle. Altera have a close relationship with ARM. In fact their next generation products (the one that Intel will make) contain ARM processors. That was unlikely enough when Intel was the foundry but Altera was the company designing the parts and selling them. If Intel buys Altera then they will be designing, marketing and selling ARM parts. Given Intel’s obsession with Atom (see Intel’s failed mobile strategy) I wonder how that will play out.
See also Pigs Fly. Altera Goes with ARM on Intel 14nm
I talked to Xilinx but after thinking for a bit they decided not to comment. And kudos for Kevin Morris at EE Journal for his piece last year When Intel Buys Altera.