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Globalfoundries Spins Out Custom Chip Business

Globalfoundries, one of the largest contract chip manufacturers, is forming a new company to deliver custom ASICs using a wide range of process technologies, including 12-nanometers and 14-nanometers. Avera Semiconductor was formed on Thursday as part of chief executive Thomas Caulfield’s strategy to tighten the Santa Clara, California-based company’s focus around core products.

Globalfoundries has been realigning its business in recent months, trying to boost its position in wireless networking, data centers, automobiles, factories and Internet of Things applications that demand energy efficiency computing. Avera is focused on many of the same markets including machine learning, where custom chips—more commonly known as application-specific integrated circuits, or ASICs—have started to take hold.

The changes were made to counterbalance the turmoil inside Globalfoundries, the world's second largest foundry business, which now employs 17,000 people after eliminating around 1,000 jobs over the last year. The company has pulled out of manufacturing chips based on the 7-nanometer process node. The decision came after acknowledging that it would not have had enough customers to recover billions of dollars in development costs.

Globalfoundries has instead focused on where it has differentiated technology. The company has moved to expand the market for chips based on fully-deleted silicon-on-insulator technology, which are projected to enter production based on 22-nanometer manufacturing in the first half of 2019. The company has also announced plans to combine radio frequency, memory and analog functions into its 12-nanometer processes.

Globalfoundries said that Avera would be able to engage a broader range of customers than it could alone. That includes systems companies that are increasingly investing in ASIC development. As an independent subsidiary with 850 employees, around $500 million in annual revenues more than $3 billion in orders for chips based on 14-nanometer technology, Avera will also help customers gain access to alternate 7-nanometer process nodes.

“I couldn’t imagine a better time to launch a new venture focused on delivering custom ASIC solutions,” Kevin O’Buckley, chief executive of Avera, which became part of Globalfoundries following the 2015 acquisition of IBM Microelectronics, said. “Data traffic and bandwidth demands have exploded, and next-generation systems for cloud and communications must deliver more performance and handle more complexity than ever before.”

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