Skywater CEO Thomas Sonderman is building a new type of chip foundry.
SkyWater Technology CEO Thomas Sonderman is building a new type of chip foundry that shifts onerous multi-billion–dollar fab investments to customers who bear most of the cost.
The only 100% U.S.-owned foundry was created in 2017 after private equity investor Oxbow Industries acquired Cypress Foundry Solutions, a subsidiary of now-defunct Cypress Semiconductor, and installed former AMD executive Sonderman at the helm of the new company.
By creating a “technology-foundry model, we went after this sweet spot of the customization/volume gap that required a lot of innovation,” Sonderman told EE Times in an exclusive interview. “It also allowed us to market ourselves as different than just another specialty foundry.”
“The majority of SkyWater’s revenue has been from ‘technology as a service’ or from clients with high R&D budgets,” Gartner Research VP Sam Wang told EE Times. “Recently, SkyWater has offered an open-source PDK and MPW [multi-product wafer] services, and they are now attractive to many new clients with small R&D budgets.”
SkyWater also has a key customer in the U.S. Department of Defense (DoD), which has made the company a trusted supplier as part of the Defense effort to create a secure supply chain within the U.S.
Following the Minnesota fab that SkyWater got with the Cypress acquisition, the company added an existing Florida facility in 2021 and this year announced a new $1.8 billion fab in Indiana. The first two fabs make 200-mm wafers, and the Indiana facility may make both 200-mm and 300-mm wafers.
SkyWater aims to fill the gap between ideation of a solution to a problem and the realization of that idea in a physical product, TechInsights vice chair Dan Hutcheson told EE Times.
“They are doing it with a unique set of skills that were already there in Minnesota at a scale small enough to provide better service and be more cost-effective than a large-scale foundry,” he said.
In the next two years, SkyWater aims to become one of a few foundries providing customers start-to-finish wafer fabrication and chip assembly in the U.S.
“The goal is to bring the most advanced, heterogeneous-integration technology to the U.S., starting on a 200-mm platform,” Sonderman said. “We’re working on wafer fan-out packaging. There’s also a wafer-bonding technology with hybrid bonding technology that we license.”
As Covid locked the world down, SkyWater started an advanced packaging operation in Florida, TechInsights’ Hutcheson noted. “They realized a new technology from idea to silicon and onto a packaged device ready for insertion.”
The idea that a chip foundry should take all the risk of investing billions of dollars in manufacturing has been a problem for companies that compete with the likes of TSMC or Samsung, Sonderman said. Instead of shouldering the investment alone, SkyWater expects customers to bear development costs for bringing their technologies to market.
“What you get is the benefit of co-optimization,” he said. “You get to develop your product while we’re developing the process,” resulting in a differentiated product that gets to market faster “because you’re making that investment, and we’re going to ramp your product to volume all inside the same fab.”
SkyWater competes by combining a low-margin wafer business in the mature process nodes with high-margin advanced technology services (ATS).
“Two-thirds of our revenue come from this ATS portion of the business, and it only consumes 5% of the total activities in the fab,” Sonderman said.
Far from the leading edge
While top foundries TSMC and Samsung are starting production of 3-nm chips with the world’s highest transistor density, SkyWater does most of its production at 90 nm.
“The U.S. government ironically is still mainly focused at 90 nm,” Sonderman said, adding that SkyWater makes the world’s most advanced radiation-hardened ASICs at that node.
The company uses the technology to make read-out ICs that process thermal information in night-vision goggles or vision systems on an F-35 fighter jet.
SkyWater will compete for the DoD business with Tower Semiconductor of Israel and soon the company acquiring Tower, Intel Foundry Services (IFS). Sonderman expects IFS will offer the DoD 45-nm production, while another rival, GlobalFoundries, will be competing at the 28-nm node.
“In many ways, the smaller you make the transistors, the leakier they are,” he said. “If you think about things that go up in space, you want to conserve power as much as possible. If you can make the tradeoff for performance, you don’t necessarily need that very advanced node.”
SkyWater is working with the Massachusetts Institute of Technology (MIT) and the Defense Advanced Research Projects Agency (DARPA) on a 3D SoC program. SkyWater is adding carbon nanotube layers to its 90-nm CMOS process to make FETs coupled with resistive RAM.
“By creating additional functionality and additional interconnectivity, you can make that 90-nm device run at sub-10-nm power-consumption levels,” Sonderman said. “You end up getting the performance benefit without all the cost. It’s literally a heterogeneous-integration solution because you’re building a skyscraper on top of the foundational CMOS device.”
Google open-source project
In September, SkyWater became the foundry for a project with the Department of Commerce’s National Institute of Standards and Technology (NIST) and Google. NIST and Google are providing funding for researchers to develop chips.
Google will pay the initial cost of setting up production and will subsidize the first production run. NIST will design the circuitry for the chips. The circuit designs will be open-source.
The project has been scaling up since early this year, Sonderman said.
Google and SkyWater a few months ago partnered on a 90-nm process transferred from MIT Lincoln Labs.
“Think of it as 90-nm technology without the rad-hard components,” he said.
Secure supply chain
Within a few years, SkyWater expects to provide front-end chip fabrication, as well as back-end assembly and test, from its Florida facility as a trusted supplier.
“Part of the strategy for Florida was to do just that,” Sonderman said. “The DoD was clearly a supporter. The appetite within the product community to having all this in the U.S. is as high as I’ve ever seen. The argument is, ‘Why do I want to make the wafer in the U.S. if I have to send it to Asia to get it singulated?’”
This month, SkyWater and BRIDG, a public-private partnership, completed Phase 1 of a DoD-funded program to develop a baseline fabrication flow for silicon bridge interposers, which are increasingly used in heterogeneous-integration applications.
CHIPS Act helping with U.S. security
The recently passed CHIPS and Science Act has helped to address vulnerabilities in U.S. national security, Sonderman said.
“All of a sudden, the DoD got themselves in a situation where all the chips were coming from places that weren’t controlled by the United States. [Now] they have a seat at the table for the decision making, for where things are going to be funded. It’s important to keep that in mind, as that is the ultimate objective of a lot of this investment—to make sure we have a secure supply chain within the U.S. for things that are critical to the economy and national security.”
Sonderman expects that by 2024, SkyWater will have multiple examples of “complete supply chains down to the package die level.”
SkyWater expects to win some of the $52 billion in CHIPS Act subsidies when the U.S. government begins to disburse the money next year.
The DoD will allocate about $2 billion as part of its recently announced Microelectronics Commons program, Sonderman said in a Nov. 7 conference call with investors and journalists. “We are actively involved with that. This is to create innovation centers around the lab-to-fab concept.
“There’s $11 billion for R&D and innovation. This is the National Semiconductor Technology Center concept, of which $5 billion is tied to advanced packaging and heterogeneous integration. I believe we’re well-positioned for those.”
SkyWater has more than 50 customers, to which it offers eight platforms of specialized technologies, including radiation hardening and microelectromechanical systems (MEMS) on standard CMOS chips, as well as mixed signal.
The company’s main mixed-signal customer is Infineon.
Infineon is using programmable SoC technology embedded with power-management capabilities to create microcontrollers and other devices that go into new products like Fitbit smartwatches. Parade Technologies of Taiwan is also using SkyWater’s mixed-signal tech in display devices.
SkyWater’s key MEMS customer is Rockley Photonics, which makes photonics ICs for multi-application, health-related sensing and monitoring applications.
DARPA is SkyWater’s main customer for carbon-nanotube technology, Sonderman said.
“They want to be able to have high levels of computation on edge devices so you don’t need a cloud when you’re in the middle of a conflict. You don’t have to send data to the cloud.”
In this year’s third quarter, SkyWater’s revenue rose to $52 million, or 49% from the same period last year. The company came closer to profitability after its net loss narrowed to $7 million from the same period last year.
As 2022 draws to a close after a multi-year chip-industry surge, SkyWater finds itself constrained by shortages of production equipment and engineers.
“That is a big issue, getting equipment,” he said. “We have equipment that we’ve ordered that we’re being told could take up to two years for us to get. A lot of stuff we’re buying is more geared toward development at this point. I don’t envision our tools getting canceled, but I sure would like to get them a lot faster.
“Engineers are still very difficult to find. We had a unique playing field before everybody got excited about the CHIPS Act because we were the only guys hiring for a fab in the U.S. Now, you’ve got TSMC building a fab, you’ve got Intel wanting to build a fab in Ohio. The market is just a lot more competitive.”
This article was originally published on EE Times.
Alan Patterson has worked as an electronics journalist in Asia for most of his career. In addition to EE Times, he has been a reporter and an editor for Bloomberg News and Dow Jones Newswires. He has lived for more than 30 years in Hong Kong and Taipei and has covered tech companies in the greater China region during that time.