What's Apple Want With an Old Maxim Fab?

200mm R&D fab likely to be used for prototyping, building MEMS or mix-signal devices.

From time to time, speculation emerges from some far flung corner of the Internet that Apple Inc. wants to stop relying on foundry partners and build its own A-series microprocessors. Predictably, this speculation heated up again this week when Apple acquired an R&D fab formerly belonging to Maxim Integrated Products Inc.

But, of course, Apple certainly has no intention of building A-series processors in this facility, which is a 200mm fab that uses 90nm lithography and is capable of about 7,000 wafer starts per month. This is not the place to build some of the most advanced chips in the world, and 84,000 wafers per year won’t satisfy Apple’s needs. The fab is also located in San Jose, Calif., where as we all know nobody builds chips anymore, for good reason.

Keep in mind that Apple does not even build its own end products, famously relying on Foxconn for the manufacture of its iPhones, iPads and other devices. Why, then, would it want to go way upstream and get involved in building its own processors, an immensely complicated enterprise in which it has no experience? The only possible reason could be the legitimate fear of exposing its intellectual property, but the economics simply don’t make sense.

Apple, being Apple, is not saying what it plans to use the R&D fab for (unsurprisingly, Apple did not respond to request for comment for this story). So we are left to speculate.

There are dozens of things that Apple may be planning to do with this 70,000-square-foot fab, which it bought for $18.2 million, including stripping it down, selling off the equipment and turning it into an office building. But, most likely, Apple plans to use the fab to build MEMS sensors or mixed-signal devices that can be built with more mature process technology, or just to do some prototyping.

“For them to go into production at the leading-edge, I just don’t see it happening,” said Dean Freeman, a research vice president at Gartner Inc. “They may have a device that they can’t get built to their specifications or maybe they have a new MEMS device that is going to revolutionize the next iPhone.”

The other thing it could be, according to Freeman, “is just a place to say, ‘Okay, we want to be able to play with and prototype some stuff.’…Give our designers the opportunity to go ahead and run some silicon. That might make some sense.”

Freeman noted that the fab is located right next door to Samsung Electronics Co. Ltd.’s new Silicon Valley facility and less than two miles from Taiwan Semiconductor Manufacturing Co. Ltd. (TSMC)’s San Jose facility. Samsung and TSMC are Apple’s two main foundry partners. That proximity would make it easier for Apple designers to sit down face to face with their representatives from their foundries, Freeman noted.

“We can speculate for hours on what [Apple] might be doing with this fab,” Freeman said. “We won’t know until we know, if we ever find out.”

There has long been a sentiment that Apple wants to stop relying on Samsung in particular for the manufacture of its processors. The two companies have a complicated relationship, to say the least. In addition to being its main foundry partner, Samsung is also Apple’s largest rival in the handset space and is reported to have recently sent Apple a $548 million check stemming from a 2012 patent infringement case. It could be that Apple would rather that Samsung—or anybody for that matter —not get that intimately familiar with its chip designs. This could be a reasonable, if expensive, decision.

But if Apple arrived at that conclusion, it wouldn’t build its processors in San Jose. As alluded to earlier, nobody does that anymore, simply because the cost of real estate and labor and real estate in Silicon Valley make it economically unfeasible.

“If I’m doing that, I’m building a fab in Austin or Arizona where I’ve got cheap real estate and engineers that I can steal from Intel or Samsung,” Freeman said. “The economics [of Apple building processors in San Jose] just don’t make any sense.”

Even in a place where real estate and labor are less expensive than Silicon Valley, though, Apple couldn’t justify the billions of dollars of investment required to build its own fab, Freeman added. “It doesn’t make sense for Apple to build a fab,” he said. “Back in the 1980s, early 1990s, yeah. In 2015, as cheap as silicon is, it doesn’t make sense.”

—Dylan McGrath covers the semiconductor industry for EE Times.

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