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The foundry model is a
microelectronics Microelectronics is a subfield of electronics. As the name suggests, microelectronics relates to the study and manufacture (or microfabrication) of very small electronic designs and components. Usually, but not always, this means micrometre-sc ...
engineering and manufacturing
business model A business model describes how an organization creates, delivers, and captures value,''Business Model Generation'', Alexander Osterwalder, Yves Pigneur, Alan Smith, and 470 practitioners from 45 countries, self-published, 2010 in economic, soci ...
consisting of a
semiconductor fabrication plant In the microelectronics industry, a semiconductor fabrication plant (commonly called a fab; sometimes foundry) is a factory where devices such as integrated circuits are manufactured. Fabs require many expensive devices to function. Estimates ...
, or foundry, and an
integrated circuit design Integrated circuit design, or IC design, is a sub-field of electronics engineering, encompassing the particular logic and circuit design techniques required to design integrated circuits, or ICs. ICs consist of miniaturized electronic componen ...
operation, each belonging to separate companies or subsidiaries.
Integrated device manufacturer An integrated device manufacturer (IDM) is a semiconductor company which designs, manufactures, and sells integrated circuit (IC) products. IDM is often used to refer to a company which handles semiconductor manufacturing in-house, compared to a ...
s (IDMs) design and manufacture integrated circuits. Many companies, known as
fabless semiconductor companies Fabless manufacturing is the design and sale of hardware devices and semiconductor chips while outsourcing their fabrication (or ''fab'') to a specialized manufacturer called a semiconductor foundry. These foundries are typically, but not excl ...
, only design devices; merchant or
pure play A pure play company focuses solely on a particular product or activity. Investing in a pure play company can be considered as investing in a particular commodity or product of a company. Pure play firms either specialize in a specific niche, or hav ...
foundries only manufacture devices for other companies, without designing them. Examples of IDMs are
Intel Intel Corporation is an American multinational corporation and technology company headquartered in Santa Clara, California. It is the world's largest semiconductor chip manufacturer by revenue, and is one of the developers of the x86 seri ...
,
Samsung The Samsung Group (or simply Samsung) ( ko, 삼성 ) is a South Korean multinational manufacturing conglomerate headquartered in Samsung Town, Seoul, South Korea. It comprises numerous affiliated businesses, most of them united under the ...
, and
Texas Instruments Texas Instruments Incorporated (TI) is an American technology company headquartered in Dallas, Texas, that designs and manufactures semiconductors and various integrated circuits, which it sells to electronics designers and manufacturers globall ...
, examples of fabless companies are
AMD Advanced Micro Devices, Inc. (AMD) is an American multinational semiconductor company based in Santa Clara, California, that develops computer processors and related technologies for business and consumer markets. While it initially manufact ...
,
Nvidia Nvidia CorporationOfficially written as NVIDIA and stylized in its logo as VIDIA with the lowercase "n" the same height as the uppercase "VIDIA"; formerly stylized as VIDIA with a large italicized lowercase "n" on products from the mid 1990s to ...
, and
Qualcomm Qualcomm () is an American multinational corporation headquartered in San Diego, California, and incorporated in Delaware. It creates semiconductors, software, and services related to wireless technology. It owns patents critical to the 5G, 4 ...
, and examples of pure play foundries are
GlobalFoundries GlobalFoundries Inc. (GF or GloFo) is a multinational semiconductor contract manufacturing and design company incorporated in the Cayman Islands and headquartered in Malta, New York. Created by the divestiture of the manufacturing arm of AMD, t ...
,
TSMC Taiwan Semiconductor Manufacturing Company Limited (TSMC; also called Taiwan Semiconductor) is a Taiwanese multinational semiconductor contract manufacturing and design company. It is the world's most valuable semiconductor company, the world' ...
, and UMC. Integrated circuit production facilities are expensive to build and maintain. Unless they can be kept at nearly full use, they will become a drain on the
finances Finance is the study and discipline of money, currency and capital assets. It is related to, but not synonymous with economics, the study of production, distribution, and consumption of money, assets, goods and services (the discipline of f ...
of the company that owns them. The foundry
model A model is an informative representation of an object, person or system. The term originally denoted the plans of a building in late 16th-century English, and derived via French and Italian ultimately from Latin ''modulus'', a measure. Models c ...
uses two methods to avoid these costs: fabless companies avoid costs by not owning such facilities. Merchant foundries, on the other hand, find work from the worldwide pool of fabless companies, and by careful
scheduling A schedule or a timetable, as a basic time-management tool, consists of a list of times at which possible tasks, events, or actions are intended to take place, or of a sequence of events in the chronological order in which such things are i ...
,
pricing Pricing is the process whereby a business sets the price at which it will sell its products and services, and may be part of the business's marketing plan. In setting prices, the business will take into account the price at which it could acqui ...
, and contracting keep their plants at full use.


History

Originally, microelectronic devices were manufactured by companies that both designed and produced the devices. These manufacturers were involved in both the
research and development Research and development (R&D or R+D), known in Europe as research and technological development (RTD), is the set of innovative activities undertaken by corporations or governments in developing new services or products, and improving exist ...
of manufacturing processes and the research and development of
microcircuit An integrated circuit or monolithic integrated circuit (also referred to as an IC, a chip, or a microchip) is a set of electronic circuits on one small flat piece (or "chip") of semiconductor material, usually silicon. Large numbers of tiny M ...
design. The first pure play semiconductor company is the Taiwan Semiconductor Manufacturing Corporation, a
spin-off Spin-off may refer to: *Spin-off (media), a media work derived from an existing work * Corporate spin-off, a type of corporate action that forms a new company or entity * Government spin-off, civilian goods which are the result of military or gov ...
of the government
Industrial Technology Research Institute The Industrial Technology Research Institute (ITRI; ) is a technology research and development institution in Taiwan. Founded in 1973, ITRI has contributed to moving Taiwan's industries from labor-intensive to innovation-driven. ITRI is hea ...
, which split its design and fabrication divisions in 1987, a model advocated for by
Carver Mead Carver Andress Mead (born May 1, 1934) is an American scientist and engineer. He currently holds the position of Gordon and Betty Moore Professor Emeritus of Engineering and Applied Science at the California Institute of Technology (Caltech), ...
in the U.S., but deemed too costly to pursue. The separation of design and fabrication became known as the foundry model, with
fabless manufacturing Fabless manufacturing is the design and sale of hardware devices and semiconductor chips while outsourcing their fabrication (or ''fab'') to a specialized manufacturer called a semiconductor foundry. These foundries are typically, but not exclu ...
outsourcing to semiconductor foundries.
Fabless semiconductor companies Fabless manufacturing is the design and sale of hardware devices and semiconductor chips while outsourcing their fabrication (or ''fab'') to a specialized manufacturer called a semiconductor foundry. These foundries are typically, but not excl ...
do not have any semiconductor fabrication capability; and contract production from a merchant foundry manufacturer. The fabless company concentrates on the research and development of an IC-product; the foundry concentrates on manufacturing and testing the physical product. If the foundry does not have any semiconductor design capability, it is a pure play semiconductor foundry. An absolute separation into fabless and foundry companies is not necessary. Some companies continue to exist which perform both operations and benefit from the close coupling of their skills. Some companies manufacture some of their own designs and contract out to have others manufactured or designed, in cases where they see value or seek special skills. The foundry model is a business vision that seeks to optimize productivity.


MOSIS

The very first merchant foundries were part of the
MOSIS MOSIS (Metal Oxide Semiconductor Implementation Service) is multi-project wafer service that provides metal–oxide–semiconductor (MOS) chip design tools and related services that enable universities, government agencies, research institutes an ...
service. The MOSIS service gave limited production-access to designers with limited means, such as students, university researchers, and engineers at small
startups A startup or start-up is a company or project undertaken by an entrepreneur to seek, develop, and validate a scalable business model. While entrepreneurship refers to all new businesses, including self-employment and businesses that never intend t ...
. The designer submitted designs and these submissions were manufactured with the commercial company's extra capacity. Manufacturers could insert some
wafers A wafer is a crisp, often sweet, very thin, flat, light and dry biscuit, often used to decorate ice cream, and also used as a garnish on some sweet dishes. Wafers can also be made into cookies with cream flavoring sandwiched between them. They ...
for a MOSIS design into a collection of their own wafers when a processing step was compatible with both operations. The commercial company (serving as foundry) was already running the process, so they were effectively being paid by MOSIS for something they were already doing. A factory with excess capacity during slow periods could also run MOSIS designs to avoid having expensive capital equipment standing idle. Under-use of an expensive manufacturing plant could lead to the financial ruin of the owner, so selling surplus
wafer A wafer is a crisp, often sweet, very thin, flat, light and dry biscuit, often used to decorate ice cream, and also used as a garnish on some sweet dishes. Wafers can also be made into cookies with cream flavoring sandwiched between them. They ...
capacity was a way to maximize the fab's use. Hence, economic factors created a climate where fab operators wanted to sell surplus wafer-manufacturing capacity, and designers wanted to purchase manufacturing capacity rather than try to build it. Although MOSIS opened the doors to some fabless customers, earning additional
revenue In accounting, revenue is the total amount of income generated by the sale of goods and services related to the primary operations of the business. Commercial revenue may also be referred to as sales or as turnover. Some companies receive revenue ...
for the foundry and providing inexpensive service to the customer, running a business around MOSIS production was difficult. The merchant foundries sold wafer capacity on a surplus basis, as a secondary business activity. Services to the customers were secondary to the commercial business, with little
guarantee Guarantee is a legal term more comprehensive and of higher import than either warranty or "security". It most commonly designates a private transaction by means of which one person, to obtain some trust, confidence or credit for another, engages ...
of support. The choice of merchant dictated the design, development flow, and available techniques to the fabless customer. Merchant foundries might require proprietary and non-portable preparation steps. Foundries concerned with protecting what they considered
trade secret Trade secrets are a type of intellectual property that includes formulas, practices, processes, designs, instruments, patterns, or compilations of information that have inherent economic value because they are not generally known or readily asc ...
s of their
methodologies In its most common sense, methodology is the study of research methods. However, the term can also refer to the methods themselves or to the philosophical discussion of associated background assumptions. A method is a structured procedure for bri ...
might only be willing to release data to designers after an onerous nondisclosure procedure.


Dedicated foundry

In 1987, the world's first dedicated merchant foundry opened its doors: Taiwan Semiconductor Manufacturing Company (TSMC). The distinction of 'dedicated' is in reference to the typical merchant foundry of the era, whose primary business activity was building and selling of its own IC-products. The dedicated foundry offers several key advantages to its customers: first, it does not sell finished IC-products into the
supply Supply may refer to: *The amount of a resource that is available **Supply (economics), the amount of a product which is available to customers **Materiel, the goods and equipment for a military unit to fulfill its mission *Supply, as in confidenc ...
channel; thus a dedicated foundry will never compete directly with its fabless customers (obviating a common concern of fabless companies). Second, the dedicated foundry can scale production capacity to a customer's needs, offering low-quantity shuttle services in addition to full-scale
production Production may refer to: Economics and business * Production (economics) * Production, the act of manufacturing goods * Production, in the outline of industrial organization, the act of making products (goods and services) * Production as a stat ...
lines. Finally, the dedicated foundry offers a "COT-flow" (customer owned tooling) based on industry-standard EDA systems, whereas many IDM merchants required its customers to use proprietary (non-portable) development tools. The COT advantage gave the customer complete control over the design process, from concept to final design.


Foundry sales leaders by year

* Pure-play semiconductor foundry is a company that does not offer a significant amount of IC products of its own design, but instead operates
semiconductor fabrication plant In the microelectronics industry, a semiconductor fabrication plant (commonly called a fab; sometimes foundry) is a factory where devices such as integrated circuits are manufactured. Fabs require many expensive devices to function. Estimates ...
s focused on producing ICs for other companies. *
Integrated device manufacturer An integrated device manufacturer (IDM) is a semiconductor company which designs, manufactures, and sells integrated circuit (IC) products. IDM is often used to refer to a company which handles semiconductor manufacturing in-house, compared to a ...
(IDM) semiconductor foundry is where companies such as Texas Instruments, IBM, and Samsung join in to provide foundry services as long as there is no conflict of interest between relevant parties.


2017


2016–2014


2013


2011


2010


2009–2007

As of 2009, the top 17 semiconductor foundries were: (1) Now acquired by GlobalFoundries


2008–2006

As of 2008, the top 18 pure-play semiconductor foundries were: (1) Merged with CR Logic in 2008, reclassified as an IDM foundry


2007–2005

As of 2007, the top 14 semiconductor foundries include: For ranking in worldwide:


2004

As of 2004, the top 10 pure-play semiconductor foundries were:


Financial and IP issues

Like all industries, the semiconductor industry faces upcoming challenges and obstacles. The cost to stay on the leading edge has steadily increased with each generation of chips. The financial strain is being felt by both large merchant foundries and their fabless customers. The cost of a new foundry exceeds $1 billion. These costs must be passed on to customers. Many merchant foundries have entered into joint ventures with their competitors in an effort to split research and design expenditures and fab-maintenance expenses. Chip design companies sometimes avoid other companies' patents simply by purchasing the products from a licensed foundry with broad cross-license agreements with the patent owner. Stolen design data is also a concern; data is rarely directly copied, because blatant copies are easily identified by distinctive features in the chip, placed there either for this purpose or as a byproduct of the design process. However, the data including any procedure, process system, method of operation or concept may be sold to a competitor, who may save months or years of tedious
reverse engineering Reverse engineering (also known as backwards engineering or back engineering) is a process or method through which one attempts to understand through deductive reasoning how a previously made device, process, system, or piece of software accompli ...
.


See also

*
Fabless manufacturing Fabless manufacturing is the design and sale of hardware devices and semiconductor chips while outsourcing their fabrication (or ''fab'') to a specialized manufacturer called a semiconductor foundry. These foundries are typically, but not exclu ...
*
Contract manufacturer A contract manufacturer (CM) is a manufacturer that contracts with a firm for components or products (in which case it is a turnkey supplier). It is a form of outsourcing. A contract manufacturer performing packaging operations is called copacker o ...
*
Integrated device manufacturer An integrated device manufacturer (IDM) is a semiconductor company which designs, manufactures, and sells integrated circuit (IC) products. IDM is often used to refer to a company which handles semiconductor manufacturing in-house, compared to a ...
*
Semiconductor fabrication Semiconductor device fabrication is the process used to manufacture semiconductor devices, typically integrated circuit (IC) chips such as modern computer processors, microcontrollers, and memory chips such as NAND flash and DRAM that are pre ...
*
Original design manufacturer An original design manufacturer is a company that designs and manufactures a product that is eventually rebranded by another firm for sale. Such companies allow the firm that owns or licenses the brand to produce products while having to engage i ...
*
Original equipment manufacturer An original equipment manufacturer (OEM) is generally perceived as a company that produces non-aftermarket parts and equipment that may be marketed by another manufacturer. It is a common industry term recognized and used by many professional or ...
* Semiconductor fabless sales leaders by year *
Semiconductor equipment sales leaders by year This article lists rankings of semiconductor equipment suppliers by sales (in US-Dollar). Definition An IC equipment supplier's revenue is classified as sales of systems used to manufacture semiconductors, thin-film heads, MEMS, and integrated ci ...


References

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External links


Compound Semiconductor.net: "Foundry model could be key to InP industry future"
Semiconductor device fabrication Semiconductors