Foundry model

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In microelectronics, the foundry model refers to the separation of a semiconductor fabrication plant operation (foundry) from an integrated circuit design operation, into separate companies or business units.

Overview[edit]

Although many companies continue to both design and manufacture integrated circuits (achieving efficiency through vertical integration), these Integrated Device Manufacturers (IDMs) are not alone in the marketplace. Economic forces have led to the existence of many companies that only design devices, known as fabless semiconductor companies, as well as merchant foundries that only manufacture devices under contract by other companies, without designing them.

Integrated circuit production facilities are expensive to build and maintain. Unless they can be kept at nearly full utilization, they will become a drain on the finances of the company that owns them. The foundry model 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, pricing, and contracting keep their plants at full utilization.

History[edit]

Originally, microelectronic devices were manufactured by companies that both designed and produced the devices. This was necessary because manufacturing involved tweaking parameters, precise understanding of the manufacturing processes being used, and the occasional need to redesign. These manufacturers were involved in both the research and development of manufacturing processes and the research and development of microcircuit design.

However, as manufacturing techniques developed, microelectronic devices became more standardised allowing them to be used by more than a single manufacturer. This standardization allowed design to be split from manufacture. A design that obeyed the appropriate design rules could be manufactured by different companies that had compatible manufacturing methods. An important development that allowed this was the introduction of advances in electronic design automation (EDA), which allowed circuit designers to exchange design data with other designers using different foundries.

Because of the separation of manufacture and design, new types of companies were founded. One type of company is called a fabless semiconductor company. These companies do not have any semiconductor manufacturing capability but rather contracted production from a manufacturer. This manufacturer is called a merchant foundry. The fabless company concentrates on the research and development of an IC-product; the foundry concentrates on fabricating and testing the physical product. If the foundry does not have any semiconductor design capability, it is called 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[edit]

The very first merchant foundries were part of the MOSIS service. The MOSIS service gave limited production-access to designers with limited means, such as students, researchers at a universities, and engineers at small startups. The designer submitted designs and these submissions were manufactured with the commercial company's extra capacity. Manufacturers could insert some wafers 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 in order to avoid having expensive capital equipment standing idle.

Under-utilization of an expensive manufacturing plant could lead to the financial ruin of the owner, so selling surplus wafer capacity was a way to maximize the fab's utilization. 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 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 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 secrets of their methodologies might only be willing to release data to designers after an onerous nondisclosure procedure.

Dedicated foundry[edit]

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 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 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[edit]

2013[edit]

As of 2013, the top 13 semiconductor foundries were:[1]
2013 Rank2012 RankCompanyFoundry TypeCountry of originRevenue (million $USD)
11TSMCPure-play Taiwan19,850
22GlobalfoundriesPure-play United States4,261
33UMCPure-play Taiwan3,959
44Samsung SemiconductorIDM South Korea3,950
55SMICPure-play China1,973
68PowerChipPure-play Taiwan1,175
79Vanguard (VIS)Pure-play Taiwan713
86Huahong GracePure-play China710
910DongbuPure-play South Korea570
107TowerJazzPure-play Israel509
1111IBMIDM United States485
1212MagnaChipIDM South Korea411
1313Win SemiconductorsPure-play Taiwan354

2010[edit]

As of 2010, the top 10 semiconductor foundries were:[2]
RankCompanyFoundry TypeCountry of originRevenue (million $USD)
1TSMCPure-play Taiwan13,332
2UMCPure-play Taiwan3,824
3GlobalfoundriesPure-play United States3,520
4SMICPure-play China1,554
5Dongbu HiTekPure-play South Korea512
6TowerJazzPure-play Israel509
7Vanguard (VIS)Pure-play Taiwan505
8IBMIDM United States500
9MagnaChipIDM South Korea410
10Samsung SemiconductorIDM South Korea390

2011[edit]

As of 2011, the top 14 semiconductor foundries were:[3]
RankCompanyFoundry TypeCountry of originRevenue (million $USD)
1TSMCPure-play Taiwan14,600
2UMCPure-play Taiwan3,760
3GlobalfoundriesPure-play United States3,580
4Samsung SemiconductorIDM South Korea1,975
5SMICPure-play China1,315
6TowerJazzPure-play Israel610
7Vanguard (VIS)Pure-play Taiwan519
8Dongbu HiTekPure-play South Korea500
9IBMIDM United States445
10MagnaChipIDM South Korea350
11SSMCPure-play Singapore345
12Hua Hong NECPure-play China335
13Win SemiconductorsPure-play Taiwan300
14X-FabPure-play Germany285

2010[edit]

As of 2010, the top 10 semiconductor foundries were:[4]
RankCompanyFoundry TypeCountry of originRevenue (million $USD)
1TSMCPure-play Taiwan13,332
2UMCPure-play Taiwan3,824
3GlobalfoundriesPure-play United States3,520
4SMICPure-play China1,554
5Dongbu HiTekPure-play South Korea512
6TowerJazzPure-play Israel509
7Vanguard (VIS)Pure-play Taiwan505
8IBMIDM United States500
9MagnaChipIDM South Korea410
10Samsung SemiconductorIDM South Korea390

2009~2007[edit]

As of 2009, the top 17 semiconductor foundries were:[5]

RankCompanyFoundry TypeCountry of originRevenue (million $USD)
2009200920082007
1TSMCPure-playTaiwanTaiwan8,98910,5569,813
2UMCPure-playTaiwanTaiwan2,8153,0703,430
3Chartered(1)Pure-playSingaporeSingapore1,5401,7431,458
4GlobalFoundriesPure-playUnited StatesUSA1,10100
5SMICPure-playChinaChina1,0751,3531,550
6DongbuPure-playSouth KoreaSouth Korea395490510
7VanguardPure-playTaiwanTaiwan382511486
8IBMIDMUnited StatesUSA335400570
9SamsungIDMSouth KoreaSouth Korea325370355
10GracePure-playChinaChina310335310
11He JianPure-playChinaChina305345330
12Tower SemiconductorPure-playIsraelIsrael292252231
13HHNECPure-playChinaChina290350335
14SSMCPure-playSingaporeSingapore280340359
15Texas InstrumentsIDMUnited StatesUSA250315450
16X-FabPure-playGermanyGermany223368410
17MagnaChipIDMSouth KoreaSouth Korea220290322

(1) Now acquired by GlobalFoundries

2008~2006[edit]

As of 2008, the top 18 pure-play semiconductor foundries were:[6]

RankCompanyCountry of originRevenue (million $USD)
2008200820072006
1TSMCTaiwanTaiwan10,5569,8139,748
2UMCTaiwanTaiwan3,4003,7553,670
3CharteredSingaporeSingapore1,7431,4581,527
4SMICChinaChina1,3541,5501,465
5VanguardTaiwanTaiwan511486398
6DongbuSouth KoreaSouth Korea490510456
7X-FabGermanyGermany400410290
8HHNECChinaChina350335315
9He JianChinaChina345330290
10SSMCSingaporeSingapore340350325
11GraceChinaChina335310227
12Tower SemiconductorIsraelIsrael252231187
13Jazz SemiconductorUnited StatesUnited States190182213
14SilterraMalaysiaMalaysia175180155
15ASMCChinaChina149155170
16Polar SemiconductorJapanJapan11010595
17Mosel-VitelicTaiwanTaiwan100105155
18CR Micro (1)ChinaChina-143114
Others140167180
Total20,98020,57519,940

(1) Merged with CR Logic in 2008, reclassified as an IDM foundry

2007~2005[edit]

As of 2007, the top 14 semiconductor foundries include:[7]

RankCompanyFoundry typeCountry of originRevenue (million $USD)
2007200720062005
1TSMCPure-PlayTaiwanTaiwan9,8139,7488,217
2UMCPure-PlayTaiwanTaiwan3,7553,6703,259
3SMICPure-PlayChinaChina1,5501,4651,171
4CharteredPure-PlaySingaporeSingapore1,4581,5271,132
5Texas InstrumentsIDMUnited StatesUnited States610585540
6IBMIDMUnited StatesUnited States570600665
7DongbuPure-PlaySouth KoreaSouth Korea510456347
8VanguardPure-PlayTaiwanTaiwan486398353
9X-FabPure-PlayGermanyGermany410290202
10SamsungIDMSouth KoreaSouth Korea38575-
11SSMCPure-PlaySingaporeSingapore350325280
12HHNECPure-PlayChinaChina335315313
13He JianPure-PlayChinaChina330290250
14MagnaChipIDMSouth KoreaSouth Korea322342345

For ranking in worldwide Semiconductor sales leaders by year:[8]

RankCompanyCountry of originRevenue (million $USD)2006/2005 changes
2006200520062005
67TSMCTaiwanTaiwan9,7488,217+19%
2122UMCTaiwanTaiwan3,6703,259+13%

2004[edit]

As of 2004, the top 10 pure-play semiconductor foundries were:[citation needed]

Rank 2004CompanyCountry of origin
1TSMCTaiwanTaiwan
2UMCTaiwanTaiwan
3CharteredSingaporeSingapore
4SMICChinaChina
5Dongbu/AnamSouth KoreaSouth Korea
6SSMCSingaporeSingapore
7HHNECChinaChina
8Jazz SemiconductorUnited StatesUnited States
9SilterraMalaysiaMalaysia
10X-FabGermanyGermany

Financial and IP issues[edit]

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.[9]

Stolen design data is also a concern; data is rarely directly copied, because blatant copies are easily identified by distinctive features in the chip,[10] 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.

See also[edit]

References[edit]

External links[edit]