INDUSTRY DATA

Semiconductor companies have adopted a manufacturing outsourcing strategy for many of the same reasons that other industries have evolved to outsourcing operations considered beyond their forte. The outsourcing of silicon wafers allows semiconductor companies to focus on the design and marketing of its product without the burden of building, operating and upgrading a manufacturing facility.

As the cost of building a wafer fab and maintenance of leading-edge process technology escalates, the fabless model is an attractive long-term option for many semiconductor companies. By adopting a fabless business strategy, a company can focus time and resources on the design of innovative integrated circuits, while avoiding the high cost of operating an internal fabrication facility.

This approach has proven highly successful. The fabless segment has exceeded the growth of the overall semiconductor market by nearly double. Success can also be measured by the creation of leading fabless companies in the 3D graphics, programmable logic and communications markets, among others.

With the widespread availability of leading-edge technology from independent wafer foundries, many IDMs are also adopting a more fabless approach by outsourcing a portion of their manufacturing.