The foundry model is a microelectronics engineering and manufacturing business model consisting of a semiconductor fabrication plant, or foundry, and an integrated circuit design operation, each belonging to separate companies or subsidiaries. [1] [2] [3] [4] It was first conceived by Morris Chang, the founder of the Taiwan Semiconductor Manufacturing Company Limited (TSMC). [5]
Integrated device manufacturers (IDMs) design and manufacture integrated circuits. Many companies, known as fabless semiconductor companies, only design devices; merchant or pure play foundries only manufacture devices for other companies, without designing them. Examples of IDMs are Intel, Samsung, and Texas Instruments, examples of pure play foundries are GlobalFoundries, TSMC, and UMC, and examples of fabless companies are AMD, Nvidia, and Qualcomm.
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 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, through careful scheduling, pricing, and contracting, keep their plants in full use.
Companies that both designed and produced the devices were originally responsible for manufacturing microelectronic devices. These manufacturers were involved in both the research and development of manufacturing processes and the research and development of microcircuit design.
The first pure play semiconductor company is the Taiwan Semiconductor Manufacturing Corporation founded by Morris Chang, a spin-off of the government Industrial Technology Research Institute, which split its design and fabrication divisions in 1987, [6] a model advocated for by Carver Mead 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 outsourcing to semiconductor foundries. [7]
Fabless semiconductor companies do not have any semiconductor fabrication capability, instead contracting with a merchant foundry for fabrication. 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. Many companies continue to exist that 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 model that seeks to optimize productivity.
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, university researchers, and engineers at small startups. [8] 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 to avoid having expensive capital equipment stand idle.
Under-use 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 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 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.
In 1987, the world's first dedicated merchant foundry opened its doors: Taiwan Semiconductor Manufacturing Company (TSMC). [9] 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.
Rank | Company | Foundry type | Country/Territory of origin | Revenue (million USD) | |
---|---|---|---|---|---|
2023 | Q4 2023 | Q3 2023 | |||
1 | TSMC | Pure-play | Taiwan | 19,660 | 17,249 |
2 | Samsung Semiconductor | IDM | Korea | 3,619 | 3,690 |
3 | GlobalFoundries | Pure-play | United States | 1,854 | 1,852 |
4 | UMC | Pure-play | Taiwan | 1,727 | 1,801 |
5 | SMIC | Pure-play | China | 1,678 | 1,620 |
6 | Hua Hong Semiconductor | Pure-play | China | 657 | 766 |
7 | Tower Semiconductor | Pure-play | Israel | 352 | 358 |
8 | PowerChip | IDM | Taiwan | 330 | 305 |
9 | Nexchip | Pure-play | China | 308 | 283 |
10 | Vanguard (VIS) | Pure-play | Taiwan | 304 | 333 |
Rank | Company | Foundry type | Country/Territory of origin | Revenue (million USD) | |
---|---|---|---|---|---|
2017 | 2017 | 2016 | |||
1 | TSMC | Pure-play | Taiwan | 32,040 | 29,437 |
2 | GlobalFoundries | Pure-play | United States | 5,407 | 4,999 |
3 | UMC | Pure-play | Taiwan | 4,898 | 4,587 |
4 | Samsung Semiconductor | IDM | Korea | 7,398 | 4,284 |
5 | SMIC | Pure-play | China | 3,099 | 2,914 |
6 | TowerJazz | Pure-play | Israel | 1,388 | 1,249 |
7 | PowerChip | IDM | Taiwan | 1,035 | 870 |
8 | Vanguard (VIS) | Pure-play | Taiwan | 817 | 801 |
9 | Hua Hong Semiconductor | Pure-play | China | 807 | 721 |
10 | Dongbu HiTek | Pure-play | Korea | 676 | 666 |
Rank | Company | Foundry type | Country/Territory of origin | Revenue (million USD) | |||
---|---|---|---|---|---|---|---|
2016 | 2015 | 2016 | 2015 | 2014 | |||
1 | 1 | TSMC | Pure-play | Taiwan | 29,488 | 25,574 | 25,138 |
2 | 2 | GlobalFoundries | Pure-play | United States | 5,545 | 5,019 | 4,355 |
3 | 3 | UMC | Pure-play | Taiwan | 4,582 | 4,464 | 4,331 |
4 | 4 | SMIC | Pure-play | China | 2,921 | 2,236 | 1,970 |
5 | 5 | PowerChip | Pure-play | Taiwan | 1,275 | 1,268 | 1,291 |
6 | 6 | TowerJazz | Pure-play | Israel | 1,249 | 961 | 828 |
8 | 8 | Vanguard (VIS) | Pure-play | Taiwan | 800 | 736 | 790 |
9 | 9 | Hua Hong Semi | Pure-play | China | 712 | 650 | 665 |
10 | 10 | Dongbu HiTek | Pure-play | Korea | 672 | 593 | 541 |
11 | 12 | X-Fab | Pure-play | Germany | 510 | 331 | 330 |
Others | Pure-play | 2,251 | 2,405 | 2,280 |
2013 Rank | 2012 Rank | Company | Foundry Type | Country/Territory of origin | Revenue (million $USD) |
---|---|---|---|---|---|
1 | 1 | TSMC | Pure-play | Taiwan | 19,850 |
2 | 2 | GlobalFoundries | Pure-play | United States | 4,261 |
3 | 3 | UMC | Pure-play | Taiwan | 3,959 |
4 | 4 | Samsung Semiconductor | IDM | Korea | 3,950 |
5 | 5 | SMIC | Pure-play | China | 1,973 |
7 | 8 | PowerChip | Pure-play | Taiwan | 1,175 |
8 | 9 | Vanguard (VIS) | Pure-play | Taiwan | 713 |
9 | 6 | Huahong Grace | Pure-play | China | 710 |
10 | 10 | Dongbu | Pure-play | Korea | 570 |
11 | 7 | TowerJazz | Pure-play | Israel | 509 |
12 | 11 | IBM | IDM | United States | 485 |
13 | 12 | MagnaChip | IDM | Korea | 411 |
14 | 13 | Win Semiconductors | Pure-play | Taiwan | 354 |
Rank | Company | Foundry type | Country/Territory of origin | Revenue (million USD) |
---|---|---|---|---|
1 | TSMC | Pure-play | Taiwan | 14,600 |
2 | UMC | Pure-play | Taiwan | 3,760 |
3 | GlobalFoundries | Pure-play | United States | 3,580 |
4 | Samsung Semiconductor | IDM | Korea | 1,975 |
5 | SMIC | Pure-play | China | 1,315 |
6 | TowerJazz | Pure-play | Israel | 610 |
7 | Vanguard (VIS) | Pure-play | Taiwan | 519 |
8 | Dongbu HiTek | Pure-play | Korea | 500 |
9 | IBM | IDM | United States | 445 |
10 | MagnaChip | IDM | Korea | 350 |
11 | SSMC | Pure-play | Singapore | 345 |
12 | Hua Hong NEC | Pure-play | China | 335 |
13 | Win Semiconductors | Pure-play | Taiwan | 300 |
14 | X-Fab | Pure-play | Germany | 285 |
Rank | Company | Foundry Type | Country/Territory of origin | Revenue (million USD) |
---|---|---|---|---|
1 | TSMC | Pure-play | Taiwan | 13,332 |
2 | UMC | Pure-play | Taiwan | 3,824 |
3 | GlobalFoundries | Pure-play | United States | 3,520 |
4 | SMIC | Pure-play | China | 1,554 |
5 | Dongbu HiTek | Pure-play | Korea | 512 |
6 | TowerJazz | Pure-play | Israel | 509 |
7 | Vanguard (VIS) | Pure-play | Taiwan | 505 |
8 | IBM | IDM | United States | 500 |
9 | MagnaChip | IDM | Korea | 410 |
10 | Samsung Semiconductor | IDM | Korea | 390 |
As of 2009, the top 17 semiconductor foundries were: [18]
Rank | Company | Foundry type | Country/Territory of origin | Revenue (million USD) | ||
---|---|---|---|---|---|---|
2009 | 2009 | 2008 | 2007 | |||
1 | TSMC | Pure-play | Taiwan | 8,989 | 10,556 | 9,813 |
2 | UMC | Pure-play | Taiwan | 2,815 | 3,070 | 3,430 |
3 | Chartered (1) | Pure-play | Singapore | 1,540 | 1,743 | 1,458 |
4 | GlobalFoundries | Pure-play | USA | 1,101 | 0 | 0 |
5 | SMIC | Pure-play | China | 1,075 | 1,353 | 1,550 |
6 | Dongbu | Pure-play | South Korea | 395 | 490 | 510 |
7 | Vanguard | Pure-play | Taiwan | 382 | 511 | 486 |
8 | IBM | IDM | USA | 335 | 400 | 570 |
9 | Samsung | IDM | South Korea | 325 | 370 | 355 |
10 | Grace | Pure-play | China | 310 | 335 | 310 |
11 | HeJian | Pure-play | China | 305 | 345 | 330 |
12 | Tower Semiconductor | Pure-play | Israel | 292 | 252 | 231 |
13 | HHNEC | Pure-play | China | 290 | 350 | 335 |
14 | SSMC | Pure-play | Singapore | 280 | 340 | 359 |
15 | Texas Instruments | IDM | USA | 250 | 315 | 450 |
16 | X-Fab | Pure-play | Germany | 223 | 368 | 410 |
17 | MagnaChip | IDM | South Korea | 220 | 290 | 322 |
(1) Now acquired by GlobalFoundries
As of 2008, the top 18 pure-play semiconductor foundries were: [19]
Rank | Company | Country/Territory of origin | Revenue (million USD) | ||
---|---|---|---|---|---|
2008 | 2008 | 2007 | 2006 | ||
1 | TSMC | Taiwan | 10,556 | 9,813 | 9,748 |
2 | UMC | Taiwan | 3,400 | 3,755 | 3,670 |
3 | Chartered | Singapore | 1,743 | 1,458 | 1,527 |
4 | SMIC | China | 1,354 | 1,550 | 1,465 |
5 | Vanguard | Taiwan | 511 | 486 | 398 |
6 | Dongbu | South Korea | 490 | 510 | 456 |
7 | X-Fab | Germany | 400 | 410 | 290 |
8 | HHNEC | China | 350 | 335 | 315 |
9 | HeJian | China | 345 | 330 | 290 |
10 | SSMC | Singapore | 340 | 350 | 325 |
11 | Grace | China | 335 | 310 | 227 |
12 | Tower Semiconductor | Israel | 252 | 231 | 187 |
13 | Jazz Semiconductor | United States | 190 | 182 | 213 |
14 | Silterra | Malaysia | 175 | 180 | 155 |
15 | ASMC | China | 149 | 155 | 170 |
16 | Polar Semiconductor | Japan | 110 | 105 | 95 |
17 | Mosel-Vitelic | Taiwan | 100 | 105 | 155 |
18 | CR Micro (1) | China | - | 143 | 114 |
Others | 140 | 167 | 180 | ||
Total | 20,980 | 20,575 | 19,940 |
(1) Merged with CR Logic in 2008, reclassified as an IDM foundry
As of 2007, the top 14 semiconductor foundries include: [20]
Rank | Company | Foundry type | Country/Territory of origin | Revenue (million USD) | ||
---|---|---|---|---|---|---|
2007 | 2007 | 2006 | 2005 | |||
1 | TSMC | Pure-Play | Taiwan | 9,813 | 9,748 | 8,217 |
2 | UMC | Pure-Play | Taiwan | 3,755 | 3,670 | 3,259 |
3 | SMIC | Pure-Play | China | 1,550 | 1,465 | 1,171 |
4 | Chartered | Pure-Play | Singapore | 1,458 | 1,527 | 1,132 |
5 | Texas Instruments | IDM | United States | 610 | 585 | 540 |
6 | IBM | IDM | United States | 570 | 600 | 665 |
7 | Dongbu | Pure-Play | South Korea | 510 | 456 | 347 |
8 | Vanguard | Pure-Play | Taiwan | 486 | 398 | 353 |
9 | X-Fab | Pure-Play | Germany | 410 | 290 | 202 |
10 | Samsung | IDM | South Korea | 385 | 75 | - |
11 | SSMC | Pure-Play | Singapore | 350 | 325 | 280 |
12 | HHNEC | Pure-Play | China | 335 | 315 | 313 |
13 | HeJian | Pure-Play | China | 330 | 290 | 250 |
14 | MagnaChip | IDM | South Korea | 322 | 342 | 345 |
For ranking in worldwide: [21]
Rank | Company | Country/Territory of origin | Revenue (million USD) | 2006/2005 changes | ||
---|---|---|---|---|---|---|
2006 | 2005 | 2006 | 2005 | |||
6 | 7 | TSMC | Taiwan | 9,748 | 8,217 | +19% |
21 | 22 | UMC | Taiwan | 3,670 | 3,259 | +13% |
As of 2004, the top 10 pure-play semiconductor foundries were: [ citation needed ]
Rank 2004 | Company | Country/Territory of origin |
---|---|---|
1 | TSMC | Taiwan |
2 | UMC | Taiwan |
3 | Chartered | Singapore |
4 | SMIC | China |
5 | Dongbu/Anam | South Korea |
6 | SSMC | Singapore |
7 | HHNEC | China |
8 | Jazz Semiconductor | United States |
9 | Silterra | Malaysia |
10 | X-Fab | Germany |
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. [22]
Stolen design data is also a concern; data is rarely directly copied, because blatant copies are easily identified by distinctive features in the chip, [23] 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.
Semiconductor device fabrication is the process used to manufacture semiconductor devices, typically integrated circuits (ICs) such as microprocessors, microcontrollers, and memories. It is a multiple-step photolithographic and physico-chemical process during which electronic circuits are gradually created on a wafer, typically made of pure single-crystal semiconducting material. Silicon is almost always used, but various compound semiconductors are used for specialized applications.
Taiwan Semiconductor Manufacturing Company Limited is a Taiwanese multinational semiconductor contract manufacturing and design company. It is the world's most valuable semiconductor company, the world's largest dedicated independent ("pure-play") semiconductor foundry, and Taiwan's largest company, with headquarters and main operations located in the Hsinchu Science Park in Hsinchu, Taiwan. Although the central government of Taiwan is the largest individual shareholder, the majority of TSMC is owned by foreign investors. In 2023, the company was ranked 44th in the Forbes Global 2000. Taiwan's exports of integrated circuits amounted to $184 billion in 2022, accounted for nearly 25 percent of Taiwan's GDP. TSMC constitutes about 30 percent of the Taiwan Stock Exchange's main index.
The semiconductor industry is the aggregate of companies engaged in the design and fabrication of semiconductors and semiconductor devices, such as transistors and integrated circuits. It's roots can be traced to the invention of the transistor by Shockley, Brattain, and Bardeen at Bell Labs in 1948. Bell Labs licensed the technology for $25,000, and soon many companies, including Motorola (1952), Schockley Semiconductor (1955), Sylvania, Centralab, Fairchild Semiconductor and Texas Instruments were making transistors. In 1958 Jack Kilby of Texas Instruments and Robert Noyce of Fairchild independently invented the Integrated Circuit, a method of producing multiple transistors on a single "chip" of Semiconductor material. This kicked off a number of rapid advances in fabrication technology leading to the exponential growth in semiconductor device production, known as Moore's law that has persisted over the past six or so decades. The industry's annual semiconductor sales revenue has since grown to over $481 billion, as of 2018.
Fabless manufacturing is the design and sale of hardware devices and semiconductor chips while outsourcing their fabrication to a specialized manufacturer called a semiconductor foundry. These foundries are typically, but not exclusively, located in the United States, mainland China, and Taiwan. Fabless companies can benefit from lower capital costs while concentrating their research and development resources on the end market. Some fabless companies and pure play foundries may offer integrated-circuit design services to third parties.
Wafer fabrication is a procedure composed of many repeated sequential processes to produce complete electrical or photonic circuits on semiconductor wafers in semiconductor device fabrication process. Examples include production of radio frequency (RF) amplifiers, LEDs, optical computer components, and microprocessors for computers. Wafer fabrication is used to build components with the necessary electrical structures.
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.
An integrated device manufacturer (IDM) is a semiconductor company which designs, manufactures, and sells integrated circuit (IC) products.
United Microelectronics Corporation is a Taiwanese company based in Hsinchu, Taiwan. It was founded as Taiwan's first semiconductor company in 1980 as a spin-off of the government-sponsored Industrial Technology Research Institute (ITRI).
Maxim Integrated Products, Inc., was an American semiconductor company that designed, manufactured, and sold analog and mixed-signal integrated circuits for the automotive, industrial, communications, consumer, and computing markets. Maxim's product portfolio included power and battery management ICs, sensors, analog ICs, interface ICs, communications solutions, digital ICs, embedded security, and microcontrollers. The company is headquartered in San Jose, California, and has design centers, manufacturing facilities, and sales offices worldwide. In 2021, the company was acquired by Analog Devices.
In the microelectronics industry, a semiconductor fabrication plant, also called a fab or a foundry, is a factory where integrated circuits (ICs) are manufactured.
Multi-project chip (MPC), and multi-project wafer (MPW) semiconductor manufacturing arrangements allow customers to share tooling and microelectronics wafer fabrication cost between several designs or projects.
The term die shrink refers to the scaling of metal–oxide–semiconductor (MOS) devices. The act of shrinking a die creates a somewhat identical circuit using a more advanced fabrication process, usually involving an advance of lithographic nodes. This reduces overall costs for a chip company, as the absence of major architectural changes to the processor lowers research and development costs while at the same time allowing more processor dies to be manufactured on the same piece of silicon wafer, resulting in less cost per product sold.
GlobalFoundries Inc. 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, the company was privately owned by Mubadala Investment Company, a sovereign wealth fund of the United Arab Emirates, until an initial public offering (IPO) in October 2021.
Semiconductor consolidation is the trend of semiconductor companies collaborating in order to come to a practical synergy with the goal of being able to operate in a business model that can sustain profitability.
Vanguard International Semiconductor Corporation (VIS) is a Taiwanese specialized IC foundry service provider, founded in December 1994 in Hsinchu Science Park by Morris Chang. In March 1998, VIS became a listed company on the Taiwan Over-The-Counter Stock Exchange (OTC) with the main shareholders TSMC, National Development Fund, Executive Yuan and other institutional investors.
Global Unichip Corporation (GUC) is a worldwide fabless ASIC design service company, with its headquarters located in the Hsinchu Science Park in Hsinchu, Taiwan.
Tower Semiconductor Ltd. is an Israeli company that manufactures integrated circuits using specialty process technologies, including SiGe, BiCMOS, Silicon Photonics, SOI, mixed-signal and RFCMOS, CMOS image sensors, non-imaging sensors, power management (BCD), and non-volatile memory (NVM) as well as MEMS capabilities. Tower Semiconductor also owns 51% of TPSCo, an enterprise with Nuvoton Technology Corporation Japan (NTCJ).
The semiconductor industry, including Integrated Circuit (IC) manufacturing, design, and packaging, forms a major part of Taiwan's IT industry. Due to its strong capabilities in OEM wafer manufacturing and a complete industry supply chain, Taiwan has been able to distinguish itself as a leading microchip manufacturer and dominate the global marketplace. Taiwan’s semiconductor sector accounted for US$115 billion, around 20 percent of the global semiconductor industry. In sectors such as foundry operations, Taiwanese companies account for 50 percent of the world market, with Taiwan Semiconductor Manufacturing Company (TSMC) the biggest player in the foundry market.
The Chinese semiconductor industry, including integrated circuit design and manufacturing, forms a major part of mainland China's information technology industry.