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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.
Since the rapid adoption of the modern day chip in the 1960s, most companies involved in producing semiconductors were extremely vertically integrated. Semiconductor companies owned and operated their own fabrication plants and also the processing technologies that facilitated the creation of the chips. Research, design, testing, production, and manufacturing were all kept "in house". Advances in the semiconductor industry made the market extremely competitive and companies began to use a technology roadmap that helped set goals for the industry. This roadmap came to be known as Moore's Law, a statistical trend seen by Intel's co-founder Gordon Moore in which the number of transistors on an integrated circuit is doubled approximately every 2 years. [1] This increase in transistor numbers meant that chips were getting smaller and faster as time progressed.
As chips continued to get faster, so did the levels of sophistication within the circuitry. Companies were constantly updating machinery to be able to keep up with production demands and overhauls of newer circuits. Companies raced to make transistors smaller in order to pack more of them on the same size silicon and enable faster chips. This practice became known as "shrinkage".
Companies were now in a race against each other and themselves to create the next fastest chip, as all goals were to meet or exceed Moore's Law. With the shrinking of sizes in semiconductors, production became much more intricate. Fabrication machines, which were producing chips at the millimeter level in the 1960s, were now operating in the micrometer and heading into the nanometer scale. As of 2011 [update] , most cutting edge processor makers are working in the 32 nm level and heading into full 22 nm production; sizes comparable to the human DNA strand. The process at which most of these intricate chips are being produced at is called photolithography, and the cost of equipment and operating them has grown astronomically, resulting in an inevitable consolidation of semiconductor companies.
Companies like Xilinx and Western Design Center were pioneers and the first to realize the practicality of not having to sustain a fabrication plant model. As costs continued to grow and competition grew fierce, resources could not be focused on maintaining a business model that had to sustain research and production. The solution became the Fabless semiconductor company model, where a company could focus all its resources to the design, marketing, and sale of its devices while outsourcing the production of its devices to manufacturers called fabs.
This business model grew in such popularity that the new initiative was being promoted by a group called the Fabless Semiconductor Association (FSA) which is now the Global Semiconductor Alliance.
These fabs, commonly referred to as foundries, were able to update assembly and photolithography systems much more easily than their counterparts as all they focused on is handling bulk orders that come from these fabless businesses. In addition, the bottom line of these two business models became much stronger.
Although many companies grew and profited well from a fabless business model, new hurdles still had to be dealt with. The modern day microprocessor now has billions of dollars of research put behind it, with months and even years of research in creating the micro circuitry and teams of hundreds of engineers testing and developing a chip. Now even keeping fabrication and development apart is not enough[ citation needed ].
"On one side will be Intel and a select few that can afford their own fab plants—which will cost between $2.5 billion and $3 billion to build in 2003 and $6 billion by 2007—and perform basic research on transistor design or new chip materials. These new fabs will process wafers with 300-millimeter diameters, larger and more complex to make than today's 200-millimeter variety. On the other side will be everyone else. They will have to share fabs, pool research, buy technology or rely more heavily on outside foundries, which in turn will have to seek help." The theory, Rock's Law, was first articulated by venture capitalist Arthur Rock in which he proposed that the cost of a fabrication plant doubles every 4 years and eventually gets to the point in which it will collide with Moore's law. The implication is that rising plant costs will eventually prohibit further chip improvements. Realizing this, companies began to collaborate. This also meant many compatible companies ended up being takeover targets in order to strengthen relationships and help the businesses' bottom line.
in July, 2006, AMD announced the acquisition of the GPU manufacturer ATI Technologies for $4.3 billion in cash and 58 million shares of its stock and completed the acquisition on October 25, 2006. [2] In October 2008, AMD announced plans to spin off manufacturing operations in a joint venture with Advanced Technology Investment Co., an investment company from Abu Dhabi. The partnership and resulting new venture, called GlobalFoundries Inc., gave AMD an infusion of cash and allowed the company to focus solely on chip design. [3]
TI and Infineon have outsourced some production to Shanghai's Semiconductor Manufacturing International Corporation [4] [5]
Motorola, ST Microelectronics, Philips and Taiwan Semiconductor Manufacturing Co. are collaborating.[ citation needed ]
In 2000, Sony Computer Entertainment, Toshiba Corporation, and IBM teamed up to design and manufacture the Cell processor. The alliance of the three companies was known as "STI" and over 400 engineers from the three companies worked together in Austin, Texas in a facility specifically built for the project in 2001. The processor has since been used in numerous commercial products, including some IBM BladeCenter servers [6] and the Sony PS3 gaming console. [7]
The outsourced semiconductor assembly and test (OSAT) industry has also seen a considerable amount of consolidation in recent years. [8] This is because OSAT companies are looking to differentiate themselves, and consolidation, in a horizontal sense, is one of the best known ways to achieve better differentiation. [9]
According to analysts [ citation needed ], the trend is that there will be an industry-wide move toward collaboration. However, companies such as Intel, IBM, and Toshiba will be able to survive on their own as they are currently market leaders in the microprocessors, servers, and memory fields (in that order).
An integrated circuit or monolithic integrated circuit is a set of electronic circuits on one small flat piece of semiconductor material, usually silicon. Large numbers of tiny MOSFETs integrate into a small chip. This results in circuits that are orders of magnitude smaller, faster, and less expensive than those constructed of discrete electronic components. The IC's mass production capability, reliability, and building-block approach to integrated circuit design has ensured the rapid adoption of standardized ICs in place of designs using discrete transistors. ICs are now used in virtually all electronic equipment and have revolutionized the world of electronics. Computers, mobile phones and other home appliances are now inextricable parts of the structure of modern societies, made possible by the small size and low cost of ICs such as modern computer processors and microcontrollers.
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 present in everyday electrical and electronic devices. It is a multiple-step sequence of photolithographic and chemical processing steps during which electronic circuits are gradually created on a wafer made of pure 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 one of Taiwan's largest companies, with its headquarters and main operations located in the Hsinchu Science Park in Hsinchu. It is majority owned by foreign investors.
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 formed around 1960, once the fabrication of semiconductor devices became a viable business. The industry's annual semiconductor sales revenue has since grown to over $481 billion, as of 2018. The semiconductor industry is in turn the driving force behind the wider electronics industry, with annual power electronics sales of £135 billion as of 2011, annual consumer electronics sales expected to reach $2.9 trillion by 2020, tech industry sales expected to reach $5 trillion in 2019, and e-commerce with over $29 trillion in 2017. In 2019, 32.4% of the semiconductor market segment was for networks and communications devices.
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.
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, 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.
An integrated device manufacturer (IDM) is a semiconductor company which designs, manufactures, and sells integrated circuit (IC) products.
In electronic design, a semiconductor intellectual property core, IP core, or IP block is a reusable unit of logic, cell, or integrated circuit layout design that is the intellectual property of one party. IP cores can be licensed to another party or owned and used by a single party. The term comes from the licensing of the patent or source code copyright that exists in the design. Designers of application-specific integrated circuits (ASIC) and systems of field-programmable gate array (FPGA) logic can use IP cores as building blocks.
Zentrum Mikroelektronik Dresden (ZMD) was regarded as the heart of East Germany's microelectronics research in the 1980s as well as its most advanced integrated circuit manufacturer. Together with TU Dresden and VEB Spurenmetalle Freiberg, ZMD formed the foundation for Silicon Saxony, a cluster of microelectronics companies that came to include new fabs by Siemens and AMD.
In the microelectronics industry, a semiconductor fabrication plant is a factory where devices such as integrated circuits are manufactured.
The transistor count is the number of transistors in an electronic device. It is the most common measure of integrated circuit complexity. The rate at which MOS transistor counts have increased generally follows Moore's law, which observed that the transistor count doubles approximately every two years. However, being directly proportional to area of a chip, transistor count doesn't represent how advanced corresponding manufacturing technology is, which is better characterized by transistor density instead.
The 14 nm process refers to the MOSFET technology node that is the successor to the 22 nm node. The 14 nm was so named by the International Technology Roadmap for Semiconductors (ITRS). Until about 2011, the node following 22 nm was expected to be 16 nm. All 14 nm nodes use FinFET technology, a type of multi-gate MOSFET technology that is a non-planar evolution of planar silicon CMOS technology.
The term die shrink refers to the scaling of metal-oxide-semiconductor (MOS) devices. The act of shrinking a die is to create 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 Advanced Micro Devices (AMD), the company was privately owned by Mubadala Investment Company, the sovereign wealth fund of the United Arab Emirates, until an initial public offering (IPO) in October 2021.
Tower Semiconductor Ltd. is an Israeli company that manufactures integrated circuits using specialty process technologies, including SiGe, BiCMOS, 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).
Advanced Semiconductor Engineering, Inc., also known as ASE Group, is a provider of independent semiconductor assembling and test manufacturing services, with its headquarters in Kaohsiung, Taiwan.
The Taiwanese semiconductor industry, including IC manufacturing, design, and packing, 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 from its competitors and dominate the global marketplace. Taiwan semiconductor sector accounted for US$115 billion, which is ca. 20% of global semiconductor industry. In selected sectors like foundry operations, Taiwanese companies account for 50% of world market, with Taiwan Semiconductor Manufacturing Company (TSMC) being the biggest player in the foundry market.
The Chinese semiconductor industry, including IC design and manufacturing, forms a major part of mainland China's IT industry.