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. Foundries
are typically, but not exclusively, located in China and Taiwan.[1][2][3][4] 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 (like TSMC) may offer integrated-circuit design services to third
parties.

Contents
History
Industry growth and success
Sales leaders
See also
References

History
Prior to the 1980s, the semiconductor industry was vertically integrated. Semiconductor companies owned and
operated their own silicon-wafer fabrication facilities and developed their own process technology for
manufacturing their chips. These companies also carried out the assembly and testing of their chips, the
fabrication.

As with most technology-intensive industries, the silicon manufacturing process presents high barriers to entry
into the market, especially for small start-up companies. But integrated device manufacturers (IDMs) had
excess production capacity. This presented an opportunity for smaller companies, relying on IDMs, to design
but not manufacture silicon.

These conditions underlay the birth of the fabless business model. Engineers at new companies began
designing and selling ICs without owning a fabrication plant. Simultaneously, the foundry industry was
established by Dr. Morris Chang with the founding of Taiwan Semiconductor Manufacturing Corporation
(TSMC). Foundries became the cornerstone of the fabless model, providing a non-competitive manufacturing
partner for fabless companies.

The co-founders of the first fabless semiconductor company, LSI Computer Systems, Inc. (LSI/CSI) LSI/CSI,
worked together at General Instrument Microelectronics (GIM) in the 1960s. In 1969 GIM was hired to
develop three full custom CPU circuits for Control Data Corporation (CDC). These CPU ICs operated at
5 MHz (state of the art at the time) and were incorporated in the CDC Computer 469. The Computer 469
became a standard CDC Aerospace Computer and was used in the Spy in the Sky Satellites in addition to
other classified satellite programs.

GIM was reluctant to proceed with the next phase of the program, which it deemed to be too technically
challenging. The GIM engineers who had worked on the project were encouraged by CDC to form their own
company to provide five new custom circuits. This resulted in the formation of LSI Computer Systems, Inc.
(LSI/CSI) in 1969. The new chips were power-efficient Random Logic circuits with extremely high circuit
densities. These new circuits also operated at 5 MHz. These devices were designated LSI0101, LSI0102,
LSI0103, LSI0104, and LSI0105 and were manufactured in compact 40-pin metal flat packs with 0.050
inches (1.3 mm) spacing.

In creating the fabless semiconductor industry, LSI/CSI had to do the following:

1. Select a suitable and CDC certifiable wafer fab house.

2. Monitor the process, and inspection of all wafers per Class S requirements and visuals.
3. Perform all In-Process inspections of the wafers.
4. Select a highly reliable packaging house capable of meeting CDC's Class S assembly
requirements.
5. Have CDC certify and approve the assembly facility and its processes.
6. LSI/CSI successfully performed all required environmental testing at Class S approved
facilities.
7. LSI/CSI prepared and submitted all environmental test reports.

CDC's Aerospace Computer 469 weighed one pound, consumed a total of 10 watts and ran at 5 MHz. CDC
ran a parallel program, developing a chipset of eight similar parts that were to operate at 2.5 MHz with the
identical environmental and Class S requirements. CDC had initial difficulties with this project, but eventually
awarded another contract to LSI/CSI to manage the processing, inspection, visuals, assembly, and testing of
the ICs. These parts were given the designation LSI3201, LSI3202, LSI3203, LSI3204 and LSI3205. Another
successful space program completed by LSI/CSI was the upgrade to class S of a Standard Brushless DC
Motor Commutator/Controller Chip, LS7262, which was implemented in satellites.

In 1994, Jodi Shelton, along with a half a dozen CEOs of fabless companies, established the Fabless
Semiconductor Association (FSA) to promote the fabless business-model globally. In December 2007, the
FSA transitioned to the GSA, the Global Semiconductor Alliance.[5] The organizational transition reflected the
role FSA had played as a global organization that collaborated with other organizations to co-host international
events.

Industry growth and success

The fabless manufacturing model has been further validated by the conversion of major IDMs to a completely
fabless model, including (for example) Conexant Systems, Semtech, and most recently, LSI Logic. Today
most major IDMs including Apple Inc., Infineon and Cypress Semiconductor have adopted the practice of
outsourcing chip manufacturing as a significant manufacturing strategy.

Sales leaders
The top 5 sales leaders for fabless companies in 2017 were:[6]

Rank Company Headquarters Revenue (million US$)

1 Qualcomm United States 17,078
2 Broadcom United States 16,065
3 Nvidia United States 9,228
4 MediaTek Taiwan 7,875
5 Apple United States 6,660
The top 5 sales leaders for fabless companies in 2013 were:[7]

Rank Company Headquarters Revenue (million US$)

1 Qualcomm United States 17,200
2 Broadcom United States 8,200
3 AMD United States 5,300
4 MediaTek Taiwan 4,600
5 Nvidia United States 3,900

The top 5 sales leaders for fabless companies in 2011 were:[8]

Rank Company Headquarters Revenue (million US$)

1 Qualcomm United States 9,910
2 Broadcom United States 7,160
3 AMD United States 6,568
4 Nvidia United States 3,939
5 Marvell United States 3,445

The top 5 sales leaders for fabless companies in 2010 were:[9]

Rank Company Headquarters Revenue (million US$)

1 Qualcomm United States 7,098
2 Broadcom United States 6,540
3 AMD United States 6,460
4 MediaTek Taiwan 3,610
5 Marvell United States 3,602

The top 5 sales leaders for fabless companies in 2003 were:

Rank Company Headquarters Revenue (million US$)

1 Qualcomm United States 2,398
2 NVIDIA United States 1,716
3 Broadcom United States 1,610
4 ATI Technologies Canada 1,401
5 Xilinx United States 1,300

See also
ARM Holdings has an alternative fabless semiconductor design business model.
Foundry model
Rock's law
Semiconductor consolidation
Semiconductor device fabrication
 Semiconductor equipment sales leaders by year
Semiconductor foundry sales leaders by year
Semiconductor intellectual property core (IP cores)

References
1. "The UK manufacturer taking on China" (https://web.archive.org/web/20141003102244/http://w
ww.bbc.co.uk/news/business-17952023). BBC Online. 2012-05-07. Archived from the original
(https://www.bbc.co.uk/news/business-17952023) on 2014-10-03.
2. Blodget, Henry (2012-01-22). "This Article Explains Why Apple Makes iPhones In China And
Why The US Is Screwed" (https://web.archive.org/web/20140624143359/http://www.businessin
sider.com/you-simply-must-read-this-article-that-explains-why-apple-makes-iphones-in-china-a
nd-why-the-us-is-screwed-2012-1). Business Insider. Archived from the original (http://articles.b
usinessinsider.com/2012-01-22/news/30652073_1_iphone-apple-china) on 2014-06-24.
3. Pinto, Jim. "Global Manufacturing – The China Challenge" (https://web.archive.org/web/20120
112010545/http://www.automation.com/resources-tools/articles-white-papers/articles-by-jim-pin
to/global-manufacturing-150-the-china-challenge). Archived from the original (http://www.autom
ation.com/resources-tools/articles-white-papers/articles-by-jim-pinto/global-manufacturing-150-
the-china-challenge) on 2012-01-12.
4. Jain, Rounak (2012-01-22). "Why Does Apple Manufacture iPhone in Asia?" (https://web.archiv
e.org/web/20130401230831/http://www.iphonehacks.com/2012/01/apple-manufacture-iphone-
asia.html). iPhoneHacks.com. Archived from the original (http://www.iphonehacks.com/2012/0
1/apple-manufacture-iphone-asia.html) on 2013-04-01.
5. "About the Global Semiconductor Alliance" (https://web.archive.org/web/20130219205823/htt
p://www.gsaglobal.org/about-us/). GSA. Archived from the original (http://www.gsaglobal.org/ab
out-us/) on 2013-02-19.
6. Manners, David (2018-01-05). "Over $100bn revenues for fabless for first time" (https://www.ele
ctronicsweekly.com/news/business/100bn-revenues-fabless-first-time-2018-01/). Electronics
Weekly.
7. Manners, David (2014-05-08). "Fastest growing fabless companies" (http://www.electronicswee
kly.com/news/business/fabless-companies-grew-8-2013-says-ic-insights-2014-05/). Electronics
Weekly.
8. Clarke, Peter (2012-04-12). "Spreadtrum, Dialog, MegaChips shine in fabless rankings" (http://
www.eetimes.com/electronics-news/4370863/Spreadtrum-Dialog-MegaChips-fabless-ranking
s). EE Times.
9. "13 Fabless IC Suppliers Forecast to Top $1.0 Billion in Sales in 2010!" (http://www.icinsights.c
om/news/bulletins/13-Fabless-IC-Suppliers-Forecast-To-Top-10-Billion-In-Sales-In-2010/).
ICInsights.com. 2010-12-21.

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