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Foundry model

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This article is about the business model for making integrated circuits. For other uses of the term foundry, see foundry (disambiguation).

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]

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.

History

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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, a spin-off of the government Industrial Technology Research Institute, which split its design and fabrication divisions in 1987,[5] 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.[6]

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.

MOSIS

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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.[7] 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.

Dedicated foundry

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In 1987, the world's first dedicated merchant foundry opened its doors: Taiwan Semiconductor Manufacturing Company (TSMC).[8] 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

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  • Pure-play semiconductor foundry is a company that does not offer a significant amount of IC products of its own design, but instead operates semiconductor fabrication plants focused on producing ICs for other companies.[9]
  • Integrated device manufacturer (IDM) semiconductor foundry is where companies such as Texas Instruments, IBM, and Samsung join in to provide foundry services as long as there is no conflict of interest between relevant parties.

2023

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As of 2023, the top semiconductor foundries were:[10]
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

2017

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As of 2017, the top pure-play semiconductor foundries were:[11]
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

2016–2014

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As of 2016, the top pure-play semiconductor foundries were:[12][13]
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

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As of 2013, the top 13 semiconductor foundries were:[14]
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

2011

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As of 2011, the top 14 semiconductor foundries were:[15]
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

2010

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As of 2010, the top 10 semiconductor foundries were:[16]
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

2009–2007

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

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

2008–2006

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

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

2007–2005

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As of 2007, the top 14 semiconductor foundries include:[19]

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:[20]

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%

2004

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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

Financial and IP issues

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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.[21]

Stolen design data is also a concern; data is rarely directly copied, because blatant copies are easily identified by distinctive features in the chip,[22] 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

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References

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  1. ^ M. Liu (14 May 2021). "Taiwan and the foundry model". Nature Electronics. 4 (5): 318–320. doi:10.1038/s41928-021-00576-y.
  2. ^ S. K. Saha (25–27 June 2012). "The Role of Semiconductor Foundries in Advanced Integrated Circuit Product Development". International Technology Management Conference. pp. 32–35. doi:10.1109/ITMC.2012.6306393. ISBN 978-1-4673-2134-1. S2CID 7329163.
  3. ^ F. C. Tseng (8–11 December 1996). "Foundry Technologies". International Electron Devices Meeting. Technical Digest. pp. 19–24. doi:10.1109/iedm.1996.553030. ISBN 0-7803-3393-4. S2CID 40610229.
  4. ^ J.Y.-C. Sun (1998). Burnett, David; Wristers, Dirk; Tsuchiya, Toshiaki (eds.). "Foundry Technology Trend". Proceedings of SPIE. Microelectronic Device Technology II. 3506: 19–24. Bibcode:1998SPIE.3506...19S. doi:10.1117/12.323970. S2CID 173181521.
  5. ^ "Company Profile". TSMC. Retrieved 6 December 2020.
  6. ^ Brown, Clair; Linden, Greg (2011). Chips and change : how crisis reshapes the semiconductor industry (1st ed.). Cambridge, Mass.: MIT Press. ISBN 9780262516822.
  7. ^ Suzanne Berger; Richard K. Lester (12 February 2015). Global Taiwan: Building Competitive Strengths in a New International Economy. Routledge. pp. 142–. ISBN 978-1-317-46970-4.
  8. ^ Hitoshi Hirakawa; Kaushalesh Lal; Shinkai Naoko (2013). Servitization, IT-ization and Innovation Models: Two-stage Industrial Cluster Theory. Routledge. pp. 34–. ISBN 978-0-415-63945-3.
  9. ^ "Pure-Play Foundry Market On Pace For Strongest Growth Since 2014". EPS News. 22 September 2020. Retrieved 6 January 2021.
  10. ^ Chung, Eden. "Press Center - Global Top 10 Foundries Q4 Revenue Up 7.9%, Annual Total Hits US$111.54 Billion in 2023, Says TrendForce | TrendForce - Market research, price trend of DRAM, NAND Flash, LEDs, TFT-LCD and green energy, PV". TrendForce. Retrieved 29 March 2024.
  11. ^ "Press Center – TrendForce Reports Top 10 Ranking of Global Semiconductor Foundries of 2017, TSMC Ranks First with Market Share of 55.9% | TrendForce – Market research, price trend of DRAM, NAND Flash, LEDs, TFT-LCD and green energy, PV". TrendForce. Retrieved 1 July 2020.
  12. ^ McGrath, Dylan (23 January 2017). "X-Fab is Fastest Growing Foundry". EE Times. Archived from the original on 29 January 2017. Retrieved 10 May 2017.
  13. ^ Clarke, Peter (16 January 2017). "SMIC, Tower, X-Fab are strongest growing pure-play foundries". eeNews Analog. Retrieved 29 January 2021.
  14. ^ IC Insights: Top 13 Foundries Account for 91% of Total Foundry Sales in 2013
  15. ^ semimd.com: 2011 Major IC Foundries Archived 26 May 2013 at the Wayback Machine.
  16. ^ dongbuhitek.com: 2010 Foundry Ranking (citing Gartner) (PDF).
  17. ^ IC Insights, "2009 Major IC Foundries" March 2009.
  18. ^ IC Insights, "Leading Pure-Play Foundry Companies" March 2009 Archived 19 July 2011 at the Wayback Machine.
  19. ^ IC Insights, "2007 Major IC Foundries".
  20. ^ IC Insights, "Worldwide 2006 Top 25 Semiconductor Sales Leaders".
  21. ^ R. H. Abramson (28 February – 4 March 1994). "When the chickens come home to roost: The licensed foundry defense in patent cases". Proceedings of COMPCON '94. pp. 348–354. doi:10.1109/CMPCON.1994.282907. ISBN 978-0-8186-5380-3. S2CID 2957002.
  22. ^ Carol Marsh and Tom Kean. "A Security Tagging Scheme for ASIC Designs and Intellectual Property Cores". Design & Reuse.
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