Fab and Fabless

When I joined the industry in mid-90s, a lot of companies are making good money on semiconductors IC business. Meanwhile, fabless design house are getting started. Fabless mean they don't own a fabs. They do chip design only. Then outsource the fabrication process to independent foundries such as TSMC. The disadvantage is that they don't have control on process quality, which can affect their IC product quality directly. Therefore, the people in this industry used to say: the real guy has fab.

But nowadays. The wind has changed.

As the IC chip scales to ever smaller, the manufactory steps are getting more complicate. For the latest TSMC 65nm fab, the cost is over $6 Billion. This is not the money that any company can afford. A company got to sell A LOT of chips to make return of this investment. Let's do a quick math. Let's say a high end chip can sell $100 a piece. They need to sell 60 million of them to break even!

So in today's IC industry, even big companies like Motorola and Philip build jolt fab together. The cost of investment are just too big to do it alone. Meanwhile, fabless design houses are getting more common. Let's name a few famous one: Broadcom, Qualcom, Xilinx, etc. They are real IC chip players, but not necessary have fabs.

Soaring tool costs to delay 450-mm fabs