PART 8 • THE INDUSTRY
The Industry
Business models
Who designs, who builds, and why those are often different companies
Fab economics
Why a leading-edge fab costs billions, and what that forces
Moore's Law
The trend that built this industry, and why it's bending now
THREE WAYS TO RUN A CHIP COMPANY
Design and build aren't always the same company
A chip company can design its own chips and build them in its own fabs, design chips and pay someone else to build them, or build chips designed by other companies. Those three choices define an integrated device manufacturer, a fabless company, and a foundry.
THE THREE MODELS
Design, build, or both
IDM
Designs and builds in its own fabs, such as Intel historically has
Fabless
Designs chips only, such as Nvidia, Qualcomm, or Apple
Foundry
Builds chips for other companies, such as TSMC or Samsung
HOW THE MODELS RELATE
Fabless companies still need someone to build
An IDM handles both design and construction under one roof. A fabless company designs a chip, then ships that design to a foundry, which builds it without ever designing a chip of its own.
WHY THE SPLIT HAPPENED
Building got too expensive to do casually
Early in the industry, most chip companies were IDMs by default, since there was no other option. As leading-edge fabs grew dramatically more expensive to build, many companies found it cheaper to design chips and pay a foundry to build them than to keep building fabs of their own.
UNIT 43 STUDY COMPLETE
Ready for the Fab Challenge?
You've covered the three business models a chip company can run, and why the split happened.