Outsourcing trends in semiconductor industry

Abstract

Microelectronic devices traditionally were manufactured by companies that both designed and produced integrated chips. This process was important in 1970's and 1980's when the manufacturing processes required tweaking the design, understanding of the manufacturing processes and occasional need to redesign. As manufacturing techniques and standards evolved, companies have changed their business model and have started to outsource their manufacturing to merchant foundries. Semiconductor companies have also started to outsource the design and verification of their chips to third party design service companies and focus on core competence like research and development of new technologies and defining protocols. This trend has evolved even though the chips have become much more complex, hard to design and hard to manufacture. This thesis studies the different players in the supply chain, how each player has evolved and the challenges companies face in making decisions regarding outsourcing internal processes. It was found that the advancements in the downstream industries such as EDA, Design Suppliers and EMS have helped fabless companies remain competitive with IDM's (Integrated Device Manufacturers). The fabless companies compete in different markets that do not need the most advanced processing technologies used by leading-edge companies.