Forget wafer fabs, fabless is the new fad
Going fabless is a trend that has quickly penetrated the IC industry, as evidenced by a growing number of major IDMs worldwide that are opting to shed their wafer fabs, according to IC Insights. The spread of the fab-lite or asset-lite business model has been the centre of many debates about the future of chipmaking.
Most recently, large Japanese IC makers—namely Toshiba, Renesas, Sony, and Fujitsu—joined the asset-lite movement after several years in which U.S. and European IDMs started reining in capital expenditures on expensive new 300mm wafer fabs and increased their use of third-party foundries.
Nearly all IDMs today, excluding giant Intel and the memory makers, are now aiming to keep capital spending at or below 10 per cent of annual sales compared to the IC industry's average of 20 per cent in the last decade.
The advent of asset-lite strategies has led to a rash of predictions that many IDMs are on their way to becoming fabless since they have stopped investing in leading-edge wafer plants and development of next-generation digital CMOS technologies.
Indeed, some IDMs have used asset-lite strategies as steppingstones to going fabless, such as LSI and Integrated Device Technology. Many other IC manufacturers, however, insist "lite" business models are sustainable over the long term since they've narrowed their strategic product focus to categories that do not require 300mm wafer processes or expensive fabs.
IC Insights recently released a report showing the number of IDMs producing leading-edge logic devices declining from 22 at the 130nm technology node to only 2 at the 22nm/20nm technology node (see figure below).
Source: IC Insights
TSMC, GlobalFoundries, UMC, and SMIC are the four major pure-play foundries seen to be the leading benefactors of a new business that transitions away from the IDMs.
With an increasing number of large semiconductor companies like ST, NXP, Infineon, Renesas, Sony, Fujitsu, and Toshiba stating their intentions to rely more on outside foundries for their IC production, it is easy to see why IC Insights forecasts foundries will impact an increasing amount of worldwide IC sales over the next several years.
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