Home»News»IDMs rapidly transitioning Logic production to foundries

IDMs rapidly transitioning Logic production to foundries

Pinterest Google+

In 1998, Motorola’s Semiconductor Products Sector (which was later spun out as Freescale) became the first major IDM to use the term “asset light” when it announced plans to shift 50% of its wafer production to third-party manufacturers in four years.Motorola’s asset-light efforts were slow to take hold, and the strategy was re-launched a few more times before its semiconductor division was spun out in 2003 as Freescale. In 2011, about 28% of Freescale’s wafers were outsourced compared to 15% in 2007.Arguably, no other trend has so quickly swept through the IC industry and stirred up so much debate about the future of chip making as the spread of “fab-lite” (or “asset-lite”) business models, which are being embraced by a growing number of major IDMs worldwide.Most recently, large Japanese IC makers—namely Toshiba, Renesas, Sony, and Fujitsu—joined the fab-lite/asset-lite movement several years after U.S. and European IDMs began reining in capital expenditures on expensive new 300mm wafer fabs and increasing their use of third-party foundries.Nearly all IDMs today (excluding giant Intel and many memory makers) are now aiming to keep capital spending at or below 10% of annual sales compared to the IC industry’s average of more than 20% in the last decade.The advent of fab-/asset-lite strategies has led to a rash of predictions that many IDMs were on their way to becoming fabless because they have stopped investing in leading-edge wafer plants and development of next-generation digital CMOS technologies.Indeed, some IDMs have used fab-/asset-lite strategies as steppingstones to going fabless—such as LSI and most recently Integrated Device Technology (IDT)—but many other IC manufacturers 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.When looking at the increasing number of large companies that have stated their intentions to rely more on outside foundries for their IC production (e.g., ST, NXP, Infineon, Renesas, Sony, Fujitsu, Toshiba, etc.), it is easy to envision foundry sales to IDMs “impacting” an increasing amount of worldwide IC sales over the next 5-10 years. The number of IDMs producing leading edge logic devices is forecast to shrink from 22 at the 130nm technology node to only three at the 22/20nm technology node. Of course, the major IC foundries will continue to be the recipients of this business as it transitions away from the IDMs.

Electronicsfeed.com is a participant in the Amazon Services LLC Associates Program, an affiliate advertising program designed to provide a means for sites to earn advertising fees by advertising and linking to Amazon.com. For a full list of the affiliate programs we utilize to help serve unique, ad-free content, take a look at our Advertising Disclosure statement.
Previous post

Applied Materials to lay off 900 - 1'300 staff worldwide

Next post

Kindle Fire teardown reveals cost-saving design