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Semiconductor companies have adopted a manufacturing outsourcing
strategy for many of the same reasons that other industries
have evolved to outsourcing operations considered beyond their
forte. The outsourcing of silicon wafers allows semiconductor
companies to focus on the design and marketing of its product
without the burden of building, operating and upgrading a
manufacturing facility.
As the cost of building a wafer fab and maintenance of leading-edge
process technology escalates, the fabless model is an attractive
long-term option for many semiconductor companies. By adopting
a fabless business strategy, a company can focus time and
resources on the design of innovative integrated circuits,
while avoiding the high cost of operating an internal fabrication
facility.
This approach has proven highly successful. The fabless segment
has exceeded the growth of the overall semiconductor market
by nearly double. Success can also be measured by the creation
of leading fabless companies in the 3D graphics, programmable
logic and communications markets, among others.
With the widespread availability of leading-edge technology
from independent wafer foundries, many IDMs are also adopting
a more fabless approach by outsourcing a portion of their
manufacturing.
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