Fabless semiconductor company

A fabless (fabrication-less) semiconductor company specializes in the design and sale of hardware devices and semiconductor chips while outsourcing the fabrication or "fab" of the devices to a specialized manufacturer called a semiconductor foundry. Foundries are typically located in countries with lower cost of labor, so fabless companies can benefit from lower capital costs while concentrating their research and development resources on the end market. The credit for pioneering the fabless concept is given to Bernie Vonderschmitt of Xilinx and Gordon A. Campbell of Chips and Technologies. The first fabless semiconductor company, the Western Design Center, was founded in 1978.

History

LSI/CSI (not affiliated with LSI, Inc)

Prior to the 1980s, the semiconductor industry was vertically integrated. Semiconductor companies owned and operated their own silicon wafer fabrication facilities and developed their own process technology for manufacturing their chips. These companies also carried out the assembly and testing of their chips, the fabrication.

Meanwhile, with the help of private-equity funding, smaller companies began to form, with experienced engineers exercising their entrepreneurial prowess by establishing their own IC design companies focused on innovative chip solutions.^{[citation needed]}

As with most technology-intensive industries, the silicon manufacturing process presents high barriers to entry into the market, especially for small start-up companies. These companies relied on using excess capacity from Integrated Device Manufacturers (IDMs) to manufacture the chips they were designing.^{[citation needed]}

These conditions underlay the birth of the fabless business model. Companies were manufacturing integrated circuits (ICs) without owning a fabrication plant. Simultaneously, the foundry industry was established by Dr. Morris Chang with the founding of Taiwan Semiconductor Manufacturing Corporation (TSMC). Foundries became the cornerstone of the fabless model – providing a non-competitive manufacturing partner for fabless companies.

In 1994, Jodi Shelton – along with a half a dozen CEOs of fabless companies – established the Fabless Semiconductor Association (FSA) to promote the fabless business model globally. Eventually, the FSA became the global voice for the fabless ecosystem, with over 500 corporate members in 25 countries.

In December 2007, the FSA transitioned to the GSA – the Global Semiconductor Alliance. The organizational transition reflected the role FSA had played as a global organization that collaborated with other organizations to co-host international events. Additionally, the GSA leadership is composed of regional leadership councils with executives from those regions who serve as advisers to the GSA Board of Directors on global and regional issues. Those leadership councils are the Asia-Pacific Leadership Council and the Europe, Middle East and African (EMEA) Leadership Council. The transition also highlights GSA's membership and mission expansion beyond fabless to include the entire semiconductor supply chain.

Industry growth and success

When FSA was established in 1994, there were only three fabless companies – Cirrus Logic, Adaptec, and Xilinx – each with revenues in excess of $250 million. During the 1990s, industry pundits acknowledged the financial success of fabless companies, such as Nvidia, Broadcom, and Xilinx, and such companies as Cyrix produced competitively-priced products, benefiting consumers and driving the global market for computing devices.

The model has been further validated by the conversion of major IDMs to a completely fabless model, including (for example) Conexant Systems, Semtech, and most recently, LSI Logic. Today most major IDMs including Freescale, Infineon, Texas Instruments and Cypress Semiconductor have adopted the practice of outsourcing chip manufacturing as a significant manufacturing strategy. As of 2007, the fabless model is the preferred business model for the semiconductor industry^{[citation needed]}. The same year GSA tracked 10 separate fabless companies that had each surpassed $1 billion in annual revenues.

Fabless sales leaders by year

2010

The top 5 sales leaders for fabless companies:

Rank 2010	Company	Country of origin	Revenue (million $ USD)	% Change
1	Qualcomm	USA	7,098	11%
2	Broadcom	USA	6,540	53%
3	AMD	USA	6,460	20%
4	MediaTek	Taiwan	3,610	3%
5	Marvell	USA	3,602	34%

2009

The top 5 sales leaders for fabless companies:

Rank 2009	Company	Country of origin	Revenue (million $ USD)
1	Qualcomm	USA	6,585
2	AMD	USA	5,252
3	Broadcom	USA	4,190
4	MediaTek	Taiwan	3,500
5	Nvidia	USA	3,135

2008

The top 5 sales leaders for fabless companies:

Rank 2008	Company	Country of origin	Revenue (million $ USD)
1	Qualcomm	USA	6,477
2	Broadcom	USA	4,643
3	NVIDIA	USA	3,241
4	Marvell Technology Group	USA	3,059
5	MediaTek	Taiwan	2,896

2007

The top 5 sales leaders for fabless companies:

Rank 2007	Company	Country of origin	Revenue (million $ USD)
1	Qualcomm	USA	5,619
2	Broadcom	USA	3,746
3	NVIDIA	USA	3,466
4	Marvell Technology Group	USA	2,777
5	MediaTek	Taiwan	2,452

2006

The top 4 sales leaders for fabless companies:

Rank 2006	Company	Country of origin	Revenue (million $ USD)
1	Qualcomm	USA	4,529
2	Broadcom	USA	3,668
3	NVIDIA	USA	2,574
4	Marvell Technology Group	USA	2,550

2005

The top 5 sales leaders for fabless companies:

Rank 2005	Company	Country of origin	Revenue (million $ USD)
1	Qualcomm	USA	3,457
2	Broadcom	USA	2,671
3	NVIDIA	USA	2,079
4	ATI Technologies	Canada	2,028
5	Xilinx	USA	1,645
Others			22,262
Total			31,142

2004

The top 5 sales leaders for fabless companies:

Rank 2004	Company	Country of origin	Revenue (million $ USD)
1	Qualcomm	USA	3,211
2	Broadcom	USA	2,400
3	ATI Technologies	Canada	1,913
4	NVIDIA	USA	1,680
5	Xilinx	USA	1,586
Others			20,135
Total			30,925

2003

The top 5 sales leaders for fabless companies:

Rank 2003	Company	Country of origin	Revenue (million $ USD)
1	Qualcomm	USA	2,398
2	NVIDIA	USA	1,716
3	Broadcom	USA	1,610
4	ATI Technologies	Canada	1,401
5	Xilinx	USA	1,300

See also

• Semiconductor sales leaders by year
• Semiconductor foundry sales leaders by year
• Semiconductor equipment sales leaders by year
• Foundry model
• Semiconductor consolidation
• Semiconductor device fabrication
• Rock's law