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Semiconductor manufacturers have two possible approaches to making their products. They can either build and run their own manufacturing plants, or restrict themselves to designing chips that are then made by others. The former was once the more usual method, involving the construction and operation of extremely expensive factories (called silicon foundries in the jargon) which are capable of the high standards of precision and cleanliness required to make these complex circuits. Many of these plants were sited in places, often in foreign countries where wage rates and other costs were low or grants were available and were usually restricted to manufacture of components with no research or design facilities. These became known in the business as fabs, short for “fabrication plants”. More recently, some companies — especially the smaller ones — have begun to select the other route to manufacture, because they have discovered they can innovate more effectively and bring products to market more quickly if they contract out the production stages to a foundry. Such firms are said to be fabless. This group now has its own trade association, the Fabless Semiconductor Association.

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Page created 24 May 1997