Fabless chip makers are companies that specialize in designing and selling semiconductors for various electronics like smartphones, digital cameras and smart cars without actually manufacturing them. Instead of manufacturing the chips themselves, fabless chip makers outsource their production to foundries or production facilities.
The fabless model emerged in the early 1980s when smaller manufacturers entered the market. Due to high barriers to entry, many of these companies produced more chips than they could use leading to a surplus problem. Hence, with the continued growth of the semiconductor industry, the fabless model was developed and adopted by many companies.
Advantages of Fabless Model
The fabless model offers several advantages to chip manufacturers. Firstly, it eliminates the need for large investments in manufacturing processes and infrastructure. Secondly, it allows the manufacturers to focus on the design of the chips and brings in operational flexibility. Thirdly, it allows the companies to operate on a global scale by locating their design centers in one part of the world and their manufacturing in another.
Frequently Asked Questions
What Is a Chip?
A chip, also known as an integrated circuit, is a miniaturized electronic circuit consisting of transistors and other electronic components that are manufactured in a single piece of semiconductor material.
What Is the Semiconductor Industry?
The semiconductor industry is the sector of the electronics industry that deals with the production of semiconductor chips used in electronic devices like smartphones, laptops, TVs, and other digital electronics.
What Is the Difference Between Fabless and Semiconductor Companies?
The main difference between fabless and semiconductor companies is that fabless companies only design and sell semiconductors, while semiconductor companies manufacture and sell their own semiconductors.
Fabless chip makers have transformed the semiconductor industry by allowing companies to focus on chip design rather than manufacturing. This model has brought in operational flexibility, ease of entry and global reach to semiconductor businesses.