The Foundry Model is a business model that originates from the microelectronics industry. This was introduced by Taiwan Semiconductor Manufacturing in 1987. According to this model, many companies do not have their own production facilities, but only develop turnkey solutions. The factories for the production and design of integrated circuits belong to different companies.

Companies that belong to the microelectronics industry can be divided into three groups. Intel belongs to the first group. This company is to be an integrated device manufacturer. They design and manufacture their own semiconductor devices.

AMD belongs to the second group. Such companies do not have their own capacities. All production work is outsourced.

GlobalFoundries and Taiwan Semiconductor Manufacturing belongs to the third group. They are pure play foundries. Their main task is not to design, but to produce custom solutions. This model has been widely distributed and accepted by the world community. The rapid development of microelectronics from a scientific point of view and the race of electronics manufacturers do not allow slowing down the renewal of the plant’s lines. Businesses buy ideas around the world or invest in their research centers. The main reason for this model is the incredible cost of the manufacturing plant. Modern-level factories cost as much as several annual budgets of a country.

We asked expert’s opinion about The Foundry Model

Mr. Risher Panir, will The Foundry Model continue to exist?

– I think definitely yes. There are a lot of design centers or companies that will never be able to afford a factory. They do not need it at all.

What awaits us in the future?

The construction of new factories with production must be carried out. This will be done in order to break up the share that the current leaders have. Perhaps the world of microelectronics will be divided into blocks. You see, the semiconductor industry is all about digital security and independence. Rich countries will have their own production factories at own loss.

Some companies have already begun distributing not only design centers around the world, but also production facilities.

Could you list the pros and cons of such a business model?

A big pron is the opportunity for design centers of various sizes to produce their products. After all, startups and small projects are the driver of progress. The disadvantages are clearly a strong localization of production, in other words, a strong dependence on geographical, political and natural factors of global microelectronics and the microelectronic industry of almost all countries in particular.

by Andiy Domane

CounselSenses