Editing Foundry model (section)

==History==
Companies that both designed and produced the devices were originally responsible for manufacturing microelectronic devices. These manufacturers were involved in both the [[research and development]] of manufacturing processes and the research and development of [[microcircuit]] design.

The first pure play semiconductor company is the [[Taiwan Semiconductor Manufacturing Corporation]] founded by [[Morris Chang]], a [[Corporate spin-off|spin-off]] of the government [[Industrial Technology Research Institute]], which split its design and fabrication divisions in 1987,<ref>{{cite web |url=http://www.tsmc.com/english/aboutTSMC/company_profile.htm |title=Company Profile |publisher=TSMC |access-date=2020-12-06}}</ref> a model advocated for by [[Carver Mead]] in the U.S., but deemed too costly to pursue. The separation of design and fabrication became known as the foundry model, with [[fabless manufacturing]] outsourcing to [[semiconductor foundry|semiconductor foundries]].<ref name=Brown>{{cite book|last1=Brown|first1=Clair|last2=Linden|first2=Greg|title=Chips and change : how crisis reshapes the semiconductor industry|date=2011|publisher=MIT Press|location=Cambridge, Mass.|isbn=9780262516822|edition=1st|url=https://books.google.com/books?id=9RnxtWd3ZEkC&pg=PA47}}</ref>

[[Fabless semiconductor companies]] do not have any semiconductor fabrication capability, instead contracting with a merchant foundry  for fabrication. The fabless company concentrates on the research and development of an IC-product; the foundry concentrates on manufacturing and [[Test method|testing]] the physical product. If the foundry does not have any semiconductor design capability, it is a pure-play semiconductor foundry.

An absolute separation into fabless and foundry companies is not necessary. Many companies continue to exist that perform both operations and benefit from the close coupling of their skills. Some companies manufacture some of their own designs and contract out to have others manufactured or designed, in cases where they see [[Value (marketing)|value]] or seek special skills. The foundry model is a business model that seeks to optimize productivity.

===MOSIS===
The very first merchant foundries were part of the [[MOSIS]] service. The MOSIS service gave limited production access to designers with limited means, such as students, university researchers, and engineers at small [[Startup company|startups]].<ref name="BergerLester2015">{{cite book|author1=Suzanne Berger|author2=Richard K. Lester|title=Global Taiwan: Building Competitive Strengths in a New International Economy|url=https://books.google.com/books?id=BHCmBgAAQBAJ&pg=PA142|date=12 February 2015|publisher=Routledge|isbn=978-1-317-46970-4|pages=142–}}</ref> The designer submitted designs, and these submissions were manufactured with the commercial company's extra capacity. Manufacturers could insert some [[Wafer (electronics)|wafers]] for a MOSIS design into a collection of their own wafers when a processing step was compatible with both operations. The commercial company (serving as foundry) was already running the process, so they were effectively being paid by MOSIS for something they were already doing. A factory with excess capacity during slow periods could also run MOSIS designs to avoid having expensive [[Capital (economics)|capital]] equipment stand idle.

Under-use of an expensive manufacturing plant could lead to the financial ruin of the owner, so selling surplus [[Wafer (electronics)|wafer]] capacity was a way to maximize the fab's use. Hence, economic factors created a climate where fab operators wanted to sell surplus wafer-manufacturing capacity and designers wanted to purchase manufacturing capacity rather than try to build it.

Although MOSIS opened the doors to some fabless customers, earning additional [[revenue]] for the foundry and providing inexpensive service to the customer, running a business around MOSIS production was difficult. The merchant foundries sold wafer capacity on a surplus basis, as a secondary business activity. Services to the customers were secondary to the commercial business, with little [[guarantee]] of support. The choice of merchant dictated the design, development flow, and available techniques to the fabless customer. Merchant foundries might require [[Property|proprietary]] and non-portable preparation steps. Foundries concerned with protecting what they considered [[trade secret]]s of their [[methodologies]] might only be willing to release data to designers after an onerous [[nondisclosure agreement|nondisclosure]] procedure.

===Dedicated foundry===
In 1987, the world's first dedicated merchant foundry opened its doors: [[TSMC|Taiwan Semiconductor Manufacturing Company (TSMC)]].<ref name="HirakawaLal2013">{{cite book|author1=Hitoshi Hirakawa|author2=Kaushalesh Lal|author3=Shinkai Naoko|title=Servitization, IT-ization and Innovation Models: Two-stage Industrial Cluster Theory|url=https://books.google.com/books?id=QkNXCLjxJsoC&pg=PA34|year=2013|publisher=Routledge|isbn=978-0-415-63945-3|pages=34–}}</ref> The distinction of 'dedicated' is in reference to the typical merchant foundry of the era, whose primary business activity was building and selling of its own [[Integrated circuit|IC]]-products. The dedicated foundry offers several key advantages to its customers: first, it does not sell finished IC-products into the [[supply (economics)|supply]] channel; thus a dedicated foundry will never compete directly with its fabless customers (obviating a common concern of fabless companies). Second, the dedicated foundry can scale production capacity to a customer's needs, offering low-quantity [[Multi-project wafer service|shuttle]] services in addition to full-scale [[Mass production|production]] lines. Finally, the dedicated foundry offers a "COT-flow" (customer owned tooling) based on industry-standard [[Electronic design automation|EDA]] systems, whereas many IDM merchants required its customers to use proprietary (non-portable) development tools. The COT advantage gave the customer complete control over the design process, from concept to final design.