Intel: Fabless Business Model Is Collapsing

Intel Claims Major Advantages for Owning Factories

by Anton Shilov
04/25/2012 | 12:56 PM

Nowadays it is extremely expensive to build, own and operate semiconductor manufacturing facilities. Intel Corp. is among a handful of companies, who can afford to own numerous leading-edge facilities across the globe, whereas other companies have to turn to contract makers of chips. But Intel claims that as process technologies get thinner and processors more sophisticated, foundry model may fail.


“The foundry model is collapsing. [...] Qualcomm will not be able to use that [TSMC's single 20nm] process,” said Mark Bohr, director of process architecture & integration and senior fellow of technology & manufacturing group at Intel, in a brief interview with EETimes.

TSMC recently announced that it would offer only one version of 22nm process technology that would be aimed at both low-power and high-performance devices. Intel, which has been manufacturing commercial chips using general purpose 22nm process technology for several months now, vows to introduce a special version of the 22nm manufacturing technology for system-on-chip devices shortly. Intel concludes that without special tailoring of fabrication processes for chip designs and vice versa the end product will not be the best one possible.

There are clear advantages in having own fabs, but very few companies these days sell as many chips as Intel does and therefore they cannot afford building factories and develop their own process technologies. Once semiconductor fabs start to process 450mm wafers, even fewer companies will be able to have their own facilities and tailor designs for processes and vice versa, which solves a lot of problems, according to Intel.

“Being an integrated device manufacturer really helps us solve the problems dealing with devices this small and complex,” said Mr. Bohr.

But since far too many chip designers are fabless, contract makers of semiconductors will have to ensure the best possible process technologies in order to stay competitive. Therefore, the process technologies will only get better and the foundry industry will prosper in the coming decades.