IDM to Fab-lite or Fabless. American Semiconductor Crisis

    The Chip Insider®
    October 30, 2020 — Strategy and Tactics: Can an IDM safely become Fab-lite or Fabless? Evolution of the American Semiconductor Crisis. WildPhotons: Two commanders on the same field are always ...
    G. Dan Hutcheson G. Dan Hutcheson
    Summaries:

    Can an IDM safely become Fab-lite or Fabless? An appropriate question, given the controversy that emerged from Intel's last earnings call. The path from IDM to a Fab-lite or Fabless business model is the hardest tactical move to execute in the semiconductor business. Here are some successful examples.

    Evolution of the American Semiconductor Crisis: This year's CHIPS for America Act (Creating Helpful Incentives to Produce Semiconductors) is the first time the United States has seriously considered having an industrial policy. If passed, it would infuse $22B into the industry. The hollowing out of America's semiconductor manufacturing industry is not new. As an issue, it goes as far back as the late seventies when CEOs of U.S. companies warned of Japan's threat. In those days, the U.S. accounted for more than two-thirds of the world's IC manufacturing and Silicon Valley was half of that.

    Looking back, the number of U.S. companies doing semiconductor process R&D at or near the leading edge was just over 70. By 2000, only 15 U.S. semiconductor companies manufacturing would be left. By 2010, only 4 and then only 2 going on 1 as 2020 came to a close.

    Unlike the Chicxulub impactor that struck the earth and killed off dinosaurs, there were multiple environmental changes - along with strategic repositioning - that killed off the semiconductor manufacturing base of the United States. The U.S. industrial policy of ... did nothing to stave off the addition of the American semiconductor manufacturer to the endangered species list. The biggest factor is the financial fractal that Moore's Law drove. As transistors got smaller the scale needed soared. In 1980 when the node was 3 microns, the corporate scale needed was no more than $50M. Today's minimal scale needed for an IDM to be sustainable is ... This trend was, in effect, the Chicxulub impactor to America's Semiconductor manufacturing industry...

    IDM to Fab-lite or Fabless. American Semiconductor Crisis.


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