foundry model

The foundry model is the semiconductor business model where specialized manufacturers fabricate chips for outside design companies. **Its central bargain is specialization.** Fabless companies avoid building fabs and can move faster on architecture, software, and customer demand. Foundries concentrate capital, process engineering, yield learning, and factory utilization across many customers, which spreads the cost of process development over far more wafer volume. | Benefit | Who gains | Tradeoff | |---|---|---| | Lower entry cost | Fabless chip companies | Dependence on external wafer supply | | Better factory utilization | Foundries | Exposure to customer demand cycles | | Faster ecosystem growth | EDA, IP, packaging, and design services | More coordination across companies | | Technology leverage | End customers | Capacity bottlenecks during demand spikes | **The model works when trust and repeatability hold.** Customers need stable PDKs, protected IP, predictable schedules, and honest yield feedback. Foundries need enough volume to justify new nodes and enough pricing power to fund the next generation of equipment.