Taiwan Semiconductor Manufacturing Company
[Type the company name]
Taiwan Semiconductor Manufacturing Co., The Semiconductor Services Company
| | | | | | | | | | | |
[Type the company name]
Taiwan Semiconductor Manufacturing Co., The Semiconductor Services Company
| | | | | | | | | | | |
STUDY QUESTIONS
Taiwan Semiconductor Manufacturing Company
1. Explain the “foundry model” that TSMC carved out in the semiconductor industry. How does it differ from the conventional business model?
A typical semiconductor manufacturing company can be categorized into one of these two groups and they are as follows :
IDMs - Prior to the emergence of foundries, all IC manufacturers in the IC industry were Integrated Device Manufacturers. These fully integrated manufacturers had the ability to design, fabricate and market their own products while some even had the abilities to build their own production equipment. Included in the group of IDMs are both systems companies such as Hitachi, IBM and chip companies such as Amtel and Microchip.
These IDMS were reluctant outsource their chip production because they viewed fabs as providing leverage in acquiring ideas for new chip designs. However, rising production costs in countries such as the United Stated forced these IDMs to start outsourcing their products to more efficient manufacturers such as Toshiba in Japan and Samsung in Korea.
Foundries : Entrepreneurs started fabless companies in the late 1980’s when they realized that they can utilize these production facilities in other countries. These firms generally have high profit margin and strong cash flows, reflecting the relative lack of capital intensity in their business model. It opened the door for the foundation of foundries and in 1987, Taiwan Semiconductor Manufacturing Company was founded. TSMC was the first pure “foundry,” a pure chip manufacturer without a product of its own. It produced a win-win situation for both the fabless
Taiwan Semiconductor Manufacturing Co., The Semiconductor Services Company
| | | | | | | | | | | |
[Type the company name]
Taiwan Semiconductor Manufacturing Co., The Semiconductor Services Company
| | | | | | | | | | | |
STUDY QUESTIONS
Taiwan Semiconductor Manufacturing Company
1. Explain the “foundry model” that TSMC carved out in the semiconductor industry. How does it differ from the conventional business model?
A typical semiconductor manufacturing company can be categorized into one of these two groups and they are as follows :
IDMs - Prior to the emergence of foundries, all IC manufacturers in the IC industry were Integrated Device Manufacturers. These fully integrated manufacturers had the ability to design, fabricate and market their own products while some even had the abilities to build their own production equipment. Included in the group of IDMs are both systems companies such as Hitachi, IBM and chip companies such as Amtel and Microchip.
These IDMS were reluctant outsource their chip production because they viewed fabs as providing leverage in acquiring ideas for new chip designs. However, rising production costs in countries such as the United Stated forced these IDMs to start outsourcing their products to more efficient manufacturers such as Toshiba in Japan and Samsung in Korea.
Foundries : Entrepreneurs started fabless companies in the late 1980’s when they realized that they can utilize these production facilities in other countries. These firms generally have high profit margin and strong cash flows, reflecting the relative lack of capital intensity in their business model. It opened the door for the foundation of foundries and in 1987, Taiwan Semiconductor Manufacturing Company was founded. TSMC was the first pure “foundry,” a pure chip manufacturer without a product of its own. It produced a win-win situation for both the fabless