Looking at the semiconductor operating profit table, there are a wide variety of semiconductor companies such as Intel and Samsung. Some of these companies will only design semiconductors, some will only make semiconductors, and others will be able to do both. In this way, semiconductor companies can be classified into various categories, and today, let’s look at the classification criteria of semiconductor companies.
Semiconductor companies can be classified into three main categories: fabless, foundry, and IDM.
Fabless is a compound word of Fabrication+less, and refers to a semiconductor company that indirectly manufactures products without directly manufacturing semiconductor products. Fabless companies design and develop technologies, but sell products on a 100% commission basis. Simply put, it’s about making plans and leaving them to other places. Fabless companies have the advantage of being able to grow into specialized companies as they can reduce large investment costs by focusing only on marketing and technology development of products and entrusting production to external factories.
Representative fabless companies include AMD, ARM, NVIDIA, Qualcomm, and Apple.
Foundry can be thought of as the opposite of fabless, which means a company specializing in consignment production in the semiconductor industry. In other words, it refers to companies with opposite concepts to fabless companies that exclude design and technology development and focus on semiconductor production through fabs. In other words, it refers to a company that only receives and makes designs. The reason for the trend of semiconductor manufacturers’ transformation into foundry companies that are only in charge of manufacturing according to design is because of the limitations of manufacturers’ natural design capabilities and the nature of the semiconductor industry that is sensitive to confidentiality.
Representative foundry companies include Taiwan’s TSMC and Samsung Electronics’ foundry division, which can be said to be almost monopolized because TSMC has 50% of the foundry market share. (Samsung Electronics’ foundry division is about 20% as of the first quarter of 2019, and its market share is on the rise.)
Finally, IDM stands for Integrated Device Manufacturer, which is a company in charge of everything from direct design to production.
Earlier, Samsung Electronics’ Foundry division was included in the Foundry company, and Samsung is a company that can do both design and production, and it also plays the role of Foundry that receives the design drawings of Qualcomm, a fabless company. Representative foundry companies include Intel, Samsung Electronics, and SK Hynix.
Samsung is a very special case, and it also has a mobile market such as the Galaxy series, so it is the only company that can handle the design, production, and supply of semiconductors.
In the next posting, we will look at memory semiconductors and non-memory semiconductors (system semiconductors), which are very important concepts to understand the semiconductor market.