Fabless
A term for the way of operating in which a company owns no manufacturing plant (fab, short for fabrication facility) and concentrates on product planning, design, marketing, and sales, or for such a company itself. It is a coinage made by adding the suffix -less to fab (plant), and is used especially in the semiconductor industry. Manufacturing is outsourced to external contract manufacturers called foundries.
The division of labor in the semiconductor industry
In semiconductors, by dividing roles between fabless companies, which plan and design chips, and foundries, which specialize in manufacturing alone, a division of labor has taken shape in which the risk of enormous capital investment in manufacturing is concentrated on the manufacturing side, while the design side stays light and can concentrate its resources on developing new products. Taiwan's TSMC, founded in 1987, is the leading example of a company specializing in this kind of contract manufacturing (a foundry), and is said to hold more than half of the world market.
Representative companies
Representative fabless companies include Qualcomm, founded in 1985, and NVIDIA, founded in 1993. Neither owns a manufacturing plant; both concentrate on design and development and outsource manufacturing to foundries such as TSMC.
Origins
The fabless division of labor is said to have its origins in Silicon Valley in the 1980s, when venture companies specializing in semiconductor design grew rapidly by teaming up with partner companies that specialized in manufacturing.
To verify
- When and by whom the word "fabless" was first used (there is information placing its origin in Silicon Valley in the 1980s, but the date and company of first use have not been identified)
- How common the use of "fabless" is in industries other than semiconductors, such as apparel
References
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