A fabless company is a company that does not own a manufacturing plant (fab) and specializes in semiconductor design.

Main roles:

・Circuit design

・Architecture design

・IP integration

・Performance optimization

・Power consumption design

Manufacturing is outsourced to foundries.

There are three main reasons.

・Semiconductor factories are extremely expensive

・Technology evolves rapidly

・Design is becoming more complex

The construction cost of a leading-edge fab is on the order of 2–3 trillion yen.

It is not realistic for every company to have its own manufacturing.

As a result, design and manufacturing became separated.

These are the companies driving today’s semiconductor industry.

Representative examples:

・NVIDIA

・AMD

・Qualcomm

・Broadcom

・Apple

・MediaTek

NVIDIA in particular has become a leading company of the AI era.

Semiconductor design has a multilayered structure.

Main domains:

・System architecture

・CPU / GPU design

・AI accelerator design

・Memory controllers

・Interface design

These are integrated as an SoC (System on Chip).

Today’s semiconductors are collections of IP.

Examples:

・CPU cores

・GPU cores

・Communication IP

・Memory controllers

・AI engines

Fabless companies play the role of combining and optimizing these IP blocks.

Fabless companies cannot exist without EDA tools.

Major EDA companies:

・Cadence

・Synopsys

・Siemens EDA

EDA supports

・Circuit design

・Timing analysis

・Layout generation, and more.

Fabless companies and foundries are close partners.

Division of roles:

Fabless

・Design

・Architecture

・Market strategy

Foundry

・Process technology

・Volume production

・Yield improvement

Collaboration between the two is called DTCO (Design Technology Co-Optimization).

The greatest strengths of fabless companies:

・Focus on design

・No capital investment in equipment required

・Fast response to the market

・Risk diversification

As a result, the speed of innovation is fast.

On the other hand, there are also weaknesses.

・Dependence on manufacturing partners

・Supply constraints

・Competition for foundry capacity

・Fluctuations in manufacturing costs

Many companies depend on TSMC’s production capacity.

In the AI era, fabless companies are the main players.

Reasons:

・Competition in AI chip design

・SoC integration

・Architectural differentiation

Examples:

・GPUs

・AI accelerators

・Inference chips

Design is at the center of competition.

Future directions:

・Chiplet design

・Software integration

・AI-optimized architectures

・Vertically integrated design

Fabless companies are evolving from hardware-only companies into system design companies.

・Fabless companies are design-only companies

・Manufacturing is outsourced to foundries

・IP integration and SoC design are at the core

・Collaboration with EDA companies is indispensable

・In the AI era, design competition is the main battleground

1.What is the biggest reason the fabless model emerged?

2.What is the most important role of fabless companies?

3.What does DTCO mean?

 

Column Supervisor: Koji Kakumoto (President, OTIS Co., Ltd.)

After studying abroad and working in planning and development at a trading company, he joined OTIS Co., Ltd. in 2011. While primarily working in the Corporate Planning Department, he has also served concurrently in manufacturing and technical divisions, and since 2018 has served as President, working to drive business growth and strengthen the organization.

 

This article is a general technical explanation intended for educational purposes and does not refer to any specific company, product, or technology.