(December 29, 2010) — The fabless model was established more than a decade ago. Jodi Shelton, Global Semiconductor Alliance (GSA), has witnessed fabless companies emerge, grow and prosper. This article summarizes the accomplishments of the fabless model.

In 1994, a group of industry executives established the Fabless Semiconductor Association to "enhance the environment for innovation by providing a platform for meaningful global collaboration between fabless companies and their partners." They believed it would be a viable, sustainable model. Now, as we approach 2011, this outsourcing model has been proven time and time again. It has enabled chip companies to succeed and drive innovation by allowing them to focus on technology development and quickly push to the leading edge with minimal investment. Also read: 13 fabless IC suppliers in 2010 $1b sales club, says IC Insights

Once considered the minority, today there are close to 1,300 fabless companies worldwide, and this number continues to grow with an increasing number of integrated device manufacturers (IDMs) outsourcing a greater percentage of their manufacturing. The fabless model has created a way for IDMs to survive in the face of rising costs, transitioning to a model where they can continue innovating. Over the past two years, a number of leading semiconductor companies have already transitioned or have outlined their plan to become fab-lite/fabless, such as NXP, AMD, IDT, Texas Instruments (TI), and Renesas Electronics Corp. In Q3 2010, newly formed Renesas Electronics Corp. announced it would no longer invest in building new fabs, outsource chip production at 28nm and below, and continue its technology research project with IBM [1].


Table. Annual sales growth (fabless vs. overall semi). Source: GSA, October 2010


Fabless sales growth (%) 

Overall semiconductor industry sales growth (%)
















*This large increase was primarily the result of AMD becoming fabless.

Statistics demonstrate that fabless companies have set the bar high for the overall semiconductor industry, and these companies continue to raise the benchmark of success year after year. For example, with the exception of 2007, the fabless sector outperformed the overall semiconductor industry in performance in areas such as sales growth (see Table).  

Emerging semiconductor companies drive innovation

Industry heavyweights are not the only ones reaping the benefits of the fabless model. Today, the term "emerging" is on the mind of every executive connected with the semiconductor industry.  Chip companies, venture capitalists, suppliers, and original equipment manufacturers (OEMs) are investing in emerging applications, countries, companies, etc., as they continue to experience growth, drive demand and innovation, and therefore take a bigger piece of the pie.

The final nominees for GSA’s 2010 Most Respected Emerging Public Semiconductor Company Award, which were selected by industry peers, were all fabless companies driving innovation: NetLogic Microsystems, Cavium Networks, and Silicon Laboratories. NetLogic Microsystems recently announced that it has become a member of the Network Intelligence Alliance to drive innovation for next-generation network solutions [2]. Cavium Networks announced market-leading hardware and software solutions for 4G networks [3].  Silicon Laboratories introduced the industry’s first 5W stereo Class D amplifier that lessens electromagnetic interference (EMI), bringing inexpensive fidelity to audio electronics [4].

Growth of fabless patents

While the industry is growing, companies are still presented with challenges in different regions, at various technology nodes and end markets. However, with challenge comes opportunity for innovation.

Consumers are demanding more features, efficiency, and reliability, requiring chip companies to constantly innovate to remain competitive and meet demand. This has made semiconductors one of the fastest-growing industries and has led to a large number of patents registered by leading fabless companies. Qualcomm’s intellectual property (IP) portfolio includes more than 13,000 U.S. patents for wireless technologies, with more than 180 telecommunications equipment manufacturers licensing them worldwide [5]. And Broadcom holds more than 4,050 U.S. patents and 1,650 foreign patents, with more than 7,900 pending patent applications [6].

Fabless contributions

What would the electronics industry look like today without the contributions of fabless companies? Where would we be without NVIDIA’s graphics processing unit (GPU) invented in 1999? Its programmable GPUs have changed the user’s viewing experience and have enabled supercomputing to be economical and easily accessible. What about CSR’s Bluetooth solutions? Since its founding in 1999, CSR has shipped over two billion Bluetooth devices for a number of consumer devices. In 2010, it launched the world’s first combination audio processing and Bluetooth chip, CSR7810, and continues to be honored with innovation awards on an annual basis. Xilinx’s invention of the field programmable gate array (FPGA) has enabled designers to deliver higher performance, achieve faster time-to-market, lower costs and offer a highly reliable product.


The companies listed in this article are only a few examples of how the fabless model has contributed to the electronics industry. Since the model established itself more than a decade ago, it has reached higher and higher bars of excellence annually.  GSA has witnessed fabless companies emerge, grow and prosper — many of them becoming the best-of-breed in their end-market sector.


Jodi Shelton received her bachelor’s degree in political science from San Diego State U. and her master’s degree in political science from the U. of Houston, and is the co-founder and president of the Global Semiconductor Alliance, Churchill Tower 12400 Coit Road, Suite 650, Dallas, TX 75251 USA; ph.: 972-866-7579; [email protected]

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