Fab-lite business model called “sustainable,” attracts converts

October 4, 2011 — The fab-lite (or asset-lite) trend in IC industry has spread quickly and caused a good deal of debate about the future of chip making, says IC Insights in its latest research bulletin from The McClean Report. Fab-lite integrated device manufacturers (IDMs) from the US and Europe are now joined by large Japanese IC makers — Toshiba, Renesas, Sony, and Fujitsu — increasing utilization of third-party foundries. Nearly all IDMs today (excluding giant Intel and memory makers) are now aiming to keep capital spending at or below 10% of annual sales. In the last decade, the IC industry averaged above 20% of annual sales spent on fabs.

The advent of fab-/asset-lite strategies led to a rash of predictions that many IDMs were on their way to becoming fabless because they have stopped investing in leading-edge wafer plants and development of next-generation digital CMOS technologies. Some IDMs have used fab-/asset-lite strategies as stepping stones to a fabless model — see LSI, and most recently Integrated Device Technology (IDT), which is now selling its 200mm fab in Oregon. However, many other IC manufacturers insist "lite" business models are sustainable over the long term since they


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