June 15, 2016, anysilicon
Each semiconductor company reaches at some point to the manufacturing dilemma – how to go into production in the cheapest, most efficient and highest quality way? Is it using an external full turnkey partner – e.g ASIC model, or work directly with semiconductor suppliers – e.g. COT model.
Experienced and mature semiconductor companies with in-house operation teams tend to use COT model because they have the manpower and the know-how to drive the supply chain smoothly. However, small fabless startups that focus their efforts on designing their chip will most likely to choose ASIC model.
Today, semiconductor supply chain providers are offering 2 main business models to semiconductor companies: ASIC Model and COT model. This article’s purpose is to describe the two business models (ASIC and COT) and discuss the advantages and disadvantages of each model.
ASIC model is defined as a full turnkey solution whereas the fabless company (e.g. customer) is outsourcing all the production supply chain to a single semiconductor supplier. The semiconductor supplier is sourcing the wafers; assemble the dies into a package, test the ASICs and then ship the goods to the fabless company.
For the fabless company, the entire manufacturing process is risk free, because the full turnkey provider is responsible for the supply chain.
There is no doubt that there are significant benefits to the ASIC model. This method allows quick arrival to market utilizing the full turnkey provider’s eco-system, experience and capital. The fabless company does not need to invest resources and money in: logistics, scheduling, managing multiple suppliers and coordination between them, and of course there is no need in gaining knowledge of hiring professionals in the field of semiconductor production.
COT stands for Customer Owned Tooling. In the COT model, the fabless company itself manages the production process with different suppliers – from the wafer foundry through the packing, testing, logistics, and finally the yield itself.
The fabless company is responsible for solving the problems in the manufacturing process, including yield, quality control, delays etc. This working model requires professional expertise in the semiconductor production processes as well as understanding in logistics, shipping and planning.
Along with the risks, there is no doubt that working in COT model can save money when it comes to large-scale production. Large corporations, and especially technological corporations like control. Without control, they wouldn’t be successful. COT Model give full control over the entire production process.
When held against the traditional ASIC Model and COT Model one can clearly see the advantages and how these models could be beneficial to different type of semiconductor organisations. AnySilicon directory consists of many supply chain providers that offer both ASIC and COT models, please feel free to contact them directly or via our contact form.
In today’s fast pace and agile market, companies need to focus on their core competence. Fabless startup companies must focus on developing their product and find customers. Therefore, adding in house competences in the area semiconductor manufacturing will defocus the company strategy and increase risk in delivering high quality ASICs to the market.
Every company needs to earn money, including companies offering ASIC model. Meant that full turnkey semiconductor suppliers are generating profit for each ASIC they produce for their customers. Working in COT model will help you save money because you’ll working directly with the semiconductor manufacturing companies and thereby removing the markup for the full turnkey provider.
Some supply chain providers offer a combined model that allows customers to start with ASIC model and move gradually to COT model. Or a tailored business model that could fit better to customers’ requirements, vision and strategy. Please contact us via our contact form for more information.