Fabless Semiconductor Company Value Chain

September 25, 2016, anysilicon

Michael Porter developed the value chain concept in 1980 in his book “Competitive Advantage”. A value chain is a series of activities within a company in order to deliver a product or a service. The total value delivered by the company is the sum total of the value built up all throughout the company.


This description is applicable also to the semiconductor industry. In the semiconductor industry every company has to generate a value. The sum of the entire value chain (from end to end) is the total offering which is delivered to the end customer. For visualisation sake, one can image a chip (IC or ASIC) production all the way from sunny sand dunes, where the sand is being taken to a factory, to wafer processing, ASIC design using EDA tools, packaging, testing and finally delivering the chip (ASIC) to Apple for making a new mobile phone so the customer that can enjoy the new benefits of a new IC.


In today’s semiconductor industry the value chain is dynamic and managed via partnership between all the value chain creators. Fabless semiconductor company’s value chain is described in the following block diagram. It assumes that the Fabless semiconductor company has agreements with all the typical suppliers such as: EDA companies, Wafer supplier and OSAT companies (those companies has also their own value chain. For example: packaging companies have material suppliers, machines, design tools and more).


Another type of value chain can be created with an ASIC supply chain partner that manages the fabless company operation. There are several companies that are specialized in providing semiconductor supply chain services. You can find them in this link.


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