Most of semiconductor process development work is done by the production equipment companies nowadays, according to Wim Roelandts, CEO of Xilinx and a director of the world's largest equipment company Applied Materials, so it doesn't really matter giving up basic process development.
With NXP, TI, ST and Freescale committed to giving up basic digital CMOS process development, this must come as some comfort for their future competitiveness.
"We've proved you don't have to give up anything by being fabless", says Roelandts, "60 to 70 per cent of process development is now being done by equipment companies.You can't afford to be different any more, you have to be mainstream, so why do your own basic development."
Roelandts conceded that this trend of giving up in-house process development would involve a power shift in the industry. "More power is going to the foundries and the equipment companies", he says.
He sees the industry falling into four segments: Intel, because of its size and market share, can still continue its own process development and manufacturing; second there'll be the speciality vendors, like the analogue companies, which will also develop their own processes; then there's the memory makers which will need their own fabs and process development, and fourthly there's the fabless industry.
It is the second and fourth segments which are doing the best, financially. The latest figures from the Fabless Semiconductor Association (FSA) show that FSA members' revenues grow 27 per cent last year, against 8 per cent growth for the industry as a whole, and the fabless industry, with $50bn in revenues, is now worth 20 per cent of the semiconductor industry's total value.
Some of the analogue companies are enjoying fat margins in the 70 per cent plus region, though their growth is generally slower than the overall level of the fabless companies.
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