Manufacturing outsourcing isn't a new concept for the semiconductor industry. Over the past decade, companies up and down the supply chain have adopted outsourcing in various degrees to help offset costs and increase productivity. Recognizing the benefits and potential ramifications of outsourcing and picking the right balance for your company is a matter of strategy. A megatrend occurring in the semiconductor manufacturing industry is having a profound influence on all aspects of the supply chain: the shift to fabless operations and a continued migration of chip production to Asia. Indeed, to a great extent, this trend illuminates an entire discussion on the industry's outsourcing movement and its impact on related operations such as assembly and test. In essence, the most crucial decision facing semiconductor companies today is whether to fabricate their own designs-the traditional IDM model-or go fabless by outsourcing these tasks to independent foundries. Increasingly, as IC products grow more and more complex and time-to-market pressures accelerate, the trend toward more fabless operations is intensifying because it helps companies offset investment in the capital equipment needed to keep pace with innovation.
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