But according to Bill McClean, president of IC Insights, the data shows quite clearly that the fabless-foundry model "is not broken and is not collapsing." While McClean acknowledges that is a decade or so the situation could be different, for the foreseeable future—always a tough thing to define in the semiconductor world—fabless companies, and the foundries who build their chips, are in the driver's seat.
What McClean does see, however, is consolidation. Part of the reason for the more attractive growth rate among fabless companies is that there are fewer new ones, and the large successful fabless companies are getting larger and more successful, he said. The number of fabless companies has decreased dramatically since 2000, McClean said. "There aren't a lot of new fabless companies being started, even though China has kind of set their sights on the fabless industry since they never got their IC manufacturing off the ground," McClean said.
Consolidation, of course, isn't exclusive to fabless chip companies. IDMs have had their share of consolidation, too. And though a steady stream of chip startups—nearly all of them fabless—continues to feed the semiconductor industry, the net of consolidation has left a landscape with fewer players. The most successful of those still standing are getting bigger and more powerful. "In general, even among the IDMs, the big are getting bigger, becoming more top heavy," McClean said.
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So, what's the bottom line? It's always dangerous to make long term predictions about the semiconductor industry, which can and does change on a dime sometimes. But recent history has shown the fabless model getting stronger as years go by, showing no signs of a collapse. Will continued migration to more challenging technology nodes alter the equation? Possibly down the road. But don't expect successful fabless companies to transform themselves into IDMs.
IC Insights forecasts that by 2017, fabless chip companies will command at least one third of the total chip market—especially if more large companies go fabless, which could well happen.
IC Insights' report on the fabless chip companies is part of the 2013 edition of its flagship report, the McClean Report. It can be obtained online through the firm's website.