The fabless model continues to grow as more companies recognize its benefits. The model includes both the customer-owned tooling (COT) and application- specific IC flows.
Traditionally, COT companies designed integrated circuits to the physical design level (GDSII) and sent those designs directly to foundries to manufacture the wafers. COT companies then outsourced to assembly, package, and test vendors. An ASIC vendor, on the other-hand, provides a turnkey service, managing physical design to delivery of packaged and tested parts.
The traditional differences between COT and ASIC recently began to overlap. ASIC companies not only started outsourcing manufacturing to pure-play wafer foundries, package and test vendors but also started licensing intellectual property (IT). COT companies now outsource to design services and to operations and logistics vendors. A decentralized supply chain has emerged that increases the number of options outsourcing IC manufacturing.
The downside to the new environment is that many companies struggle to decide the best outsourcing model for their particular situation and many more are not even aware of the outsourcing options available. Yet the ability to select the best available outsourcing path has profound implications for product timeliness, technology and profitability.
Understanding the trade-offs among the ASIC, COT and newer hybrid approaches is a good first step toward choosing the right outsourcing path. Once the trade-offs are understood, your business model, technology requirements and risk tolerance will determine which outsourcing path makes the most sense for your project.
In a sense, the ASIC and COT models are the two extremes of the fabless semiconductor outsourcing model. In the ASIC flow, the ASIC vendor manages every step in the semiconductor supply chain. In the COT model, you are responsible for the physical design of your device and for managing the outsourcing of the wafer foundry, package/assembly, testing, logistics and, ultimately, yield for your device.
In the pure COT model, controlling your own place and route provides flexibility and control of your design flow. That flexibility includes the option to use intellectual property from any source as well as controlling all the other aspects of your supply chain to keep manufacturing costs and logistics in line with your budget and product requirements.
But the COT model's flexibility requires new responsibilities. For example, while it is true that there is a wealth of IP out there, you must ensure the IP is validated in your technology process and meets your application requirements. The price you negotiate for the IP must also be cost-effective. When choosing a library, you need to make sure that the library supports your EDA views and has also been qualified in the process technology you are targeting. When working with the foundry, you need to take precautions to ensure a clean LVS and DRC sign-off.
Those are only a few of the considerations. Imagine the implications of managing the entire supply chain, such as setting up vendors, arranging logistics, negotiating prices and managing production through the foundry and back-end assembly and test. Those tasks require skilled people to manage them efficiently and effectively. That is why a typical COT company not only hires engineers to handle physical design implementation but also hires in-house staff to manage operations.
The key to success in the COT model is effective planning. In general, you need to plan for prototyping, which includes, design, package development, test development, wafer manufacturing, assembly, test and failure analysis, as well as for production, which includes product and system characterization, WIP planning and product cost reduction. Simply developing a plan to complete each function in sequence is not enough; you must also consider integrating suppliers early in the development cycle to avoid catastrophic events.
Issues such as incorporating effective design-for-test (DFT) take on new significance when prototypes come back with failures and you are racing to get your product to market. If you plan to use a flip-chip ball grid array (FC-BGA) package, you need to plan for specialized package and manufacturing requirements. The COT model necessitates that you create a project plan from design through production.
In the pure ASIC environment, you do not have to deal with these challenges directly. For example, the ASIC vendor typically ensures that the IP blocks offered are validated to its process technology. You do not have to worry about hiring resources to manage your silicon supply chain, and you do not have to spend money on back-end design tools. The ASIC vendor will manage the assembly, packaging and test for your prototyping and production devices. Detailed project planning is not a major concern.
Of course, the reason for the significant growth of the COT model is the inherent drawbacks of the ASIC model. By using an ASIC flow you may lose visibility into your wafer in process (WIP) schedule and your supply chain. In addition, the IP, process technology, testing and packaging that the ASIC vendor provides may not be available or adequate for your requirements. Getting the attention of the ASIC vendor's A-team can also be a challenge for a fledgling account. Finally, because you do not manage the physical implementation of the device, you have less control over such matters as die size, customer prioritization and cost increases due to last-minute modifications that may make it harder to reach production cost goals. If your company is margin-sensitive, utilizing a COT flow is the best way to control your costs.
Choosing between the traditional ASIC and COT models is not your only choice. You can elect to outsource each element of the silicon supply chain and create an ASIC/COT hybrid-outsourcing model. A few potential options for your outsourcing requirements can include:
- netlist to a fabless ASIC vendor;
- GDSII to a foundry via a back-end design services vendor;
- GDSII to a fabless ASIC or a logistics vendor; and
- netlist to a design service vendor to a logistics vendor.
You can choose the degree of outsourcing you think is appropriate to your situation. Both physical design and operations can be outsourced to a design service, fabless ASIC house or other vendor of such services. A hybrid approach may provide the advantages of both the COT and the ASIC model, saving millions of dollars in terms of hiring your own in-house team. Cost is not the only factor; it is not always easy to hire and retain talented people to manage the physical design and operations, especially during periods of economic expansion. Furthermore, you may not have the time it takes to hire a team to handle a short time-to-market project, since it can take up to six months to put a proper team in place. Outsourcing can help you avoid such problems.
There are disadvantages to outsourcing bits and pieces of your supply chain. It may be more difficult to maintain project schedules when your design is outsourced. The problem of logistics management can be overcome with good contracts built with incentives to get projects done in a timely way.
Choosing the right outsourcing path is a function of your business model, your risk tolerance and your technology requirements. By understanding the basic trade-offs, you can start to associate which model ASIC, COT or hybrid makes sense for your situation. Here are just a few general guidelines:
Consider an ASIC flow if you have no experience managing a supply chain or no desire to do so. This is especially true if your company plans to do only a few design tape-outs per year. The ASIC model is also a consideration if the ASIC vendor has some specific IP or there is a special business opportunity that would dictate using an ASIC flow.
- A hybrid approach should be considered if the number of tape-outs approaches two to four per year. Here, a modified COT approach may begin to make sense, especially if the technology demands going with a state-of-the-art process or if specialized IP is required.
- A pure COT approach should be considered when the number of tape-outs exceeds about five per year. Developing internal physical design and operations capabilities can cost more than $3 million when you include tools, maintenance and personnel. Five or more designs a year starts to justify that expense.
There are a host of other considerations, unique to each situation, that may dictate the path you choose; but once again most decisions boil down to your business model, risk tolerance and technology requirements.
Business model examples: You design a high volume consumer device and need low ASPs. Choose a COT or hybrid approach. Or, you are a start-p company and have made a deal with a major ASIC supplier to OEM your product. They have access to your IP in exchange for discounted manufacturing. The ASIC model might be the right choice.
Technology example: You are working on a cutting-edge product that requires specialized IP not available from any ASIC vendor, or your product needs a unique process only available through a pure-play foundry. Choose a COT or hybrid approach.
Risk example: You are an automotive-parts manufacturer with specific quality requirements that needs to develop an IC product, but you know nothing about semiconductor manufacturing. Consider an ASIC or hybrid approach.
Understanding the requirements necessary to manage your silicon supply-chain will help you in your preparation for choosing the right model. Once you recognize all the challenges and benefits, you will be in a position to select the best services and resources available.
Remember, you can outsource any aspect of the supply chain. At the end of the day its all about the your business model, risk tolerance and technology requirements.n
Anthony Simon and Ron Vogel are co-authors of the book "The COT Planning Guide: Tips, Tactics and Strategies for Successful IC Outsourcing."