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Fabless manufacturing is the design and sale of hardware devices andsemiconductor chips whileoutsourcing theirfabrication (orfab) to a specialized manufacturer called asemiconductor foundry. These foundries are typically, but not exclusively, located in theUnited States, mainlandChina, andTaiwan.^[1][2][3][4] Fabless companies can benefit from lower capital costs while concentrating theirresearch and development resources on the end market. Some fabless companies andpure play foundries (likeTSMC) may offerintegrated-circuit design services to third parties.

Prior to the 1980s, the semiconductor industry wasvertically integrated. Semiconductor companies owned and operated their own silicon-wafer fabrication facilities and developed their own process technology for manufacturing their chips. These companies also carried out the assembly and testing of their own chips.

As with most technology-intensive industries, the silicon manufacturing process presents highbarriers to entry into the market, especially for small start-up companies. Butintegrated device manufacturers (IDMs) had excess production capacity. This presented an opportunity for smaller companies, relying on IDMs, to design but not manufacture silicon.

These conditions underlay the birth of thefablessbusiness model. Engineers at new companies began designing and selling integrated circuits (ICs) without owning a fabrication plant. Simultaneously, the foundry industry was established by Dr.Morris Chang with the founding ofTaiwan Semiconductor Manufacturing Corporation (TSMC). Foundries became the cornerstone of the fabless model, providing a non-competitive manufacturing partner for fabless companies.

The co-founders of the first fabless semiconductor company, LSI Computer Systems, Inc. (LSI/CSI) LSI/CSI, worked together at General Instrument Microelectronics (GIM) in the 1960s. In 1969 GIM was hired to develop three full custom CPU circuits forControl Data Corporation (CDC). These CPU ICs operated at 5 MHz (state of the art at the time) and were incorporated in the CDC Computer 469. The Computer 469 became a standard CDC Aerospace Computer and was used in the Spy in the Sky Satellites in addition to other classified satellite programs.

GIM was reluctant to proceed with the next phase of the program, which it deemed to be too technically challenging. The GIM engineers who had worked on the project were encouraged by CDC to form their own company to provide five new custom circuits. This resulted in the formation of LSI Computer Systems, Inc. (LSI/CSI) in 1969. The new chips were power-efficientrandom logic circuits with extremely high circuit densities. These new circuits also operated at 5 MHz. These devices were designated LSI0101, LSI0102, LSI0103, LSI0104, and LSI0105 and were manufactured in compact 40-pin metal flat packs with 0.050 inches (1.3 mm) spacing.

In creating the fabless semiconductor industry, LSI/CSI had to do the following:

1. Select a suitable and CDC certifiable wafer fab house.
2. Monitor the process, and inspection of all wafers per Class S requirements and visuals.
3. Perform all In-Process inspections of the wafers.
4. Select a highly reliable packaging house capable of meeting CDC's Class S assembly requirements.
5. Have CDC certify and approve the assembly facility and its processes.
6. LSI/CSI successfully performed all required environmental testing at Class S approved facilities.
7. LSI/CSI prepared and submitted all environmental test reports.

CDC's Aerospace Computer 469 weighed one pound, consumed a total of 10 watts and ran at 5 MHz. CDC ran a parallel program, developing a chipset of eight similar parts that were to operate at 2.5 MHz with the identical environmental and Class S requirements. CDC had initial difficulties with this project, but eventually awarded another contract to LSI/CSI to manage the processing, inspection, visuals, assembly, and testing of the ICs. These parts were given the designation LSI3201, LSI3202, LSI3203, LSI3204 and LSI3205. Another successful space program completed by LSI/CSI was the upgrade to class S of a Standard Brushless DC Motor Commutator/Controller Chip, LS7262, which was implemented in satellites.

In 1994,Jodi Shelton, along with a half a dozen CEOs of fabless companies, established theFabless Semiconductor Association (FSA) to promote the fabless business-model globally. In December 2007, the FSA transitioned to the GSA, theGlobal Semiconductor Alliance.^[5] The organizational transition reflected the role FSA had played as a global organization that collaborated with other organizations to co-host international events.

The fabless manufacturing model has been further validated by the conversion of major IDMs to a completely fabless model, including (for example)Conexant Systems,Semtech, and most recently,LSI Logic. Today most major IDMs includingApple Inc.,Infineon andCypress Semiconductor have adopted the practice of outsourcing chip manufacturing as a significant manufacturing strategy.

The top 5 sales leaders for fabless companies (IC Design Houses) in2023 were:^[6]

The top 5 sales leaders for fabless companies in2020 were:^[7]

Rank	Company	Headquarters	Revenue (millionUS$)
1	Qualcomm	United States	19,407
2	Broadcom	United States	17,745
3	Nvidia	United States	15,412
4	MediaTek	Taiwan	10,929
5	AMD	United States	9,763

The top 5 sales leaders for fabless companies in2019 were:^[8]

The top 5 sales leaders for fabless companies in2017 were:^[9]

The top 5 sales leaders for fabless companies in2013 were:^[10]

The top 5 sales leaders for fabless companies in2011 were:^[11]

The top 5 sales leaders for fabless companies in2010 were:^[12]

The top 5 sales leaders for fabless companies in2003 were:

Look upfabless in Wiktionary, the free dictionary.

• ARM Holdings has an alternative fabless semiconductor design business model.
• Foundry model
• Moore's second law
• Semiconductor consolidation
• Semiconductor device fabrication
• Semiconductor equipment sales leaders by year
• Semiconductor foundry sales leaders by year
• Semiconductor intellectual property core (IP cores)

• Fabless semiconductor companies
• Semiconductor device fabrication

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