Sunday, February 21, 2010

Fabless is Fabulous

US apparel manufacturers long ago quit manufacturing apparel. They provide the design, marketing, wholesale and distribution services and actually get the garments manufactured by overseas contractors. The US athletic shoe market operates the same way.

Increasingly, that also appears to be the business model for IC's (integrated circuits.) With AMD spinning off their fabs, they are now the second largest fabless IC supplier in the world.

In late 1Q09, AMD became a fabless company by including its Dresden, Germany fabs as part of the GlobalFoundries spin-off. IC Insights has included all of AMD's sales for 2009 in the chart. As shown, AMD now ranks as the second largest fabless IC company in the world behind only Qualcomm...

As shown, 17 out of the top 25 fabless IC companies are headquartered in the U.S. Moreover, nine out of the top 10 fabless IC companies in 2009 are based in the U.S...

Given the big disparity in the 1999-2009 IC sales CAGRs between the fabless IC suppliers (15%) and the IDMs (2%), it comes as little surprise that fabless IC companies have been steadily increasing their share of the total IC market.

While most IC suppliers still run their own fabs, the trend toward focusing only on design, marketing, packaging and distribution seems pretty clear.

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