Fabless, IDM, or foundry? How the chip business is split

Building a leading-edge fab costs tens of billions of dollars. That economic reality split the industry into distinct business models — and understanding them explains who does what.

Fabless

Fabless companies design chips but own no fab. They focus on architecture and design, then pay a foundry to manufacture. This lets them scale R&D without the capital burden of a fab.

Foundry

A pure-play foundry manufactures chips designed by others. It sells manufacturing capacity and process technology rather than branded products, and lives or dies by yield and advanced-node leadership.

IDM

An integrated device manufacturer both designs and fabricates its own products. Some IDMs now also offer foundry services, blurring the line.