Long-term trends in the technology segment are often the result of structural change. One such change in the semiconductor space was the shift to outsourcing specialized functions, including technology development in the form of intellectual property, chip design, fabrication, and packaging and test.
That change, along with the move to more specialized workloads and the need for original equipment manufacturers and service providers to differentiate, has sparked another trend, toward customized processors and System on Chip solutions.
The fragmentation of semiconductor design and manufacturing began several decades ago with outsourcing of packaging and final test because it was viewed as a low-level function that provided little differentiation or value.
As of late, however, using multiple dies in 2D and 3D structures has made packaging a valuable function and a new pillar of innovation in the semiconductor industry. (The other three are lithography, transistor design and material technology.)
Over the past two decades, most semiconductor companies moved to outsourcing the front-end die manufacturing, referred to as "fabrication," to companies like GlobalFoundries, Samsung, TSMC, UMC and SMIC.
Outsourcing the fabrication allowed companies to share the high-cost and capital costs of fabs and new process development, both of which have increased exponentially with each new generation. As a result, most semiconductor companies are now referred to as "fabless semiconductor manufacturers."
Many companies have outsourced semiconductor design to specialty design houses or have begun licensing IP from other companies. This allows companies to share the expense of the design experts and have access to designers with expertise in specific areas. It has resulted in a huge growth in IP licensing.
Some companies, like Arm, originally adopted this model out of necessity, but others have added IP licensing to their business model. Companies ranging from the large integrated design manufacturers like Samsung to SoC vendors like Qualcomm, to electronic design and automation tools vendors like Cadence, now license various processing cores, on-chip interconnects, and other forms of semiconductor IP. As a result, it has become easier than ever to design a custom chip or to outsource its design.
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