The IC foundry business is driven by fabless companies. In the conventional, “pure-play” manufacturing only, foundry business model, the foundries [6] -[9] provide only wafer fabrication services to their customers as shown in Figure 2(a). However, with the increase in the complexities and cost of system-on-chip (SoC) design, the emerging trends in the foundry business model is to providing complete manufacturing solutions to fabless companies [10] -[13] .

Typically, the fabless companies design advanced products using third party electronic design automation (EDA) tools in-house and outsource front-end manufacturing to foundries and packaging to dedicated back-end manufacturing vendors to assemble the final products. Due to the increase in the cost and complexities of SoC design, the fabless companies, also, outsource design activities to vendors or corporate partners as shown in Figure 2(a) [13] . Thus, in order to take advantage of this tremendous business opportunity, some of the foundries are transitioning to complete IC new product development solution providers to their customers [10] -[13] . In this business model, the foundries provide necessary new product development support to their customers including chip design, layout design and verifications, process customization, manufacturing, wafer test, assembly and test, and logistics for on time delivery of final chips to fabless companies as shown in Figure 2(b) [10] -[13] .

The transition of a foundry to a complete new product development solution provider is achieved by acquiring the necessary core competencies and product development technologies (PDTs) in-house [7] [10] -[13] or establishing partnership with different foundries or vendors with complementary competencies [9] [18] . The additional core competencies required to support customers’ new product development include expertise in complex SoC design, technology customization, product testing and characterization, and packaging [11] -[13] . The major PDTs include [11] -[13] [19] [20] :

・ Technology computer-aided-design (CAD) software;

・ Modeling and characterization hardware and software;

・ CAD tools for circuit analysis and design such as process-design-kit;

・ Semiconductor Assembly and Test infrastructure.

In-house competency in Technology CAD is crucial to support technology development and technology customization, device characterization and modeling are critical for generating accurate models for SoC design, and Semiconductor Assembly and Test capabilities are critical to offer customers introducing new products within the “strategic window” of marketing. The detailed description of PDTs such as Technology CAD, characterization and modeling, and circuit CAD has been reported by Saha [11] . The advanced foundries are transitioning by acquiring core competencies in all the relevant areas of PDT to support fabless customers’ manufacturing as well as new product development [11] -[13] .

The core competencies described above are organized in a dedicated customer support team described as the PDT group (PDTG) [11] -[13] as shown in Figure 3. The functionalities of each PDT are set in different subgroups with ultimate objective of efficient customer support and customer relationship management. The inner-circle of Figure 3 shows the core competencies of PDTG whereas the outer circle shows PDTG establishing an extensive partnership network for “research and development” and information flow. The PDTG supports in-house technology development and characterization. It provides design and manufacturing solutions to customers, develops and maintains intellectual properties, and manages relationship with vendors, corporate partners, and academia for research and development of emerging technologies and products. Thus, in the foundry business model, the PDTG plays a critical role to support in-house technology development, provide complete new product development solutions to customers, and establish a link to the outside world for information flow and feedback as shown in Figure 3. The critical role of PDTG to support complete IC new product development is reported in the literature [11] -[13] . The PDTG is an important organization in the transitioning foundry business model from the pure-play manufacturing only to turn-key new product development solution provider in the microelectronics industry.

In the longer term, the foundry business has evolved over the last two decades. New 2015 Foundry Almanac by GSA and IC insights reports 37% of IC sales now come from foundry capacity. Although earlier it competed on factor cost advantages, productivity gains, and operational excellence, it now depends on true technology leadership, scale advantages, and superior ecosystem for product design as shown in Figure 2(b) [16] [17] .

The foundry business model provides fabless companies an easy market entry with limited capital investment. As a result, new fabless IC companies with innovative product ideas are continuously emerging [21] . In recent years, fabless companies have continued to gain ground, outpacing IDMs as shown in Figure 4 and claiming more than 25% of the global market share as shown in Figure 5. Figure 4 shows the percentage change in IC sales each year during the years 2000-2014. It is seen from Figure 4 that the revenues for the fabless chip makers grew 8% in the year 2014 compared to that of 7% for IDMs showing the strength of the fabless segment in the last 14 years. It is observed from Figure 5 that in the year 2014, fabless IC company sales represent about 30% percent of total worldwide IC sales, up from only about 8% in the year 2000. And, assuming the same continued

trends of IC sales, the extrapolated fabless company IC sales will reach about 33% of total worldwide IC sales in the year 2018 [21] . Thus, fabless IC companies continue to gain market share.

The emerging trend in the microelectronics industry is that more IDMs are outsourcing their logic products to foundries and going fabless or fab-lite. The fabless companies create value with less capital investment as well as by establishing dominance in niche application rather than across applications. Three distinct business models have emerged in the fabless business segment [14] .

In the early days of foundry business model, the dedicated foundries, primarily, adopted advanced process technologies from the technology leading IDMs, qualified the technologies at the foundry fabs, and provided low cost manufacturing services to fabless customers as shown in Figure 6(a). By the mid-2000s, the process technology from the leading foundries reached parity with the leading-edge IDMs in standard CMOS technologies,

e.g. TSMC’s 28 nm CMOS technology developed independently at TSMC equals the highest achievable standard as that developed by IDMs such as Intel and Samsung. By the end of the 2000s, foundries became the core of new technology clusters; e.g. CMOS: low voltage, standard, and high voltage; Memories: Flash, Static Random Access Memory, etc., and so on [29] -[35] . Besides, foundries co-develop novelty technologies with fabless customers; e.g. TSMC developed different generations of split-gate flash memory technology with Silicon Storage Technology [32] [33] . Leading foundries like TSMC has developed core competencies in technology development and solving different physical effects in the scaled devices of today’s CMOS technologies [15] [16] .

Over the past several years, many IDMs have decided to step out of some aspects of the capital-intensive, leading-edge front-end technology development and fabrication part of the value chain. And, nearly all IDMs have outsourced some of their logic production to dedicated foundries and became fab-lite. Thus, the most of the front-end manufacturing in the microelectronics industry, today, is outsourced to foundries. Figure 6(b) shows the emerging trend in the front-end manufacturing where foundries are leading the bulk of the business. As a result, the foundry business has surged over the last decade [6] -[9] . With the advanced technologies, the emerging trend in manufacturing is that the foundries are aggressively competing for customers because of the high cost of advanced technology development. As a result, the price competition in this segment of the microelectronics industry value-chain is intensifying [14] . The foundry business model started the evolution in the IC business by separation of design and manufacturing. Microelectronics industry, which had represented the essence of advanced technology in the past, is becoming more commoditized, and competition within any given segments of the microelectronics value chain is continuously increasing.

In the 1980s, IDMs relocated packaging plants in the Asia-Pacific region [16] . However, with the emergence of foundry business model, outsourcing of packaging business emerged in the early 1990s [13] . In the recent years, outsourced packaging business has accelerated with proliferation of customized and application-specific packaging demands with more than 130 Semiconductor Assembly and Test companies in the greater Asia-Pacific region. Currently, the Outsourced Semiconductor Assembly and Test (OSAT) activity is about $25B business [13] [14] .

In the early 1990s, the OSAT companies were regarded as low-end, commoditized service business, and the competitive dynamics of the business were driven by price competition [13] . However, with today’s SoC packaging, the emerging trends show two profitable segments:

・ The very profitable high-end companies providing miniaturized package;

・ The mainstream OSAT companies providing legacy packages such as ASE group, Amkor Technology, and so on [36] [37] .

As the pace of innovation slows in the front-end segment of the microelectronics value-chain, the emerging trend in the OSAT business is to offer sophistication and technical differentiation in a bid to increase SoC performance. Technological differentiation will continue to drive the two-tier market structure: there will be oligopolistic high-end companies and commoditized mainstream firms. Thus, with the shift of technology to OSAT business, this segment of the microelectronics industry is transitioning to provide miniaturized packaging solution for advanced-node SoCs.