semiconductor foundry
In plain wordsA factory company that manufactures chips designed by other companies. Taiwan's TSMC, the largest, makes nearly all of the world's most advanced AI chips.
A company that manufactures integrated circuits designed by others, in fabrication plants ('fabs') that cost tens of billions of dollars at the leading edge. The foundry model separates chip design from manufacturing: fabless companies such as Nvidia, AMD, Apple and Broadcom design chips that foundries make, while integrated device manufacturers (IDMs) such as Intel and Samsung do both and also offer foundry services. TSMC is dominant, with about 70% of global foundry revenue as of 2025 and a near-monopoly on the leading-edge nodesprocess node, n.: The label for a generation of chip-making technology, like '3 nanometer'. Smaller numbers mean newer, denser chips, but the number no longer measures any actual part of the chip. and advanced packagingadvanced packaging, n.: Ways of joining several chips very closely inside one package — side by side on a silicon base or stacked on top of each other — so they act almost like one bigger chip. used for AI accelerators; Samsung, Intel Foundry, GlobalFoundries, UMC and China's SMIC follow. The concentration of advanced manufacturing in Taiwan is a central concern of semiconductor industrial policy, such as the CHIPS and Science ActCHIPS and Science Act, prop. n.: A 2022 US law that put tens of billions of dollars into building computer-chip factories and chip research in the United States, to reduce dependence on chips made in Asia., and of export controls on AI chipsexport controls on AI chips, n.: Government rules that limit which countries and companies may buy the most advanced AI chips and the machines used to make them. The United States uses them mainly to slow China's progress in AI..
Origin
Morris Chang founded TSMC in Hsinchu, Taiwan, on 21 February 1987 as the first dedicated foundry, a model anticipated by Carver Mead and Lynn Conway's separation of chip design from fabrication in the late 1970s and by early merchant fabrication services such as MOSIS (1981).
Usage note
'Fab' is the factory; 'foundry' the business. TSMC's first Arizona fab began volume production in 2024–2025, but its newest nodes debut in Taiwan.
Related
- process nodeprocess node, n.: The label for a generation of chip-making technology, like '3 nanometer'. Smaller numbers mean newer, denser chips, but the number no longer measures any actual part of the chip.
- advanced packagingadvanced packaging, n.: Ways of joining several chips very closely inside one package — side by side on a silicon base or stacked on top of each other — so they act almost like one bigger chip.
- chipletchiplet, n.: One of several smaller chips that are made separately and then joined inside a single package to work as one processor, which is cheaper than making one giant chip and lets makers reuse parts.
- extreme ultraviolet lithographyextreme ultraviolet lithography, n.: The chip-printing technique used for the most advanced chips, which draws circuit patterns with ultra-short-wavelength light. A single Dutch company, ASML, makes all the machines, each costing well over $100 million.
- ASICASIC, abbr.: A chip whose circuits are laid out to do one kind of work extremely well instead of running any program. AI companies design their own to run their models more cheaply than with off-the-shelf chips.
- CHIPS and Science ActCHIPS and Science Act, prop. n.: A 2022 US law that put tens of billions of dollars into building computer-chip factories and chip research in the United States, to reduce dependence on chips made in Asia.
- export controls on AI chipsexport controls on AI chips, n.: Government rules that limit which countries and companies may buy the most advanced AI chips and the machines used to make them. The United States uses them mainly to slow China's progress in AI.
Mentioned in
Moore's lawMoore's law, n.: Gordon Moore's prediction that chipmakers could pack twice as many transistors onto a chip roughly every two years — a pace that for decades made computers steadily faster and cheaper, and has slowed but not stopped., ASICASIC, abbr.: A chip whose circuits are laid out to do one kind of work extremely well instead of running any program. AI companies design their own to run their models more cheaply than with off-the-shelf chips., ASMLASML, prop. n.: A Dutch maker of the giant machines that print circuit patterns onto chips. It alone can build the extreme-ultraviolet models on which today's most advanced chips, including AI chips, depend., CHIPS and Science ActCHIPS and Science Act, prop. n.: A 2022 US law that put tens of billions of dollars into building computer-chip factories and chip research in the United States, to reduce dependence on chips made in Asia., process nodeprocess node, n.: The label for a generation of chip-making technology, like '3 nanometer'. Smaller numbers mean newer, denser chips, but the number no longer measures any actual part of the chip., TSMCTSMC, prop. n.: The Taiwanese company that manufactures most of the world's advanced computer chips, including nearly all of the specialized chips used to train and run AI., advanced packagingadvanced packaging, n.: Ways of joining several chips very closely inside one package — side by side on a silicon base or stacked on top of each other — so they act almost like one bigger chip., extreme ultraviolet lithographyextreme ultraviolet lithography, n.: The chip-printing technique used for the most advanced chips, which draws circuit patterns with ultra-short-wavelength light. A single Dutch company, ASML, makes all the machines, each costing well over $100 million.