fabless

A semiconductor company that designs chips but outsources the actual production of the chip because it doesn’t have any production facilities. Fabless companies are a fairly new development. Typically semiconductor companies construct and operate extremely expensive factories (called silicon foundries), which are capable of the high standards of precision and cleanliness required to make these complex circuits. Many of these plants are located in foreign countries where wages and other costs are low or grants are available. Operations usually are restricted to the manufacture of components, and these silicon foundries have no research or design facilities. These factories are known in the business as fabs, short for “fabrication plants,” which is where the term fabless comes from.