Fabless-foundry partnership: Models and analysis of coordination issues

The fabless-foundry partnership for integrated circuit (IC) manufacturing b usiness is expected to grow from 12% in 1995 to approximately 17% (i.e., $4 5B) of the total IC market in 2000, The growth of this market will be even more significant for subquarter micron technologies-whose growth is driven by the multimedia industry. The customer base will extend beyond traditiona l fabless IC companies into vertically integrated IC manufacturers and syst em vendors. Given the rate of growth and the high technology profile of pro ducts, substantial investments in capital, technology, and skilled workforc e have to be dedicated and managed effectively for ensuring a successful pa rtnership, In this paper, we outline the potential coordination problems th at may arise in such partnerships, and propose a framework for analyzing is sues related to yield information sharing and yield improvement. Our analys is indicates that fabless-foundry contracts that are based on a fixed numbe r of good dies, and better yield information are more profitable.