Which business model describes a company that both designs and manufactures its own chips?

• A. IDM
• B. Fabless
• C. Foundry
• D. Original Equipment Manufacturer

Answer: (A)

In semiconductor business models, the key distinction is whether a company designs and manufactures its own chips or relies on others to do the manufacturing. When a company designs and builds its own silicon, it’s called an integrated device manufacturer. An IDM owns both the design teams and the fabrication facilities, controlling the process from architectural decisions to the finished chip. That end-to-end control is what this model describes.

Fabless companies, by contrast, design chips but outsource fabrication to a foundry, so they don’t own the production facilities. Foundry companies specialize in manufacturing for other designers and typically don’t own the IP for the chips they produce. An Original Equipment Manufacturer is about assembling complete products for sale, often using chips from various suppliers rather than designing and fabricating their own silicon.

So, a company that both designs and manufactures its own chips fits the IDM model.