This commentary was contributed by Danny Lam, energy and semiconductor analyst at The Fairview Group Inc. (San Ramon, Calif.).
In theory, digital chips can be moved around from one manufacturing facility to another. For example, a chipset can be built at IBM, TSMC or even SMIC.
Because you can clone a ''mask set'' from the chip, the industry made that practice illegal via the Semiconductor Protection Act (SPA) in 1984. So, even though someone can steal your design and make it, selling it in any reasonable quantity on the open market is a dead end.
In the case of analog parts, the above considerations do not apply. Analog and mixed-signal parts are specific to individual production lines. Generally, they cannot be moved from one line to another without recalibrating the process from scratch.
The reason is simple. Analog devices do not come off the line in a ''binary'' state. If you think of an analog part (discrete), they come off the line in a range of values. What a discrete maker does is bin them and sort them for different markets.
Think of an analog IC as a collection of hundreds to millions of little analog devices. Each have their own bell curve, and you have to get the entire collection ''within spec'' for the IC to work.
If you were to even restart the line in the future, the line has to be recalibrated. That's not hard to do if you have the same crew and the previous process data.
On the other hand, if you don't own the line and use a foundry, you have the following hurdles: 1) There is no assurance that the tool set is identical; 2) There is no assurance the line workers will be the same; 3) There is no assurance of a full set of data.
What you find is that detailed technical knowledge required to make a qualified and good part is in the hands of your foundry partner. In other words, you end up in a monopolistic relationship with the foundry. So, there is virtually no difference than if you actually owned the facility in terms of costs and risks. Add this up and the advantages of a foundry disappear pretty fast.
That is why the analog/mixed-signal foundry sector will always be a small market. The exception could be low-end, non-critical parts; in that case, the device maker doesn't mind not being in control of manufacturing. We will retire before we see the day TI, ADI and others hand over their top-of-the-line analog and mixed-signal parts to a foundry to make.
