Today, the business realities of the semiconductor business can make success something that is hard won but not impossible. Using the right manufacturing strategies are the key to success.
With a hybrid, flexible approach, a fabless company can effectively use both the Known Good Die and Wafer Buy strategies, switching from one to the other when business conditions require. Such flexibility enables a company to purchase material at different points in the manufacturing process to balance material costs, risk, and yield to meet demand.
Figure 1: Tradeoffs between Known Good Die and Wafer Buy Strategies
For instance, in a Known Good Die strategy, direct material costs are higher, and risk to the fabless company lower, because the foundry actively manages most of the manufacturing process. The converse is true of Wafer Buy. Because the fabless company assumes responsibility for (and the inherent risk associated with) producing sufficient yield to meet demand, it enjoys lower direct material costs and greater control over the manufacturing process.
By selectively using the strategies when it makes sense, a fabless company can maximize each strategy's strengths while minimizing its weaknesses—and, thus, make the greatest impact on profitability.
That's what Qualcomm, the world's largest fabless company, has recently done. By actively and flexibly applying both of these manufacturing sourcing strategies, Qualcomm reduced its overall manufacturing costs and enhanced its margins and competitiveness.
The path to competitiveness
Generating the greatest benefit from a hybrid, flexible approach requires implementing the business processes and systems capabilities that can support each manufacturing sourcing strategy. It also requires knowing which strategy to use when, and keeping tabs on performance to ensure the company attains its desired cost and product delivery targets.
Implement the business processes and systems capabilities to support flexibility.
In a Known Good Die strategy, fabless companies need business process and systems capabilities to support activities that occur after the receipt of known good die from the foundry, when the company assumes ownership of the material. The main manufacturing steps from this point include three key backend processes: Assembly, Final Test, and Scan-Bake-Tape (SBT).
In Wafer Buy, fabless companies are responsible for the activities that occur after the receipt of an unprobed wafer from the foundry. Because they assume ownership of the material earlier in the supply chain, they must be able to orchestrate the additional manufacturing steps run by the foundry in the Known Good Die strategy: bump, sort/probe, and wafer-to-die conversion. A company that relies on Known Good Die will need to develop new supporting capabilities unique to probe:
- Procurement of probe hardware
- Probe hardware planning process
- Storage process
- Probe hardware repair and maintenance process
- Pick map process for probed wafers
- Wafer acceptance test criteria/limit process