The Foundry Model, a new economic model

[Arthur Hanson]

With the world getting more complex with higher and higher costs, will the foundry model will continue to expand to more and more areas, even retail as Costco and other retail chains have done to increase efficiencies through scale at every step of the way. In more and more areas contract manufacturing has freed up capital and labor to concentrate on developing products and even whole new ecosystems. Apple is an ideal example of how powerful this trend is. I feel we are in the early stages of this and may even modular and panelized construction and modular housing being built in the future which could increase quality and lower prices. This could extend to many areas and maybe electric autos may be next. Maybe Foxcon will become one of the most versatile companies out there. Any thoughts, comments or expansions sought and welcome.

 

[count]

What is "the foundry model?" in your view?

Is it just the separation of design and manufacturing? Or is there something else involved?

I think the foundry model is more of a manufacturing platform. For it to work you need standardized design rules and IP blocks that designers can work with. The design space is highly constrained in certain dimensions but vast in others.

I can't really think of any equivalent in any other market. Modular housing is an interesting one though.

 

[hist78]

What is "the foundry model?" in your view?

Is it just the separation of design and manufacturing? Or is there something else involved?

I think the foundry model is more of a manufacturing platform. For it to work you need standardized design rules and IP blocks that designers can work with. The design space is highly constrained in certain dimensions but vast in others.

I can't really think of any equivalent in any other market. Modular housing is an interesting one though.

Electric vehicle (EV) manufacturing can be a suitable application for contract manufacturing, also known as the 'Foundry Model' in the semiconductor industry.

 

[count]

Electric vehicle (EV) manufacturing can be a suitable application for contract manufacturing, also known as the 'Foundry Model' in the semiconductor industry.

I think there is a difference between the foundry model and contract manufacturing, that's what I'm trying to get at.

I think that difference is in the design space, how compex/varied of a design you can build on a relatively fixed production process.

TSMC, if they are building a 3nm chip for Apple, Intel, or NVdia, there is not much tooling that needs to change. It's a highly complex custom design, but the production process doesn't change very much.

In automotive, even small tweaks to the design can mean major production tooling changes. For example your stamping die presses might need to change, more or less assembly stations may be needed, ect. So I don't think auto contract manufacturing will have the same economies of scale and margins at all compared to semiconductor foundries.

For the foundry model (aka manufacturing platform) to work in my view, you need to be able to deliver a large variety of complex products that can be tuned to customer needs on a relatively fixed production process in a constrained design space.

There are basically only two manufacturing processes I can think of where this model can work. Semicon, and maybe certain biologics like enzymes, proteins ect.

 

[hist78]

I think there is a difference between the foundry model and contract manufacturing, that's what I'm trying to get at.

I think that difference is in the design space, how compex/varied of a design you can build on a relatively fixed production process.

TSMC, if they are building a 3nm chip for Apple, Intel, or NVdia, there is not much tooling that needs to change. It's a highly complex custom design, but the production process doesn't change very much.

In automotive, even small tweaks to the design can mean major production tooling changes. For example your stamping die presses might need to change, more or less assembly stations may be needed, ect. So I don't think auto contract manufacturing will have the same economies of scale and margins at all compared to semiconductor foundries.

For the foundry model (aka manufacturing platform) to work in my view, you need to be able to deliver a large variety of complex products that can be tuned to customer needs on a relatively fixed production process in a constrained design space.

There are basically only two manufacturing processes I can think of where this model can work. Semicon, and maybe certain biologics like enzymes, proteins ect.

Yes, there are some challenges doing contract manufacturing for automobiles. But the environment has changed a lot since EV movement started. Different EV manufacturers may used many similar or identical parts. Compare to gasoline powered cars, it's much simpler and easier to find common ground and efficiency. And the economy of scale and competition will allow factory-less or factory-light EV brands to enter EV market using contract manufacturers.