A contract chip maker is usually called a semiconductor foundry: it manufactures chips from designs supplied by outside customers. The customer owns or provides the design; the foundry supplies the production capability. This arrangement lets a chip designer sell products without operating its own semiconductor factory.
What does a contract chip maker do?
A foundry fabricates semiconductors for external clients. Samsung Semiconductor’s glossary describes the model as receiving a product design from an outside client and manufacturing the semiconductor. In common usage, “contract chip maker” is a plain-language description of this service; “semiconductor foundry” is the standard industry term.
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The basic division is between design and production. A customer submits its chip design, and the foundry manufactures it. The foundry’s central role is wafer fabrication, though some companies also provide additional services such as packaging or mask services.
How a foundry differs from a fabless company or an IDM
| Business type | Typical role |
|---|---|
| Foundry | Manufactures semiconductors for external customers using their designs. |
| Fabless company | Designs semiconductors without its own production line and outsources fabrication to foundries, as described in Samsung Semiconductor’s glossary. |
| Integrated device manufacturer (IDM) | In Samsung Semiconductor’s simplified distinction, controls the process from planning through manufacturing. |
These labels explain common business models; they are not an exhaustive classification of every company’s activities. The key distinction is who designs the chip and who manufactures it. A fabless company can develop and sell chips while relying on a foundry for production.
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Example: TSMC’s pure-play foundry model
Taiwan Semiconductor Manufacturing Company (TSMC) is an example of a pure-play foundry. Its 2024 annual report says it focuses exclusively on manufacturing customers’ products and does not design, manufacture, or market semiconductor products under its own name. TSMC reported 11,878 different products, 288 distinct technologies, and 522 customers in 2024; these are TSMC’s figures for that year, not industry-wide totals.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.What services can a foundry provide?
Wafer fabrication is the core service, but the menu differs from one provider to another. TSMC, for example, lists backend services, advanced packaging, mask services, and eFoundry web applications on its services page. Those offerings should not be assumed to be available from every foundry.
Quick Recap
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