Fabless

Fabless is a type of company that only designs semiconductors without a factory. NVIDIA and FuriosaAI fall into this category.

Fabless is a type of company that specializes only in design without a factory (fab) that produces semiconductors. In terms of buildings, it corresponds to an architectural design office that only draws blueprints without performing construction, and actual production is left to foundries such as TSMC. Since it costs tens of trillions of won to build a semiconductor factory, a division of labor structure has been established in which design and production are separated and each person focuses on what they are good at. NVIDIA, the leader in AI chips, is a representative fabless company, and Qualcomm, AMD, and Korean AI semiconductor startup Furiosa AI also do business in this way.

Fabless can innovate quickly without the burden of factory investment, but it is not free from competition to secure production capacity because it relies entirely on foundries for production. As seen in the AI chip supply shortage, no matter how excellent the design is, it cannot be sold if there is no place to manufacture it.

✅ Why it matters

• It is an efficient structure that allows you to focus on design innovation without the burden of factory investment
• It is a basic concept for understanding the structure of the AI chip industry such as NVIDIA
• This is a keyword that frequently appears in discussions on fostering system semiconductors in Korea.

⚠️ Limits and debates

• Production is dependent on foundries, so negotiating power is weakened in the event of a supply shortage
• Production schedules are a variable due to fierce competition in securing cutting-edge processes at foundries
• Barriers to entry are not low as it is difficult to secure design manpower and intellectual property