AI the common theme for fabless firms
Undoubtedly, the star of the fabless world has been Nvidia, leading the charge on AI that has gripped the world. The company led the fabless semiconductor company rankings in 2023 and became the most valuable tech company in the world in June 2024. The fabless semiconductor company list was previously led by Qualcomm who, although having been overtaken by Nvidia, is also pursuing its own AI journey. In 2024, the company has actively promoted itself as being able to offer the components and technology to support AI. Its focus includes AI devices and the rollout of AI PCs, where its Snapdragon processors feature in Windows-based Copilot+ PCs.Focus on innovation by outsourcing
For fabless semiconductor companies, the key focus is on innovation, with the fabless model freeing up resources and funds that are required to operate manufacturing facilities and instead assigned toward accelerated design cycles. However, such a model requires close cooperation with semiconductor foundries, the companies that manufacture semiconductors in a fabrication plant, or fab. The dominant foundry player is TSMC, controlling around 60 percent of the market. TSMC counts the likes of Nvidia, Qualcomm, and even Apple as its top customers, manufacturing the next generation of advanced chips. However, with TSMC’s market share of advanced chip manufacturing for AI applications standing at closer to 90 percent, there is a level of concern among chip designers that should any military conflict arise in or over Taiwan, that it could be a serious threat to supply and the fabless model.A fabless future but collaboration is key
As chip designs grow ever more complex, it can be expected that fabless companies will be at the forefront. These companies, involved in supporting the latest technologies in AI, 5G, and more, will continue to push the boundaries as the semiconductor market continues to boom. However, with the industry often showing its frailties, the success of a fabless model depends on strong partnerships with semiconductor foundries to ensure production can be completed and chip demand is met. This combination of innovation and cooperation will be key, enabling fabless semiconductor companies to shape the future of technology.
