Chips, compute and data centres
Foundry
In short
A foundry is a chip manufacturer that produces microchips for other semiconductor companies. In the dedicated model, that split lets a design firm start without building its own wafer factory.
- Also called
- Semiconductor foundry, Chip foundry, Pure-play foundry
- Topic
- Chips, compute and data centres
- Level
- Beginner
A dedicated foundry produces microchips for other semiconductor companies. The products named with that definition include computers, automotive electronics, Internet of Things devices and communication equipment. That model lowered the barrier to starting an integrated-circuit design company, because the foundry takes on process development and the sizable investment of building wafer fabs. TSMC credits it with speeding design work at fabless start-ups and system companies2.
TSMC's pure-play model, which it dates to 1987, is an exclusive focus on manufacturing its customers' products. In 2025 it manufactured 12,682 products, with 305 process technologies, for 534 customers, across high-performance computing, smartphones, the Internet of Things, automotive and digital consumer electronics. Managed capacity exceeded 17 million 12-inch equivalent wafers1.
A fab is the factory. NIST defines it as the plant where raw silicon wafers become working chips. TSMC runs fabs in Taiwan and at subsidiaries in Nanjing, Arizona, Japan, Washington state and China, and it offers customer support and engineering services from offices in North America, Europe, Japan, China and South Korea. Its 2025 shareholder letter says the Arizona plants are to support smartphone, AI and high-performance computing chips134.
Example
In 2025 TSMC manufactured 12,682 different products for 534 customers1. Its account of the model says a design company can start without building that fab, which it calls a sizable investment2.
Why it matters
Separating chip design from the wafer plant lowered the barrier to starting a design firm, on TSMC's account of the model it introduced in 1987. The plants remain large: its managed capacity in 2025 exceeded 17 million 12-inch equivalent wafers12.
Questions people ask
What does a semiconductor foundry do?
It manufactures microchips for other semiconductor companies. TSMC, describing the pure-play version, says the focus is exclusively on customers' products. In 2025 it made 12,682 products for 534 customers12.
Is TSMC a foundry?
Yes. TSMC says it pioneered the pure-play foundry model in 1987 and focuses exclusively on manufacturing its customers' products1.