Gaining Transparency into Supplier and Competitor Costs with TechInsights Semiconductor Manufacturing Economics

The Challenge

Although the prices foundries charge are well known, a foundry’s internal costs behind quoted pricing is unknown to fabless companies. This is especially the case for “leading-edge” IC fabrication using EUV lithography in newer fabs where the capex depreciation dominates internal costs. The result being diminished negotiating power for fabless companies, leaving them unsure of if they are being quoted a fair price by their foundry partners. When it comes to competitive benchmarking for fabless companies, internal costs for competitors are also difficult to estimate, so competitive profit margins are guesses, making benchmarking a challenge.

The Solution

TechInsights IC Cost and Price Model and Strategic Cost and Price Model give users transparency into the internal costs of foundry partners, along with the purchasing-volume-based pricing. These models also provide fabless companies with the ability see competitors’ internal costs by allowing users to simulate backwards and forwards in time , enabling fabless companies to understand what their competitors profit margins are and to be able to negotiate long-term supply contracts with foundries and OSATs.

The Results

Fabless companies globally have harnessed the value included within TechInsights IC Cost and Price Model and Strategic Cost and Price Model to add $1+ million per year in revenues based on raising ASPs and gain over $10 million per year in product sales by taking market share from competitors with aggressive pricing while maintaining acceptable profit margins. A fabless company has the potential to gain $1-5 million per year in revenues with TechInsights’ Semiconductor Manufacturing Economics through strategic pricing.