Monday, 9 November 2026
Silicon Analytica
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Understand the chip industry, step by step

Updated October 2026

Short, plain-English lessons on how semiconductors work, who makes them and how the business earns money. Start with the basics, then open “Go Deeper” wherever you want more.

Lesson 1 · Foundations · 1 min read including deeper sections

What is a semiconductor?

The Basics

A semiconductor is a material, usually silicon, whose ability to carry electricity can be precisely controlled. That control lets engineers build tiny switches, called transistors, into integrated circuits.

Why it matters

Almost every electronic product depends on chips, so the industry sits upstream of computing, communications, cars and industry. Its health affects both technology progress and the wider economy.

Go Deeper

Chips fall into broad families. Logic chips (processors, accelerators) compute; memory chips store data; analog and power chips manage real-world signals and electricity. Each family has different economics and competitors.

A “semiconductor company” is a loose label. Some never touch silicon at all and sell software or machines to the companies that do. That is why the value chain is the next lesson.

Related:Why memory matters in AI systemsBrowse companies

What to learn next: The semiconductor value chain

Lesson 2 · Industry structure · 2 min read including deeper sections

The semiconductor value chain

The Basics

The production flow is design → wafer fabrication → assembly, packaging and test. Company roles are a separate layer: EDA tools and semiconductor IP support development, while equipment and materials suppliers support manufacturing. Fabless and IDM are alternative ways to organize production, not consecutive steps.

Why it matters

Knowing where a company sits explains what drives its revenue and which bottlenecks can hold it back.

Go Deeper

The chain is not a strict line. Materials and equipment support relevant manufacturing activities in parallel; design teams work with manufacturers throughout. Samsung Electronics is an IDM spanning memory, logic and Samsung Foundry services. Intel is an IDM with product and Intel Foundry businesses. Packaging and test may be done by OSATs, foundries or in-house.

Constraints often appear where capacity is slowest to add, such as advanced fabrication and packaging, where new facilities take years and large investment.

Process flow
EDA tools and semiconductor IP

Design software and reusable IP support chip development ↓

Equipment & Materials suppliers

Supply relevant wafer-fabrication and packaging/test activities ↓

  1. Design

    Define, simulate, verify and implement the circuit.

    Company roles: Fabless companies, IDM design teams and system-company design teams.

  2. Wafer fabrication

    Build transistors and interconnects on a wafer using repeated process steps.

    Company roles: Foundries and in-house IDM fabs.

  3. Assembly, packaging & test

    Prepare and connect dies in packages and test the resulting devices.

    Company roles: OSATs, foundries or in-house operations, depending on the product.

Alternative ways to organize production

Fabless: chip development and commercialization, with wafer fabrication outsourced.

IDM: design plus substantial in-house manufacturing; can cover several activities and still use external suppliers.

Solid arrows show the simplified production sequence. Dashed support markers describe generic supplier roles, not relationships between named companies. Fabless and IDM are alternatives, not consecutive steps. Packaging/test can be outsourced to an OSAT, provided by a foundry or done in-house. Actual flows vary and include repeated processing and feedback.

View sources
  1. Synopsys — About Us ↗

    Silicon design software and semiconductor IP.

    Publication date: not established. Official company source.

  2. Cadence — Tools and IP portfolio ↗

    Electronic design automation, semiconductor IP and system analysis.

    Publication date: not established. Official company source.

  3. Arm — Licensing ↗

    Processor architectures, cores and reusable IP; licence and royalty model.

    Publication date: not established. Official company source.

  4. Siemens EDA — Siemens EDA ↗

    EDA software, hardware and services for the design, verification and manufacturing of integrated circuits and electronic systems.

    Publication date: not established. Official company source.

  5. AMD — Supply chain responsibility ↗

    Outsourced wafer fabrication and assembly/test.

    Publication date: not established. Official company source.

  6. AMD — 2024 Form 10-K — Manufacturing ↗

    Reliance on external foundries for wafer fabrication; historical model evidence, not current financial data.

    Publication date: 5 February 2025 (filing date). Official company source.

  7. ASML — Our products ↗

    Lithography systems, with computational modelling, metrology and inspection.

    Publication date: not established. Official company source.

  8. Tokyo Electron — Products and Services ↗

    Deposition, etch, cleaning and coater/developer systems.

    Publication date: not established. Official company source.

  9. Intel — Company overview ↗

    Chip products and manufacturing; Intel Foundry is a foundry business, not a separate pure-play group.

    Publication date: not established. Official company source.

  10. Intel — Update on internal foundry model ↗

    Product and manufacturing businesses, external foundry capacity and foundry services. Historical explanation of the organizational model, not current operating figures.

    Publication date: 21 June 2023. Official company source.

  11. Samsung — About Samsung Semiconductor ↗

    Memory, System LSI and Foundry within Samsung Electronics.

    Publication date: not established. Official company source.

  12. TSMC — Dedicated Foundry ↗

    Dedicated foundry manufacturing for customer products, plus packaging.

    Publication date: not established. Direct corporate-page access blocked; official indexed text used.

  13. Amkor — Amkor Overview ↗

    Outsourced semiconductor assembly, packaging and test.

    Publication date: not established. Official company source.

  14. SUMCO — Production Processes ↗

    Silicon wafer manufacture, distinct from chip fabrication.

    Publication date: not established. Official company source.

Explore process flow and company roles
Read more:
Related:Interactive value-chain explorerSamsung Electronics

What to learn next: Types of semiconductor companies

Lesson 3 · Industry structure · 7 min read including deeper sections

Types of semiconductor companies

The Basics

Separate business model and industry role from product exposure and process expertise. EDA tools, Semiconductor IP, Fabless Chip Designers, Semiconductor Equipment, IDMs, Foundries and OSATs describe different roles. EDA and IP are both design-support businesses but are listed separately; the first two sit under a shared EDA & Semiconductor IP heading, apart from the fabless chip designers. Memory describes a product category, not an alternative to IDM.

Why it matters

Business models have very different cost structures. A fabless designer carries little factory cost; a foundry or IDM must fund fabs through every downturn.

Go Deeper

EDA and semiconductor IP are kept as separate design-support groups. Synopsys, Cadence and Siemens EDA are EDA examples; Arm is the semiconductor-IP example. Synopsys and Cadence also sell IP, so the two groups overlap and some companies appear in both descriptions. Nvidia, AMD and Qualcomm are grouped together under Fabless Chip Designers, which is a manufacturing model rather than a design-support role. Qualcomm’s licensing business does not change its fabless manufacturing model. Fabless companies can also sell systems, software and platforms.

Intel and Samsung Electronics are primary IDM examples. Their foundry businesses are labelled Intel Foundry and Samsung Foundry, not pure-play foundry groups. IDM does not mean every chip or step is in-house. Each example has a primary educational placement and supplementary tags; no supplier/customer relationship is implied.

Three dimensions, not one list

Companies can operate across multiple parts of the semiconductor ecosystem.

Business model / industry role
Fabless, IDM, Foundry, EDA, Semiconductor IP, Equipment and OSAT describe how a company participates; Materials & Wafers supplies manufacturing inputs.
Product exposure
Logic, Memory, Analog, Power and RF describe what chips do. Memory is a product category: a memory producer can be an IDM.
Process expertise
Lithography, Etch, Deposition, Inspection and Packaging describe technologies and activities, not mutually exclusive company types.

Each company has a primary educational placement plus supplementary tags. Foundry-business examples are explicitly labelled exceptions, not a second primary placement for their parent groups. Tags are illustrative, not complete portfolios. The site’s broader market segments combine exposures and are not a mutually exclusive list of business models.

EDA & Semiconductor IP

Electronic Design Automation — EDA

Supplies the software and hardware tools used to design, simulate, verify and manufacture chips.

Synopsys · Cadence · Siemens EDA

Go deeper
What does it do?
Supplies the software and hardware tools used to design, simulate, verify and manufacture chips.
What does it sell?
Design, simulation, verification and implementation software, related hardware and support services.
Who are its customers?
Chip-design teams at fabless companies, IDMs, foundries and system companies.
How does it make money?
Software licences and subscriptions, plus related service revenue.

Company examples

Go deeper

Synopsys, Cadence and Siemens EDA are example EDA suppliers; Siemens EDA is the business Siemens built around the former Mentor Graphics. The two tool suppliers with company profiles here, Synopsys and Cadence, also sell semiconductor IP, so this group overlaps with Semiconductor IP.

View sources
  1. Synopsys — About Us ↗

    Silicon design software and semiconductor IP.

    Publication date: not established. Official company source.

  2. Cadence — Tools and IP portfolio ↗

    Electronic design automation, semiconductor IP and system analysis.

    Publication date: not established. Official company source.

  3. Siemens EDA — Siemens EDA ↗

    EDA software, hardware and services for the design, verification and manufacturing of integrated circuits and electronic systems.

    Publication date: not established. Official company source.

  4. Siemens — Siemens closes Mentor Graphics acquisition ↗

    Mentor Graphics was acquired by Siemens and became part of its software business; the EDA business now presents itself as Siemens EDA.

    Publication date: 30 March 2017 (press release). Official company source.

Semiconductor IP

Licenses processor architectures, cores and reusable circuit blocks that other companies incorporate into their chips.

Arm

Go deeper
What does it do?
Licenses processor architectures, cores and reusable circuit blocks that other companies incorporate into their chips.
What does it sell?
Licensed architectures, processor cores and reusable design blocks, with support for integrating them.
Who are its customers?
Chip-design teams at fabless companies, IDMs and system companies.
How does it make money?
Licence fees and royalties under the relevant contracts.

Company examples

  • Arm

    Semiconductor IP

Go deeper

Arm is a semiconductor-IP example: it licenses designs rather than selling finished chips. EDA suppliers such as Synopsys and Cadence also supply IP, so the two design-support groups overlap. Licensing IP does not make a company a chip designer or a manufacturer.

View sources
  1. Synopsys — About Us ↗

    Silicon design software and semiconductor IP.

    Publication date: not established. Official company source.

  2. Cadence — Tools and IP portfolio ↗

    Electronic design automation, semiconductor IP and system analysis.

    Publication date: not established. Official company source.

  3. Arm — Licensing ↗

    Processor architectures, cores and reusable IP; licence and royalty model.

    Publication date: not established. Official company source.

Fabless Chip Designers

Designs and commercializes chips while outsourcing wafer fabrication.

Nvidia · AMD · Qualcomm

Go deeper
What does it do?
Designs and commercializes chips while outsourcing wafer fabrication.
What does it sell?
Chips and, depending on the company, boards, systems, software, platforms and licences.
Who are its customers?
System makers, cloud operators and other users of computing and communications products.
How does it make money?
Product and system sales, software/services and, where applicable, licensing.

Company examples

  • Nvidia

    Product exposure: Logic

  • AMD

    Product exposure: Logic

  • Qualcomm

    Also licensing · Product exposure: Logic, RF

Go deeper

Fabless is a manufacturing model, not a claim that a company only designs chips. Qualcomm remains a fabless example despite its separate licensing business. No named supplier relationship is implied.

View sources
  1. Nvidia — NVIDIA in Brief ↗

    Accelerated-computing products, systems and software; manufacturing model is cross-checked against company filings.

    Publication date: not established. Official company source.

  2. Nvidia — 2024 Form 10-K — Manufacturing ↗

    Explicit fabless manufacturing strategy; third-party suppliers manufacture semiconductor wafers. Historical filing used for the manufacturing-model definition, not current financial data.

    Publication date: 21 February 2024 (filing date). Official company source.

  3. AMD — Supply chain responsibility ↗

    Outsourced wafer fabrication and assembly/test.

    Publication date: not established. Official company source.

  4. AMD — 2024 Form 10-K — Manufacturing ↗

    Reliance on external foundries for wafer fabrication; historical model evidence, not current financial data.

    Publication date: 5 February 2025 (filing date). Official company source.

  5. Qualcomm — About Qualcomm ↗

    Semiconductor business and separate technology-licensing business.

    Publication date: not established. Official company source.

  6. Qualcomm — Integrated Fabless Manufacturing ↗

    Fabless manufacturing model separate from the licensing business.

    Publication date: not established. Official company source.

Semiconductor Equipment

Develops tools used to manufacture, inspect and measure semiconductor devices.

ASML · Applied Materials · Lam Research · Tokyo Electron · KLA

Go deeper
What does it do?
Develops tools used to manufacture, inspect and measure semiconductor devices.
What does it sell?
Production and process-control equipment, upgrades, parts and service.
Who are its customers?
Foundries, IDMs and other semiconductor manufacturing, wafer and packaging/test operators, depending on the tool.
How does it make money?
Equipment sales and related service, parts and upgrades.

Company examples

  • ASML

    Also metrology and inspection · Example process areas: Lithography

  • Applied Materials

    Materials engineering and other processes · Example process areas: Deposition

  • Lam Research

    Example process areas: Etch, Deposition, Wafer cleaning

  • Tokyo Electron

    Example process areas: Deposition, Etch, Cleaning, Coater/developer

  • KLA

    Process control · Example process areas: Inspection, Metrology

Go deeper

Example product areas are not complete portfolios or single-technology labels. These companies are not the sole suppliers of the listed processes. Equipment suppliers are distinct from manufacturers that operate the tools.

View sources
  1. ASML — Our products ↗

    Lithography systems, with computational modelling, metrology and inspection.

    Publication date: not established. Official company source.

  2. Applied Materials — Deposition systems for the angstrom era ↗

    Materials engineering and deposition; examples are not a complete portfolio.

    Publication date: not established. Official indexed text used; publication date not independently established.

  3. Lam Research — Our Processes ↗

    Etch, deposition, strip and wafer cleaning.

    Publication date: not established. Direct access blocked; official indexed text used.

  4. Tokyo Electron — Products and Services ↗

    Deposition, etch, cleaning and coater/developer systems.

    Publication date: not established. Official company source.

  5. KLA — Products ↗

    Process control, defect inspection and review, and metrology.

    Publication date: not established. Official company source.

Integrated Device Manufacturers — IDMs

Combines chip design with substantial in-house manufacturing.

Intel · Samsung Electronics

Go deeper
What does it do?
Combines chip design with substantial in-house manufacturing.
What does it sell?
Chip products and related offerings; some groups also provide foundry services.
Who are its customers?
System makers and other chip users; foundry customers where that business exists.
How does it make money?
Product sales and, where applicable, manufacturing services.

Company examples

Go deeper

IDM does not mean every chip or manufacturing step is in-house: external foundries and outsourced assembly/test may also be used. Samsung Electronics spans memory, logic and foundry services; Intel has product and foundry businesses. These are not pure-play foundry groups.

View sources
  1. Intel — Company overview ↗

    Chip products and manufacturing; Intel Foundry is a foundry business, not a separate pure-play group.

    Publication date: not established. Official company source.

  2. Intel — Update on internal foundry model ↗

    Product and manufacturing businesses, external foundry capacity and foundry services. Historical explanation of the organizational model, not current operating figures.

    Publication date: 21 June 2023. Official company source.

  3. Samsung — About Samsung Semiconductor ↗

    Memory, System LSI and Foundry within Samsung Electronics.

    Publication date: not established. Official company source.

  4. Samsung Foundry — Company Info ↗

    Foundry services as a business within Samsung Electronics.

    Publication date: not established. Official company source.

Foundries

Provides wafer-fabrication services for external customers’ chip designs.

TSMC · GlobalFoundries · UMC

Go deeper
What does it do?
Provides wafer-fabrication services for external customers’ chip designs.
What does it sell?
Manufacturing capacity and process services; some also offer packaging and related services.
Who are its customers?
Fabless designers, system companies and IDMs outsourcing production.
How does it make money?
Wafer-fabrication and related manufacturing-service revenue.

Company examples

Go deeper

TSMC, GlobalFoundries and UMC are dedicated-foundry examples. Samsung Foundry and Intel Foundry are foundry businesses within broader groups; use the business-unit names here, not Samsung Electronics or Intel as pure-play foundries. Foundries also develop their own manufacturing processes.

View sources
  1. Intel — Company overview ↗

    Chip products and manufacturing; Intel Foundry is a foundry business, not a separate pure-play group.

    Publication date: not established. Official company source.

  2. Intel — Update on internal foundry model ↗

    Product and manufacturing businesses, external foundry capacity and foundry services. Historical explanation of the organizational model, not current operating figures.

    Publication date: 21 June 2023. Official company source.

  3. Samsung Foundry — Company Info ↗

    Foundry services as a business within Samsung Electronics.

    Publication date: not established. Official company source.

  4. TSMC — Dedicated Foundry ↗

    Dedicated foundry manufacturing for customer products, plus packaging.

    Publication date: not established. Direct corporate-page access blocked; official indexed text used.

  5. GlobalFoundries — Design support and foundry resources ↗

    External customer access to design, foundry and production resources.

    Publication date: not established. Direct corporate-page access blocked; official indexed text used.

  6. UMC — UMC and Intel announce foundry collaboration ↗

    Foundry services for external customers; historical role evidence, not current capacity figures.

    Publication date: 25 January 2024. Direct corporate-page access blocked; official indexed text used.

Outsourced Assembly & Test — OSAT

Assembles, packages and tests semiconductor dies for customers.

ASE Technology · Amkor

Go deeper
What does it do?
Assembles, packages and tests semiconductor dies for customers.
What does it sell?
Packaging, assembly and test services, including advanced packaging where offered.
Who are its customers?
Chip designers and manufacturers outsourcing these activities.
How does it make money?
Assembly, packaging and testing service fees.

Company examples

Go deeper

Packaging and test can also be done by foundries or in-house. OSAT describes outsourced services, not every packaging activity. ASE Technology is a group with packaging/test and other activities. Test-equipment suppliers such as Advantest are not OSAT examples.

View sources
  1. ASE Technology — Company Profile ↗

    Semiconductor packaging and test; the group also includes electronics manufacturing services.

    Publication date: not established. Direct access blocked; official indexed text used.

  2. ASE — Inside the OSAT business ↗

    Outsourced assembly and test services; historical business-model explanation, not current rankings.

    Publication date: not established. Official indexed text used.

  3. Amkor — Amkor Overview ↗

    Outsourced semiconductor assembly, packaging and test.

    Publication date: not established. Official company source.

Materials & Wafers

Supplies wafers and other materials consumed in fabrication and packaging.

Shin-Etsu Chemical · SUMCO

Go deeper
What does it do?
Supplies wafers and other materials consumed in fabrication and packaging.
What does it sell?
Silicon wafers, gases, chemicals and packaging materials, depending on the supplier.
Who are its customers?
Wafer-fabrication and packaging operators.
How does it make money?
Material sales under customer supply agreements.

Company examples

Go deeper

Shin-Etsu Chemical and SUMCO are silicon-wafer examples, not examples of every material listed. A wafer supplier makes the starting material; a foundry builds devices on it. Materials groups may have substantial non-semiconductor businesses.

View sources
  1. Shin-Etsu Chemical — Silicon Wafers ↗

    Silicon wafer supply within a diversified materials group.

    Publication date: not established. Official company source.

  2. SUMCO — Production Processes ↗

    Silicon wafer manufacture, distinct from chip fabrication.

    Publication date: not established. Official company source.

Compare industry roles
Industry roles at a glance
CategoryActivity / scopeWafer fabricationRevenue modelExamples
EDA & Semiconductor IP
Electronic Design Automation — EDASupport for chip developmentNot a wafer-fabrication roleSoftware licences and subscriptions, plus related service revenue.
Semiconductor IPReusable design content for chip developmentNot a wafer-fabrication roleLicence fees and royalties under the relevant contracts.
  • Arm

    Semiconductor IP

Fabless Chip DesignersChip development; external wafer fabricationWafer fabrication outsourcedProduct and system sales, software/services and, where applicable, licensing.
  • Nvidia

    Product exposure: Logic

  • AMD

    Product exposure: Logic

  • Qualcomm

    Also licensing · Product exposure: Logic, RF

Semiconductor EquipmentSupplies relevant manufacturing activitiesSells tools; customers use them to make chipsEquipment sales and related service, parts and upgrades.
  • ASML

    Also metrology and inspection · Example process areas: Lithography

  • Applied Materials

    Materials engineering and other processes · Example process areas: Deposition

  • Lam Research

    Example process areas: Etch, Deposition, Wafer cleaning

  • Tokyo Electron

    Example process areas: Deposition, Etch, Cleaning, Coater/developer

  • KLA

    Process control · Example process areas: Inspection, Metrology

Integrated Device Manufacturers — IDMsCan cover design, wafer fabrication and packaging/testSubstantial in-house wafer fabricationProduct sales and, where applicable, manufacturing services.
FoundriesWafer fabrication; sometimes packagingOperates wafer fabsWafer-fabrication and related manufacturing-service revenue.
Outsourced Assembly & Test — OSATAssembly, packaging and testPackaging/test facilities; not the foundry roleAssembly, packaging and testing service fees.
Materials & WafersInputs to fabrication and packagingMaterial production is not chip fabricationMaterial sales under customer supply agreements.
Related:Compare companiesIntelQualcomm

What to learn next: How a chip is made

Lesson 4 · Industry structure · 2 min read including deeper sections

How a chip is made

The Basics

A chip is designed and verified in software, then built on a wafer through many repeated cycles of patterning, adding and removing material, before being cut, packaged and tested.

Why it matters

Different activities require different tools and materials. Equipment suppliers sell those tools; foundries and IDMs use them to manufacture chips. Problems during production can reduce yield and raise cost.

Go Deeper

Wafer fabrication repeats patterning, deposition, etch and cleaning in product-specific sequences. Inspection and metrology monitor production throughout; they are not merely final steps. ASML’s lithography, Lam Research’s etch/deposition/cleaning and KLA’s process-control tools are example areas, not exclusive supplier assignments.

Real flows vary widely by chip type and manufacturer. Memory, logic and power chips use different processes, and advanced packaging can combine several dies into one product.

  1. 1Design & verification

    Describe, simulate, verify and implement the circuit using EDA tools and, where relevant, licensed IP.

  2. 2Mask preparation

    Prepare the patterns used to transfer the design to the wafer.

  3. 3Wafer fabrication

    Use repeated cycles of deposition, lithography, etch and cleaning to form devices and interconnects. This is not a fixed four-step recipe.

  4. 4Process control

    Inspection and metrology monitor the wafer throughout fabrication, not just at the end.

  5. 5Wafer test & dicing

    Test dies on the wafer and separate them; the order and method vary by packaging flow.

  6. 6Assembly & packaging

    Connect and protect one or more dies in a package.

  7. 7Final test

    Check the packaged devices; testing also occurs earlier in the flow.

Conceptual sequence, not a process recipe. Wafer processing repeats many times; inspection and metrology run throughout. Actual flows and the order of dicing, packaging and test vary by product.
View sources
  1. ASML — Our products ↗

    Lithography systems, with computational modelling, metrology and inspection.

    Publication date: not established. Official company source.

  2. Applied Materials — Deposition systems for the angstrom era ↗

    Materials engineering and deposition; examples are not a complete portfolio.

    Publication date: not established. Official indexed text used; publication date not independently established.

  3. Lam Research — Our Processes ↗

    Etch, deposition, strip and wafer cleaning.

    Publication date: not established. Direct access blocked; official indexed text used.

  4. Tokyo Electron — Products and Services ↗

    Deposition, etch, cleaning and coater/developer systems.

    Publication date: not established. Official company source.

  5. KLA — Products ↗

    Process control, defect inspection and review, and metrology.

    Publication date: not established. Official company source.

  6. Amkor — Amkor Overview ↗

    Outsourced semiconductor assembly, packaging and test.

    Publication date: not established. Official company source.

  7. SUMCO — Production Processes ↗

    Silicon wafer manufacture, distinct from chip fabrication.

    Publication date: not established. Official company source.

Read more:
Related:Inside lithographyASMLKLA

What to learn next: How the industry makes money

Lesson 5 · Economics · 3 min read including deeper sections

How the industry makes money

The Basics

Chip economics turn on a few forces: heavy upfront investment, how fully factories are used, how many good chips come out, and what customers will pay.

Why it matters

These forces explain why profits swing more than revenue across the cycle.

Go Deeper

Use the concepts below as a checklist when reading a company report. Their importance differs by business model.

Capital expenditure (capex)

The Basics

Spending on fabs, tools and equipment that last for years.

Example: Like building a restaurant kitchen before serving the first meal.

Why it matters

High capex commits a company to costs before demand is known.

Go Deeper

Capex shows up as depreciation over several years, so a factory built in a boom keeps weighing on profits if demand later falls.

Utilization

The Basics

How much of available factory capacity is actually used.

Example: An airline flying half-empty planes still pays for the planes.

Why it matters

Fixed costs are spread over fewer units when utilization drops, so margins fall quickly.

Go Deeper

Manufacturers sometimes cut prices to keep lines full, trading margin for utilization.

Yield

The Basics

The share of chips on a wafer that work.

Why it matters

Better yield means more sellable chips from the same cost.

Go Deeper

New processes usually start with lower yield that improves with experience. Larger dies are more exposed to defects.

Gross and operating margin

The Basics

Gross margin subtracts production costs; operating margin also subtracts R&D, sales and admin.

Why it matters

Margins show pricing power and cost discipline.

Go Deeper

Compare margins within a business model. Fabless and software-like businesses typically differ structurally from manufacturers.

Research and development

The Basics

Spending to create the next products and processes.

Why it matters

Falling behind technically can be hard to reverse.

Go Deeper

R&D as a share of revenue shows how much of each sale is reinvested; it can rise sharply in downturns when revenue falls.

Inventory cycles

The Basics

Customers build up and then run down stocks of chips.

Example: Shops over-ordering before a holiday, then ordering little afterwards.

Why it matters

Orders can fall even when end demand is steady.

Go Deeper

Watch inventory at the company and, where disclosed, at its customers. Rising inventory relative to sales can signal weaker orders ahead.

Customer concentration

The Basics

A large share of revenue coming from a few buyers.

Why it matters

Losing or renegotiating with one customer can move results significantly.

Go Deeper

Annual reports often disclose customers above a reporting threshold; check the latest filing.

Product mix and pricing

The Basics

Which products are sold, and at what prices.

Why it matters

A shift toward higher-value products can lift margins without more volume.

Go Deeper

Memory prices in particular move with industry supply and demand, so the same volume can produce very different revenue.

Capacity constraints and lead times

The Basics

Limits on how much can be produced, and how long orders take.

Why it matters

Tight capacity supports pricing; long lead times can encourage over-ordering.

Go Deeper

When lead times shorten, customers may cancel duplicate orders, amplifying a downturn.

Read more:
Related:MicronTSMCInference and cost per answer

What to learn next: How to read company financials

Lesson 6 · Investing context · 1 min read including deeper sections

How to read company financials

The Basics

A few metrics describe growth, profitability, cash and valuation. They only make sense when compared across similar businesses and matching periods.

Why it matters

A foundry, a fabless designer, an equipment supplier and a materials company have different economics, so the same ratio can mean different things.

Go Deeper

Check the period first: fiscal years end in different months, and quarters may not align. Revenue growth is more meaningful when the base period is stated.

Capital-heavy manufacturers often show strong operating cash flow but lower free cash flow during build-outs. Inventory and receivables rising faster than revenue deserve a closer look.

Valuation ratios depend on a share price on a specific date. Always note that date, and prefer enterprise value when companies carry very different amounts of cash or debt.

Related:FinancialsSourced industry data

What to learn next: Industry cycles and current themes

Lesson 7 · Investing context · 1 min read including deeper sections

Industry cycles and current themes

The Basics

Chip demand rises and falls in cycles, driven by inventory, capacity and customer investment, on top of longer-term structural growth.

Why it matters

Separating cyclical from structural change helps avoid mistaking a temporary upswing for a permanent trend, or the reverse.

Go Deeper

End markets move at different speeds. AI infrastructure depends on data-center investment; PCs and smartphones on replacement cycles; automotive and industrial on longer design cycles and inventory practices. Memory is often the most price-sensitive.

Supply adds its own rhythm: capacity ordered in a boom arrives years later, sometimes into weaker demand. This lesson deliberately contains no current figures; dated, sourced numbers are on the Data page and in news coverage.

Related:Data: reported results and forecastsMemory in AI systems

Back to the start of the path

Explainers

Markets

The global chip supply chain: how it works, where it is strained and why

A plain-language guide to the steps, the places and the bottlenecks, with the evidence and the caveats.

13 Oct 2026●22 min read●Explainer
Markets

Where Every $100 of Chipmaking Equipment Spending Goes

A visual guide to lithography, etch, deposition and the companies supplying the machines behind semiconductor manufacturing.

13 Oct 2026●9 min read●Explainer
Memory & packaging

The AI system is only as useful as its memory

Why bandwidth, capacity and packaging belong alongside compute in the investment discussion.

12 Oct 2026●4 min read●Explainer
Equipment

Inside lithography: the tools that make smaller chips possible

ASML’s place in the value chain, and why manufacturing tools deserve their own analysis.

12 Oct 2026●4 min read●Explainer
Markets

Most chips in an AI server cost less than $10 — and they are still mission-critical

More than half of the chips in an AI data center server sit in the lowest price bucket. The pricing breakdown shows why the cheap end of the chip market matters.

1 Jun 2026●4 min●Explainer
Markets

Advanced nodes live in the compute tray — the rest of the rack runs on mature silicon

A die-by-die breakdown of an AI server rack shows that cutting-edge process technology is concentrated in one tray, while power, cooling and management functions rely on older nodes.

1 Jun 2026●4 min●Explainer
Research

One AI server rack holds over 4,500 chips

A report by SIA and Deloitte breaks down where the value sits in an AI server rack. Semiconductors make up about 95% of the content value, and the accelerator alone accounts for more than 70% of it.

1 Jun 2026●5 min●Explainer
Research

The CHIPS research programs total about $11B

An SIA paper from June 2025 describes the federal R&D programs that complement factory investments, and their status at the time.

Historical analysis●1 Jun 2025●3 min●Explainer
Sources & methodology

Qualitative educational classification by Silicon Analytica. Examples are not exhaustive lists, rankings, market shares or evidence of supplier/customer relationships. Company roles, product exposure and process expertise are assessed separately.

Source review: 13 October 2026. Corporate and product pages are generally undated; publication dates are not established unless explicitly stated below. A reporting-period end is not a publication date. Official indexed text was used where direct access was blocked, as identified per source; live page access should be rechecked before publication.

Business-model and customer descriptions summarize the relevant role, not every activity or contract of each group. Product portfolios can change; no current financial or manufacturing-capacity claims are made.

  1. Synopsys — About Us ↗

    Silicon design software and semiconductor IP.

    Publication date: not established. Official company source.

  2. Cadence — Tools and IP portfolio ↗

    Electronic design automation, semiconductor IP and system analysis.

    Publication date: not established. Official company source.

  3. Arm — Licensing ↗

    Processor architectures, cores and reusable IP; licence and royalty model.

    Publication date: not established. Official company source.

  4. Siemens EDA — Siemens EDA ↗

    EDA software, hardware and services for the design, verification and manufacturing of integrated circuits and electronic systems.

    Publication date: not established. Official company source.

  5. Siemens — Siemens closes Mentor Graphics acquisition ↗

    Mentor Graphics was acquired by Siemens and became part of its software business; the EDA business now presents itself as Siemens EDA.

    Publication date: 30 March 2017 (press release). Official company source.

  6. Nvidia — NVIDIA in Brief ↗

    Accelerated-computing products, systems and software; manufacturing model is cross-checked against company filings.

    Publication date: not established. Official company source.

  7. Nvidia — 2024 Form 10-K — Manufacturing ↗

    Explicit fabless manufacturing strategy; third-party suppliers manufacture semiconductor wafers. Historical filing used for the manufacturing-model definition, not current financial data.

    Publication date: 21 February 2024 (filing date). Official company source.

  8. AMD — Supply chain responsibility ↗

    Outsourced wafer fabrication and assembly/test.

    Publication date: not established. Official company source.

  9. AMD — 2024 Form 10-K — Manufacturing ↗

    Reliance on external foundries for wafer fabrication; historical model evidence, not current financial data.

    Publication date: 5 February 2025 (filing date). Official company source.

  10. Qualcomm — About Qualcomm ↗

    Semiconductor business and separate technology-licensing business.

    Publication date: not established. Official company source.

  11. Qualcomm — Integrated Fabless Manufacturing ↗

    Fabless manufacturing model separate from the licensing business.

    Publication date: not established. Official company source.

  12. ASML — Our products ↗

    Lithography systems, with computational modelling, metrology and inspection.

    Publication date: not established. Official company source.

  13. Applied Materials — Deposition systems for the angstrom era ↗

    Materials engineering and deposition; examples are not a complete portfolio.

    Publication date: not established. Official indexed text used; publication date not independently established.

  14. Lam Research — Our Processes ↗

    Etch, deposition, strip and wafer cleaning.

    Publication date: not established. Direct access blocked; official indexed text used.

  15. Tokyo Electron — Products and Services ↗

    Deposition, etch, cleaning and coater/developer systems.

    Publication date: not established. Official company source.

  16. KLA — Products ↗

    Process control, defect inspection and review, and metrology.

    Publication date: not established. Official company source.

  17. Intel — Company overview ↗

    Chip products and manufacturing; Intel Foundry is a foundry business, not a separate pure-play group.

    Publication date: not established. Official company source.

  18. Intel — Update on internal foundry model ↗

    Product and manufacturing businesses, external foundry capacity and foundry services. Historical explanation of the organizational model, not current operating figures.

    Publication date: 21 June 2023. Official company source.

  19. Samsung — About Samsung Semiconductor ↗

    Memory, System LSI and Foundry within Samsung Electronics.

    Publication date: not established. Official company source.

  20. Samsung Foundry — Company Info ↗

    Foundry services as a business within Samsung Electronics.

    Publication date: not established. Official company source.

  21. TSMC — Dedicated Foundry ↗

    Dedicated foundry manufacturing for customer products, plus packaging.

    Publication date: not established. Direct corporate-page access blocked; official indexed text used.

  22. GlobalFoundries — Design support and foundry resources ↗

    External customer access to design, foundry and production resources.

    Publication date: not established. Direct corporate-page access blocked; official indexed text used.

  23. UMC — UMC and Intel announce foundry collaboration ↗

    Foundry services for external customers; historical role evidence, not current capacity figures.

    Publication date: 25 January 2024. Direct corporate-page access blocked; official indexed text used.

  24. ASE Technology — Company Profile ↗

    Semiconductor packaging and test; the group also includes electronics manufacturing services.

    Publication date: not established. Direct access blocked; official indexed text used.

  25. ASE — Inside the OSAT business ↗

    Outsourced assembly and test services; historical business-model explanation, not current rankings.

    Publication date: not established. Official indexed text used.

  26. Amkor — Amkor Overview ↗

    Outsourced semiconductor assembly, packaging and test.

    Publication date: not established. Official company source.

  27. Shin-Etsu Chemical — Silicon Wafers ↗

    Silicon wafer supply within a diversified materials group.

    Publication date: not established. Official company source.

  28. SUMCO — Production Processes ↗

    Silicon wafer manufacture, distinct from chip fabrication.

    Publication date: not established. Official company source.

General educational explanations by Silicon Analytica. Information only, not investment advice. Dated financial figures appear on the Data page and in articles.