Semiconductor Manufacturing Value Chain

Semiconductor fabrication creates electronic circuits on a semiconductor wafer, while outsourced assembly and testing prepares fabricated chips for use and checks their performance. Fabrication builds the transistors and interconnections; assembly and testing turn individual chips into protected, connectable and tested components.

Where they fit in the value chain

The broad sequence is chip design, wafer fabrication, assembly and packaging, and testing. Testing also occurs at intermediate stages, so it is not confined to the end of production.

• A fab is a facility that manufactures circuits on wafers according to a chip design.
• An OSAT, or outsourced semiconductor assembly and test provider, performs assembly, packaging and testing for other semiconductor companies.
• A foundry fabricates chips for customers, whereas a fabless company designs chips without operating its own wafer fabrication plant.

What each process actually does

The central difference is between creating the circuit and preparing that circuit for practical use.

• Fabrication repeatedly uses processes such as photolithography, deposition, etching and doping to form devices and interconnections across a wafer.
• The fabricated wafer contains many individual chips, called dies, which can be electrically tested before separation.
• During assembly and packaging, dies are separated, attached to a supporting structure and electrically connected to external terminals.
• The package protects the chip, provides electrical connections and helps remove heat during operation.
• Testing checks electrical functionality and performance, allowing defective devices to be rejected and usable devices to be classified.

Why the distinction matters

Both stages require specialised technology, but they involve different industrial capabilities. Establishing assembly and testing capacity does not by itself create the ability to fabricate semiconductor circuits.

• A wafer fab requires highly controlled cleanrooms, specialised processing equipment, ultrapure water, reliable power and tight process control.
• Conventional assembly and testing generally require less capital than wafer fabrication, but still depend on precision equipment, skilled workers and quality control.
• Advanced packaging can connect multiple dies within one package, making packaging an important contributor to system performance rather than merely a protective enclosure.
• Developing fabrication and assembly capabilities can strengthen different parts of the semiconductor value chain; neither alone constitutes the entire ecosystem.