The New Economics of Semiconductor Manufacturing

The Toyota Production System has been applied to chip making. The electronics industry may never be the same

12 min read
The New Economics of Semiconductor Manufacturing
Illustration: Stuart Bradford

The semiconductor industry is undergoing a sea change. It’s being split into haves and have-nots, and it has become much more difficult for everyone to make a profit. Never have so many smart people worked so hard for so little money.

Walk into a multibillion-dollar chip-fabrication plant—a fab—and you may very well get the impression that the industry is headed for a spectacular meltdown. One of the first things you’ll see is a bay the size of two basketball courts packed with equipment for projecting a lithographic design onto wafers. Nearby, you’ll find a towering bin, called a stocker, filled with wafers waiting to be processed by this equipment. The wafers are worth from US $10 million to $100 million—all of it idle inventory.

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iStock

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