MICRO: Reality Check

The Pros and Cons of Outsourcing Total Costs and Their Various Components Must Be Scrutinized is chief technology officer and senior vice president, semiconductor technology research, for The Noblemen Group, a boutique investment banking, strategic advisory, and business development firm. Moslehi has 20 years' experience working in the semiconductor and semiconductor equipment industries. He can be reached at Outsourcing has been increasingly used by many electronics and semiconductor companies, including systems providers, chip manufacturers, and equipment suppliers. Both domestic and offshore outsourcing have given rise to a host of specialized contract manufacturing houses and contract service providers covering virtually all aspects of the value chain. The vast and growing outsource network and infrastructure includes software development services, electronic manufacturing services, original-design manufacturers (ODMs), distributors, assembly and packaging houses, electrical test services, photomask shops, chip fabrication foundries, intellectual property (IP) providers, and design services. Equipment maintenance, materials, and facilities management systems are among the areas of fab operation also being outsourced. Equipment suppliers also increasingly rely on outsourcing, particularly for gas panels, subassembly units, automation, and even the manufacturing of select tools. As a result, some suppliers have evolved into tool integrators, doing only final assembly and test in-house. In addition, many venture capital firms require an outsourcing plan and strategy from start-up companies that they fund. In the 1960s