What it is
A foundry is a company that exclusively manufactures integrated circuits (chips) for other "fabless" semiconductor companies. These companies provide the foundry with their chip designs, and the foundry then uses its fabrication plants (fabs) to produce the physical chips. This business model allows design-focused companies to avoid the immense capital expenditure required to build and maintain their own fabs, fostering specialization within the semiconductor industry.
Foundries are central to the global semiconductor supply chain, with a few major players dominating the advanced process node manufacturing. Their capacity and technological capabilities directly impact the production of nearly all modern chips, from CPUs and GPUs to specialized AI accelerators. News often covers foundry utilization rates, expansion plans, and their role in geopolitical discussions regarding chip supply and technological independence.
Why it matters
Foundries are the backbone of chip production, influencing the availability and cost of nearly all electronic devices by manufacturing the crucial semiconductors inside them.
Reviewed under editorial standardsUpdated September 26, 2026Not investment advice