Pricing capacity-booking fees for semiconductor fabs with outsourcing alternatives

Abstract

A semiconductor foundry fab is a factory that manufactures integrated circuits (IC) designed by a large number of customers (called IC design houses). We consider a foundry fab that requires the customers to pay a booking fee for reserving an amount of capacity. And the capacity reserved for the customers can be either provided by the fab itself or through outsourcing capacity from other fabs. The outsourcing activity is implemented by subsequently paying booking fee at a fixed rate to the capacity-providers. This paper develops a method to determine the optimum booking price to charge design houses by the foundry fab in order to maximize the profit of the fab. The proposed capacity-booking paradigm and solution method help resolving the information distortion problem in demand forecasting. © 2012 Springer-Verlag GmbH.