Semiconductors and patent strategy evolution

Over the past 60 years, the semiconductor industry has experimented with various design and development models such as integrated device manufacturer (IDM), fabless, and foundry concepts, each of which adopted different IP strategies.

Today, annual semiconductor sales revenues top $400 billion in an industry with many players focusing on different areas of semiconductor development across the globe. In the early years, however, designing an integrated circuit was a laborious task.

It required specialised engineers who had to create the circuits and layouts manually, limiting R&D to a select few manufacturers who not only could afford this costly process, but had their patents centred around all aspects of their product.

In the early 1980s, electronic design automation tools started to appear on the market, which led to a standardisation of processes and allowed more companies to enter the manufacturing arena. This helped split designing and manufacturing processes—allowing them to occur independent of each other—and was a huge relief as manufacturing was becoming extremely expensive and required regular upgrades to the equipment and process.

IDM, fabless and foundry came into being from this split. IDMs included the most resourceful organisations—Texas Instruments, Intel, and IBM—who had control over everything from initial design to the finished product. This resulted in portfolios with a wide spectrum of patents.

Progress

Figure 1 depicts a 1990 Texas Instruments 4MB CMOS dynamic random-access memory (DRAM), which employs a trench capacitor for data storage. Texas Instruments not only designed the DRAM, but also manufactured the device and packaged it all at their own site in the US. Texas Instruments no longer fabricates memory products or logic processors, but it does continue to monetise its vast IP assets.

Companies operating under the fabless model designed their own products but relied on foundries for manufacturing. Fabless organisations concentrated exclusively on the functions and applications their products could bring to the market, and they filed patents accordingly.