Fabless Pipsqueaks Grow Up

Pepper sniffs at fabs
Rick Merritt, EETimes
11/5/2014 06:00 AM EST

SAN JOSE, Calif. — In the early 1990s, semiconductor companies that didn't own their own fabs were considered runts. Today at least five of them rank among the world's largest chip vendors. Some of the credit for the shift goes to the sector's trade group, which will celebrate its 20th anniversary on Dec. 11.

"It was generally understood, when you get to $150 to $200 million in revenues, you'd have your own fab, but I said no," said Robert Pepper, who in 1993 was chief executive of Level One, an up-and-coming startup in communications chips.

Pepper was deeply influenced by a 1974 article from the business guru Peter Drucker, who wrote that companies should invest only in activities that really add value, outsourcing everything else. "In retrospect, I see that's what the fabless semiconductor model is," Pepper recently told us.

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