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Glossary topic

Business & Market glossary

Business and market terms explain how the semiconductor industry makes money: business models such as fabless, foundry and IDM, pricing and margins, design wins, supply agreements, inventory cycles and the measures analysts use to size a market.

Founders, product managers, buyers and investors use them to read an earnings report, build a business case, and understand why chip supply swings between shortage and glut.

139 terms in 11 groups, 36 with a full explanation and examples. Each term has its own page.

Business models

ASIC vendor: Application-Specific Integrated Circuit vendor: A supplier that takes a customer's specification or netlist and delivers finished packaged chips, owning the mask set, manufacturing relationship and test programme.
ATP: Assembly, Test and Packaging: The collective back-end operations that convert tested wafers into shippable packaged parts: die singulation, attach, interconnect, encapsulation, final test and marking.
Catalogue product: A standard part sold from a published datasheet to any customer who orders it, as opposed to a device developed for one account.
Chiplet marketplace: An emerging commercial model in which pre-verified, pre-packaged silicon dies are bought and sold as known-good components for integration into a multi-die package, rather than being designed in-ho...
COT: Customer-Owned Tooling: An engagement where the customer owns the design database, the mask set and the direct relationship with the foundry, buying wafers rather than finished parts.
Custom product

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Corporate finance

Capex intensity: Capital expenditure intensity

Capital expenditure as a percentage of revenue, a measure of how asset-heavy a business model is.

Carve-out

The separation of a business unit from its parent into a standalone company, usually sold to private equity or a strategic buyer.

Deferred revenue

Cash received or billed for goods and services not yet recognised as revenue, such as unshipped hub inventory, prepaid support or undelivered licence obligations.

EBITDA: Earnings Before Interest, Taxes, Depreciation and Amortisation

Earnings before interest, taxes, depreciation and amortisation (EBITDA): a measure of operating profit before financing costs and non-cash charges.

Fabless P&L: Fabless profit and loss

The characteristic financial shape of a fabless company: high gross margin, heavy R&D, low capex and depreciation, and operating leverage that swings sharply with revenue because costs are mostly f...

Gross margin

Revenue less cost of goods sold, as a percentage of revenue.

IPO: Initial Public Offering

The first sale of a company's shares to public investors, providing capital and a liquidity path for existing holders.

IRR: Internal Rate of Return

Internal rate of return (IRR): the discount rate at which a project's net present value is zero.

JV: Joint Venture

A jointly owned company formed by two or more parties to share the capital, risk and output of an undertaking such as a fab or a technology programme.

Licensing revenue

Income from granting rights to use IP, typically split between upfront licence fees recognised on delivery and royalties recognised as licensees ship.

M&A: Mergers and Acquisitions

The buying, selling and combining of companies or business units.

NPV: Net Present Value

Net present value (NPV): the value today of a project's expected future cash flows, discounted at a chosen rate, minus its investment.

R&D intensity: Research and development intensity

R&D spending as a percentage of revenue.

SPAC: Special Purpose Acquisition Company

A listed shell company that raises capital and then merges with a private business to take it public without a conventional IPO.

Unicorn

A privately held startup valued at over one billion dollars.

Venture stages

The conventional ladder of startup financing rounds, from pre-seed and seed through Series A, B and C to growth and pre-IPO.

Product lifecycle

A0 silicon

The first fabricated revision of a new design, used for bring-up and bug discovery.

Business case

The argument for funding a product or project: the market and customers it serves, expected revenue and margin, development and unit cost, investment, schedule and the main risks.

Conformance test suite

A released set of tests that a product passes to show it follows the rules of a platform or a specification, run on each derivative and on each new platform version.

DatasheetIn depth

The authoritative customer-facing document giving a part's electrical characteristics, absolute maximum ratings, timing, pinout, package drawing and ordering information.

Derivative

A product created by modifying an existing design rather than starting fresh, typically by scaling memory, removing blocks, changing pin count or retargeting a package.

End of support

The date after which a supplier no longer provides updates, fixes or technical support for a product, software or tool version.

Engineering sampleIn depth

Pre-production silicon released for evaluation and software development, marked as not qualified and not guaranteed to meet the final datasheet.

EOL: End of LifeIn depth

The formal announcement that a product will cease to be manufactured, starting a defined window for final orders and final shipments.

ErrataIn depth

A published list of known deviations between a silicon revision's actual behaviour and its documented specification, with severity and workarounds.

Lead product

The first product built on a new platform, whose development and silicon prove the platform before other products are derived from it.

Longevity programmeIn depth

A supplier commitment to keep specified parts available for a stated period, commonly ten to fifteen years from introduction.

LTB: Last Time Buy

A customer's final purchase of a part being discontinued, sized to cover production and service demand for the remaining life of their product.

Mass production

The state in which a part is fully qualified, released to the price book and manufactured at volume against customer forecasts.

MRD: Market Requirements Document

A document that captures what the market needs and why, stating target segments, customer problems, competitive context and required capabilities without specifying implementation.

NPI: New Product IntroductionIn depth

The cross-functional process that takes a product from design completion through qualification, pilot builds and ramp to full production, covering test programme release, supply setup, documentatio...

Orderable part number

The exact alphanumeric code a customer must quote to buy a specific SKU, encoding die, package, temperature grade, tape-and-reel option and often a lead-free indicator.

Platform

A reusable hardware and software base, comprising a core architecture, IP set, software stack and toolchain, from which multiple products are derived.

PLM: Product Lifecycle Management

Product lifecycle management (PLM): the practice, and the software system, for managing a product's data from concept through end of life, including parts, bills of materials, documents, changes an...

PRD: Product Requirements Document

The specification of what a product must do, listing features, performance targets, interfaces, power and cost goals and the acceptance criteria.

Product (semiconductor)

What a semiconductor company sells and stands behind: one or more orderable parts together with the datasheet, software, tools, documentation, qualification evidence, supply commitments and roadmap...

Product brief

A short public summary of a device's key features, block diagram and target applications, released before the full datasheet is available.

Product familyIn depth

A set of products built on a shared design that differ in features, memory size, package, speed or temperature grade.

Qualification sample

Parts built on the intended production process, package and test flow and submitted to reliability qualification such as HTOL, temperature cycling and HAST.

Reference architecture

The architecture that every product built on a platform shares: the common processor, memory, interconnect, security and software structure, with the points where products may differ and the rules...

RoadmapIn depth

The forward plan of products, derivatives and process nodes a supplier intends to deliver, with approximate timing.

Sampling

The phase in which early silicon is supplied to selected customers for evaluation and system bring-up, usually in limited quantity with preliminary documentation and no production guarantees.

SKU: Stock Keeping UnitIn depth

A distinct sellable configuration of a product, differentiated by speed grade, feature fusing, temperature range, package or memory size.

Stage-gate process

A way of running development in stages separated by gates, at each of which a review decides from set criteria whether to go on, hold, rework or stop.

Variation point

A place in a platform where products are allowed to differ, such as memory size, a peripheral set or a performance option, defined in advance so that each derivative chooses a configuration rather...

Supply chain

Allocation

The rationing state in which demand exceeds supply and a supplier apportions available output among customers, typically by historical share, contract commitments or strategic priority.

Buffer stock

Inventory positioned at a specific point in the chain, such as die bank or a customer hub, to decouple a long upstream lead time from short downstream response requirements.

Bullwhip effect

The amplification of demand variability as orders move upstream through a supply chain, so a small change in end consumption produces a much larger swing in wafer orders.

Capacity reservation

An arrangement in which a customer secures a defined slice of a fab's output ahead of time, usually with take-or-pay obligations.

Chip shortage

A period in which demand for semiconductors outruns available capacity, extending lead times, triggering allocation and halting downstream production.

Counterfeit componentsIn depth

Parts that are remarked, recycled, refurbished or entirely fabricated to impersonate a genuine device.

Country of origin

The country where a product was produced or last substantially transformed, used to determine tariffs, trade restrictions and procurement eligibility.

DIO: Days Inventory Outstanding

Average inventory divided by daily cost of goods sold, expressing stock as days of supply.

Double ordering

Placing the same demand with several suppliers or ordering more than needed in the hope of receiving a fair share under allocation.

Dual source

Deliberately splitting production volume between two qualified suppliers, typically in a fixed ratio, so both remain active and capable.

ERP: Enterprise Resource Planning

Enterprise resource planning (ERP): the business software that runs orders, inventory, purchasing, production planning and finance.

Incoterms: International Commercial Terms

The ICC's standard three-letter trade terms, such as EXW, FCA, FOB, CIF and DDP, defining where risk and cost transfer between seller and buyer.

Lead timeIn depth

The elapsed time from placing an order to receiving parts, driven by wafer cycle time, assembly, test and die bank position.

Multi-sourcing

A strategy of qualifying several suppliers, fabs or geographies for the same part or process to reduce concentration risk.

Prepayment

Cash paid to a supplier in advance of shipment, used to fund capacity expansion or secure priority allocation.

Safety stock

Inventory held above forecast demand to absorb variability in demand or supply.

Second source

An alternative qualified supplier of a functionally equivalent part, kept available to protect against supply interruption or price leverage.

Single source

A part, material or service bought from only one supplier, by choice or because no alternative is qualified.

Supply chainIn depth

The companies and steps that take a chip from raw materials to the customer: materials and equipment suppliers, foundries and fabs, assembly and test houses, distributors and logistics.

TariffIn depth

A duty levied on imported goods, calculated from the customs value, HS classification and declared country of origin.

VMI: Vendor Managed Inventory

An arrangement where the supplier owns and replenishes stock held at or near the customer's site, with title transferring only on consumption.

Wafer supply agreement

A long-term contract between a fabless company or IDM and a foundry covering volume commitments, pricing, capacity corridors and often prepayment.

Business & Market glossary

Business models

Business & Market glossary

Business models

Commercial economics

Corporate finance

Distribution channel

Go-to-market

Lifecycle management

Market analysis

Product lifecycle

Program management

Roles

Supply chain

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