A foundry is a facility that produces castings or manufactured components, typically by pouring molten material into a mold. The term applies to two distinct industries: traditional metal casting foundries, which have existed for thousands of years, and semiconductor foundries, which manufacture the microchips inside phones, computers, and cars. Both share the same core idea of shaping raw material into finished products, but they operate at vastly different scales and levels of precision.
Metal Casting Foundries
The original meaning of “foundry” refers to a factory where metal is melted and poured into molds to create parts. Liquid metal goes into a mold containing a hollow impression of the desired shape, cools, and the solid part is extracted. This process is used to make complex shapes that would be too difficult or expensive to produce by machining or forging solid metal.
Several casting methods exist, each suited to different needs:
- Sand casting is the most common and oldest method. A mold is formed from packed sand, metal is poured in, and the sand is broken away after cooling. It works for parts as small as your palm or as large as an entire rail car bed, and it handles most metals depending on the sand type. It’s inexpensive and practical for small batches.
- Investment casting (also called lost-wax casting) uses a wax model coated in a heat-resistant material. The wax melts out, leaving a precise mold. This technique dates back over 5,000 years and produces highly accurate, repeatable parts. It’s more expensive than sand casting but can create intricate shapes with little or no finishing work needed. Steel components up to 300 kg and aluminum parts up to 30 kg have been produced this way, including complete aircraft door frames.
- Die casting forces molten metal into a reusable steel mold under pressure, producing high volumes of identical parts quickly.
Metal foundries produce engine blocks, pipe fittings, turbine blades, jewelry, sculptures, and thousands of other products. The industry spans everything from small artisan workshops to massive industrial operations.
Semiconductor Foundries
In the electronics world, “foundry” refers to a factory that manufactures microchips on silicon wafers. These facilities are sometimes called “fabs” (short for fabrication plants). The defining feature of a semiconductor foundry is that it builds chips designed by other companies rather than designing its own. A “pure-play” foundry does no chip design at all. It takes a customer’s blueprint and turns it into a physical chip.
This business model emerged because building a chip factory costs tens of billions of dollars. Many chip companies found it made more sense to focus on design and outsource manufacturing. These design-only companies are called “fabless” firms. Companies like Apple, Nvidia, and Qualcomm design their own processors but rely on foundries to actually build them.
The alternative model is an integrated device manufacturer (IDM), a company that handles both design and manufacturing in-house. IDMs have full control over production quality and can tailor their manufacturing processes to specialized products. Intel and Samsung have historically operated this way, though both also offer foundry services to outside customers.
How Semiconductor Foundries Work
Chip manufacturing happens on thin, perfectly flat discs of silicon called wafers. The current industry standard is 300mm (about 12 inches) in diameter. The flatness requirements are extraordinary: surface variations must stay within tens of nanometers across the entire wafer, roughly a thousand times thinner than a human hair. The more chips (called “dies”) you can fit on a single wafer, the lower the cost per chip, which is why the industry has pushed wafer sizes larger over time and works to minimize the unusable area near the edges.
The manufacturing environment is equally extreme. Semiconductor foundries operate in cleanrooms where the air is filtered to remove nearly all dust particles. Even a speck invisible to the naked eye can ruin a chip. Workers wear full-body suits, and the air, water, and chemicals used in production are purified to levels far beyond what any other industry requires.
Chips are built layer by layer through hundreds of steps involving light exposure, chemical etching, and material deposition. The smallest features on today’s advanced chips are measured in nanometers. The industry tracks progress through “process nodes,” which roughly describe how small the transistors on a chip can be. Smaller nodes mean more transistors per chip, which translates to better performance and energy efficiency. The current frontier is the transition to 2nm manufacturing, which involves a major architectural shift in how transistors are built, moving from fin-shaped structures to a new design called gate-all-around.
Who Dominates the Foundry Market
The semiconductor foundry market is heavily concentrated. In the fourth quarter of 2024, TSMC (Taiwan Semiconductor Manufacturing Company) held a commanding 67% revenue share, driven largely by demand for AI chips and smartphone processors. Samsung Foundry sat in a distant second place at 11%. UMC and GlobalFoundries each held about 5%.
TSMC’s dominance stems from decades of investment in cutting-edge manufacturing. It produces the most advanced chips in the world for Apple, Nvidia, AMD, and dozens of other companies. Samsung competes at the leading edge but has struggled with manufacturing yields. GlobalFoundries and UMC focus on older, less expensive process nodes that are still essential for automotive chips, industrial sensors, and communications equipment. Not every chip needs to be cutting-edge, and these “mature node” foundries serve enormous markets.
Why Foundries Matter
Whether pouring molten iron into sand molds or etching circuits onto silicon, foundries are the bridge between a design and a physical product. Metal foundries remain essential to construction, transportation, energy, and manufacturing. Semiconductor foundries underpin the entire digital economy. Every smartphone, laptop, data center, and modern vehicle depends on chips produced in these facilities.
The semiconductor version of the foundry has become a geopolitical flashpoint precisely because so few companies can do it at the most advanced levels. Governments around the world are now investing heavily in domestic chip manufacturing capacity, recognizing that access to foundry capability is as strategically important as access to energy or raw materials.