Wafer is a term used to refer to the silicon chips used in the production of integrated circuits (ICs) in the semiconductor industry. It is the carrier used to produce integrated circuits. Common silicon chips in reality include computer CPUs and mobile phone chips, among others.

Wafer foundry (Foundry) is a business model in the semiconductor industry that involves accepting commissions from other semiconductor companies without manufacturing facilities (Fabless) to process wafers into finished products and manufacture integrated circuits, without engaging in product design and backend sales themselves (official explanation).

Simply put, a company specializes in producing the raw materials for chips - wafers, and then sells them to other companies that need to manufacture chips. This model has greatly reduced the threshold for chip manufacturing, allowing many companies without sufficient funds and technological strength to engage in the chip manufacturing industry.

The development of wafer foundry initially originated from Silicon Valley in the United States, where only a few companies were able to provide such services. In the 1980s, Taiwan's semiconductor industry began to rise, with Taiwan Semiconductor Manufacturing Company (TSMC) being the first company to focus on wafer foundry services. After obtaining certification from Intel, wafer foundry services were accepted by more semiconductor manufacturers. TSMC is now the world's largest wafer foundry enterprise, with a market share exceeding 50%. Meanwhile, SMIC is the largest wafer foundry enterprise in China, with a market share of about 10%.

Wafer foundry has broken the single IDM (Integrated Device Manufacturer) model and achieved the wafer foundry + IC design model. Since then, wafer foundry has gradually become an indispensable part of the semiconductor industry chain.

Today, the global wafer foundry market has become highly competitive. In addition to TSMC, there are many other manufacturers participating, such as Samsung, Intel, and SMIC.

IC design companies only design and sell chips, but outsource manufacturing, packaging, and testing to third parties in order to focus on investing in research and development. Therefore, they are called fabless semiconductor companies, including Qualcomm, Broadcom, MediaTek, and Spreadtrum under China's Tsinghua Unigroup.

Today, wafer foundry is an important part of the semiconductor industry chain and plays a crucial role in the development of the entire industry. It drives the research and development progress of semiconductor equipment materials upwards, influences the product capabilities of design companies downwards, and is driven by downstream demand for semiconductors, chips, and other products. The global wafer foundry market is still on the rise.