The next step in the evolution of the fab was that in the mid-1980s some companies realized that they didn’t need to own a fab to have chips manufactured. These companies would purchase foundry wafers just like any other semiconductor company. These companies came to be called, for obvious reasons, fabless semiconductor companies.

Semiconductor companies with fabs became known as integrated device manufacturers (IDMs), to distinguish them from the fabless companies. In 1987 the first of another new breed of semiconductor manufacturing companies was created with the founding of Taiwan Semiconductor Manufacturing Company (TSMC). TSMC was created only to do foundry business for other companies who needed to purchase wafers either because they were fabless or because they were capacity limited.