Open business models: A case study of system-on-a-chip (SoC) design foundry in the integrated circuit (IC) industry

In the global IC industry, business models have evolved into design foundry models and manufacturing foundry service models over the past twenty years. The concept of system-on-a-chip (SoC) refers to integrating all components of a computer or other electronic system in a single integrated circuit (IC). Due to the increasing complexities of SoC devices, it is impossible for one IC design house to have the state-of-the-art expertise required to make all the hardware and software components required for an SoC. Based on SoC needs for intellectual property (IP) reuse and design reuse, this study analyzes a new open business model, called design foundry. Design houses must use a design foundry, an innovation intermediary, to combine their internally generated IPs with IPs acquired externally. This paper uses the SoC design foundry as a case to examine the evolution, SoC problems, and the core value of innovation intermediaries in the whole IC industry. Further, it demonstrates how design foundries create ecological benefits by teaming up with suppliers and customers in the IC industry. This research is the first known study to explore the emerging service gaps, value creation, and value capture processes created by an SoC design foundry.