Fabless manufacturing is the design and sale of hardware devices and semiconductor chips while outsourcing the fabrication or "fab" of the devices to a specialized manufacturer called a semiconductor foundry. Foundries are typically, but not exclusively, located in China and Taiwan because of the generally low cost of labor. Thus, fabless companies can benefit from lower capital costs while concentrating their research and development resources on the end market. The credit for pioneering the fabless concept is given to Bernie Vonderschmitt of Xilinx and Gordon A. Campbell of Chips and Technologies. The first fabless semiconductor company, the Western Design Center, was founded in 1978. Xilinx, founded in 1984, was the first to "truly" separate the design of chips from their manufacture.

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