guarantee for failure.
        The exception: If you are creating a new market with your product, there is no established market leader, and you may be competing with other start-ups. The competitive dynamic is different from what is described above. However, if you want to become the dominant player in the newly created market, you still need a breakthrough technology. But because the pace of market adoption (of the new paradigm and your new product) cannot be predicted, you’ll need to have enough money to outlast the adoption cycle.

   money to pay for manufacturing overhead such as floor space, equipment and purchasing, or to pay production staff salary and wages.  In addition, you also drastically reduce your outlay for inventory financing. This will be difficult for companies that hope to control the entire supply chain to ensure high margins, but start-ups simply cannot afford to do everything.

3 – You must outsource customer support
Outsourcing customer support is critically important and more difficult to implement than outsourcing manufacturing. As costs of semiconductor fabs skyrocket,  fab manager have 		 
 


2 – You must outsource manufacturing
Outsourcing manufacturing is not new in the semiconductor industry. The fabless foundry business model – non-existent in the early 1980s – has now taken firm hold in the chip industry. In the past 15 years,

 

  come to expect “instant” support when your system goes down. But it is nearly impossible to find a partner who would be willing to shoulder the customer support burden without the benefit on the revenue line. Hence, sales and customer support tend to go hand-in-hand.  
 

tool makers, too, have adopted the outsourced manufacturing model. Today, equipment makers buy most parts from vendors and perform mainly final integration and test in-house.
        For equipment start-ups, however, we have to take it to the next level. By this I mean we should outsource the entire systems through a partnership. The manufacturing partner could be a contract manufacturer, such as Sanmina-SCI and Solectron, or another semiconductor tool maker with excess production capacity.
        The start-up must  think through carefully  not what to outsource, but what not to outsource. It is critical to keep in-house what you want to protect, which may be the heart of the whole system, the embodiment of the IP, or what the company thinks of as “the family jewels.”
        The part you want to keep making in-house may be physically small, and it may be built with relative ease in your own labs under your control.
        The objective here is to reduce the total investment needed to set up a full-blown production department. If successfully executed, you don’t need to raise equity

          In the beginning, you maybe able to take care of your customers by yourself. This works because your product is being beta-tested, and you only have a small number of products in the field. But you want to move out of beta test and into production commitment, and that’s when your paying customers will demand serious support assurance.
        It is extremely costly – both in dollars and time – to set up a customer support infrastructure. This is why you need to find a partner to provide customer support when you are ready to move into the production phase. The objective here is to leverage your partner’s existing infrastructure to support your global customers so that they can now place production orders with you.
        In executing this sales/support partnership, keep in mind you need to protect your brand name as well as your IP. Since you are the most knowledgeable about your product, your partner would want to have you make sales presentations and deliver your commitments. It’s like co-marketing, in which your brand identity remains intact. This is desirable for you and good for both.
        It is important to resist the temptation to leave all customer interactions to your marketing partner. No matter how good your partner is, you should maintain constant customer contact