The primary task of a semiconductor factory is to produce integrated circuits of outstanding performance at a steeply declining cost per electronic function delivered. The semiconductor industry over the next decade will need to continue to drive costs down in order to maximize manufacturing productivity in the climate of rising product complexity, equipment cost, and risk. Historically we have concentrated on aggressive yield improvement and declining wafer fab cost per cm2as the dominant factors for increasing productivity. To continue to be competitive, SEMATECH is extending its focus beyond cost per cm2to the more total view of cost per function. We are working toward a combination of solutions to meet our manufacturing challenges recognizing that no single solution will provide enough benefit to achieve the productivity gains end users expect. The ‘‘whole factory’’ view is a useful strategic planning tool for defining the future of manufacturing in the semiconductor industry.