A new approach to semiconductor manufacturing is necessary to decouple end product cost from factory volume. The economy of scale model for manufacturing semiconductor integrated circuits is leading to factories that cost in excess of $1 billion and with costs anticipated to increase nonlinearly. Perhaps of greater concern is that process development and integration costs are of the same magnitude. The Advanced Research Projects Agency (ARPA) has funded several stand-alone research programs to explore new ways of designing and fabricating leading-edge semiconductors. The next steps are to tightly couple design and manufacturing through powerful new frameworks and embedded intelligence with tools. This new manufacturing capability based on flexible, intelligent equipment coupled to a powerful design framework could lead to a leading-edge manufacturing capability, but at a fraction of the cost of a conventional factory. Furthermore, this manufacturing model supports innovation and could lead to a new generation of ICs and systems. The key elements necessary to enable this new semiconductor fabrication environment is described.