Please help me understand this...

[Parliament]

Yes, that does help. Thank you. But doesn't it go against what was said in this thread? The link brings us to a member of the Cointerra team who is stating that he basically had everything to do with making the ASIC card. Where would he do this?

Like Deafboy said, these companies design the chips, while Global Foundries, etc physically produce the chips.

Why do they still go to companies like Open-Silicon for ASIC design and development (well, I'm not sure if they do but I know Butterfly Labs does)?

Open-Silicon provides manufacturing operations management. You give them designs and a sum of money, and they deal with individual factories, production lines, etc.

Global Foundries (a fabricator, also something to do with "tape out")

Tape-out is where you make the final set of modifications to a design. Basically the step right before the physical manufacturing. Read: http://en.wikipedia.org/wiki/Tape-out

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[bitstyles007]

Thank you very much guys. This is extremely helpful. So can we walk through this to make sure I'm understanding and maybe someone can correct or fill in gaps (there is a reason why I'm belaboring this)?

So first a cpu architect or electrical engineer designs an ASIC card using a software program. Are the ASIC designs patent-protected or are they all pretty much similar? I read something about intellectual property on the Butterfly Labs site, does this come in to play here and if it does how?

When this ASIC design is done by an engineer, the software is sent to a company such as Open-Silicon for them to mass produce your product? Now you have physical hardware that you then send to a company like Global Foundries. They make the chipsets to fit the specs of your hardware.

Also, where does this assembling come into play? I heard in an interview about how the CEO of Butterfly Labs wasn't so comfortable outsourcing because it took them awhile to put things together right. He mentioned how you have to put the chips in and glue/insulate(?) them at a certain temperature. You gotta screw in the heatsink with a certain amount of torque. He said all of these things were done within his lab at first but that he had to outsource a little to keep up. So you get the finished hardware from Global Foundries and then you still have to put some chips in? I got confused here. Thank you all.

[Airwhale]

I found these really helpful in understanding the questions you are asking:

http://www.youtube.com/watch?v=UvluuAIiA50

http://en.wikipedia.org/wiki/Tape-out

Basically,  BFL and Cointerra have programs which simulate a chip.  They play around with these simulations,  and then they eventually send a working design to a company like Global Foundries to make the actual physical chips.  Global foundries makes several million each time a company goes to them to make chips,  but I think companies like BFL and Cointerra are making more than enough money.  I would not worry too much about them =P

[bitstyles007]

That was so awesome. Thank you for that.