Abstract The goal of operations management is to provide design methods for production systems that are inexpensive to construct and efficient to operate. When addressing the shop design topic, facility layout and material handling system design are two important and interconnected problems. This paper focuses on these problems for the particular case of the integrated circuit (IC) semiconductor manufacturing industry. Its aim is to provide a review of important literature on various aspects of factory design, such as facility layout, automated material handling systems (AMHS) design and AMHS operational issues. Research studies are critically examined and emerging opportunities for future research are identified. This analysis has general applicability as a reference tutorial for practitioners and researchers within the operations management community. Keywords: Facility layoutMaterial handling systemsSemiconductor manufacturingSurvey Acknowledgements This work was partially supported by the French Association of Technological Research (ANRT) under grant CIFRE-621/2002, and by research project Rousset 2003–2008, while the author was at École des Mines de Saint-Etienne, and at STMicroelectronics, Rousset, France. The author would like to acknowledge the reviewers for their comments and suggestions to improve the presentation of this paper.