This literature survey was carried out on Microfactory as a requirement for the course “Micromechanical System Development and Manufacture”- offered by the department of Manufacturing Engineering and Management, Technical University of Denmark. The purpose was to investigate the new idea of microfactory system, the process chain, advantage and disadvantage of the system and its implication on the final product design. The concept is in its initial stage, but has made significant progress in different areas. Countries like Japan, USA, and Switzerland are very dedicated on research in this area. Microfactory concept realization calls for cross-disciplinary research and innovation. The concept can revolutionize the modern industrial system and society, can reduce the production and process cost and can present the manufacturing system as fun-filled learning process instead of boring stay inside the factory building for a long time. Of course the concept has some of the disadvantages with some challenges ahead of it to overcome. This paper will step by step describe the concept of microfactory system, related technology, its advantage-disadvantage and some factual consideration for microfactory during final product development period.