Intel Case Study
Intel Case
DRAM industry analysis - lessons learned
By the early 1980, Intel’s total share in DRAM was barely 1% and manufacturing was restricted to one fab out of Intel’s eight fab, where the Japanese semiconductor companies had captured nearly half of the world memory market. There are several factors that forced Intel to exit the DRAM market, those are the same lessons learned.
1. Intel was always the pioneer in inventing and enhancing the DRAM with respect to the price and performance, but the industry was driven by necessity to cross-license among established players. And Intel was not on power at that time. Exhibit 6 shows the comparative intellectual property consideration.
2. DRAM was standard, and all competitors faced the same fixed cost, chip price depended on the learning curve and how aggressively competitors expanded capacity, thus manufacturing was not the Intel’s strength at that time, the Japanese companies were ahead of US companies in many different ways, such as mass production which reduced the cost, the high yield percentage 70%-80% in their fabs compared to 50%-60% for US, and that’s because they had disciplined approach to manufacturing, and they concerned with defects and control methods, and down in the learning curve.
3. Through integration in different industries Japanese companies built its competitive advantage, their DRAMs were used heavily by industries like, electronics, computers and telecommunications. Besides, these companies supported the Japanese equipment manufacturers to improve the DRAM manufacturing machinery to increase yields, which in return decrease cost of the DRAM, and better quality for their products, which were also competing the US.
As a conclusion, Intel focus was toward building better design, better performance and capacity for the DRAM, and did not concentrate on building the competitive advantage.
PC industry and added value (Q2-3-4-6) IBM had the largest added value, and this is because
DRAM industry analysis - lessons learned
By the early 1980, Intel’s total share in DRAM was barely 1% and manufacturing was restricted to one fab out of Intel’s eight fab, where the Japanese semiconductor companies had captured nearly half of the world memory market. There are several factors that forced Intel to exit the DRAM market, those are the same lessons learned.
1. Intel was always the pioneer in inventing and enhancing the DRAM with respect to the price and performance, but the industry was driven by necessity to cross-license among established players. And Intel was not on power at that time. Exhibit 6 shows the comparative intellectual property consideration.
2. DRAM was standard, and all competitors faced the same fixed cost, chip price depended on the learning curve and how aggressively competitors expanded capacity, thus manufacturing was not the Intel’s strength at that time, the Japanese companies were ahead of US companies in many different ways, such as mass production which reduced the cost, the high yield percentage 70%-80% in their fabs compared to 50%-60% for US, and that’s because they had disciplined approach to manufacturing, and they concerned with defects and control methods, and down in the learning curve.
3. Through integration in different industries Japanese companies built its competitive advantage, their DRAMs were used heavily by industries like, electronics, computers and telecommunications. Besides, these companies supported the Japanese equipment manufacturers to improve the DRAM manufacturing machinery to increase yields, which in return decrease cost of the DRAM, and better quality for their products, which were also competing the US.
As a conclusion, Intel focus was toward building better design, better performance and capacity for the DRAM, and did not concentrate on building the competitive advantage.
PC industry and added value (Q2-3-4-6) IBM had the largest added value, and this is because