Mobile Phone and Samsung
1. What kind of advantage are the Chinese entrants seeking? How close are they to achieving that advantage?
Chinese entrants are seeking for Lower-cost structure, Easier access to the large pools of local engineering talents, Local marketing, Government subsidies and Government relations.
How close:
China is expected to become the world’s second largest purchaser of semiconductor
Chinese company has already exhibited large-scale entry by 2005
Chinese companies had access to low finances 2. Can Samsung’s low-cost advantage withstand the Chinese threat on costs?
Yes, so far the results show that they continue to gain market share though their gross profit have decreased. Also, Samsung has the multiple products to sustain itself and high brand value.
Besides, Samsung has its own advantages:
Lower-cost structure: located main R&D facility and fabs at a single site
High investment in R&D to maintain technology lead
Multiple product segments(LCD, Mobile Phones)
Financial stability
Created high brand value 3. How much of Samsung’s performance is based on its reputed low-cost advantage?
According to Exhibit 7a,
In 2003 Samsung enjoyed a cost advantage of $1.39 per average units.
In 2003 Samsung enjoyed a price premium of $0.72 per average units.
Samsung has a dual advantage in both low-cost and differentiation
Samsung is deriving more of its DRAM profit from low-cost advantage than from differentiation advantage.
Samsung need to protect the low-cost advantage. 4. If Samsung is both low-cost and differentiated, how does it do both?
Lower-cost structure: located main R&D facility and fabs at a single site
High investment in R&D to maintain technology lead
Multiple product segments(LCD, Mobile Phones)
Created new uses for DRAMS by putting its manufacturing and R&D in support of design firms such as Rambus
Products shared a common core design
Learn new design rules and then apply new rules towards the production of all product types
Chinese entrants are seeking for Lower-cost structure, Easier access to the large pools of local engineering talents, Local marketing, Government subsidies and Government relations.
How close:
China is expected to become the world’s second largest purchaser of semiconductor
Chinese company has already exhibited large-scale entry by 2005
Chinese companies had access to low finances 2. Can Samsung’s low-cost advantage withstand the Chinese threat on costs?
Yes, so far the results show that they continue to gain market share though their gross profit have decreased. Also, Samsung has the multiple products to sustain itself and high brand value.
Besides, Samsung has its own advantages:
Lower-cost structure: located main R&D facility and fabs at a single site
High investment in R&D to maintain technology lead
Multiple product segments(LCD, Mobile Phones)
Financial stability
Created high brand value 3. How much of Samsung’s performance is based on its reputed low-cost advantage?
According to Exhibit 7a,
In 2003 Samsung enjoyed a cost advantage of $1.39 per average units.
In 2003 Samsung enjoyed a price premium of $0.72 per average units.
Samsung has a dual advantage in both low-cost and differentiation
Samsung is deriving more of its DRAM profit from low-cost advantage than from differentiation advantage.
Samsung need to protect the low-cost advantage. 4. If Samsung is both low-cost and differentiated, how does it do both?
Lower-cost structure: located main R&D facility and fabs at a single site
High investment in R&D to maintain technology lead
Multiple product segments(LCD, Mobile Phones)
Created new uses for DRAMS by putting its manufacturing and R&D in support of design firms such as Rambus
Products shared a common core design
Learn new design rules and then apply new rules towards the production of all product types