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©Michael Borrus, 2003
Electronics Value ChainElectronics Value Chain
Source: IC Insights
©Michael Borrus, 2003
Chips = Miniature CitiesChips = Miniature Cities
Low-angle scanning electron micrograph of a portion of a partially completed SRAM array containing six-device memory cells. The insulating oxide films have been removed, revealing the lower levels of the interconnection structure of the array.
Source: Intel and IBM
©Michael Borrus, 2003
Technical Progress ITechnical Progress I
Source: Gordon Moore presentation, SIA 2002
©Michael Borrus, 2003
Technical Progress IITechnical Progress II
Source: Gordon Moore presentation, SIA 2002
©Michael Borrus, 2003
Worldwide Semiconductor Worldwide Semiconductor SalesSales
1975-20051975-2005
0
50
100
150
200
250
$Billions
WW CAGR = 13.3%
Source: SIA, WSTS* Forecast
©Michael Borrus, 2003
Top 10 Suppliers Selected YearsTop 10 Suppliers Selected Years1978 1986 1993
1 TI NEC Intel
2 Motorola Hitachi NEC
3 NEC Toshiba Motorola
4 Philips Motorola Toshiba
5 National TI Hitachi
6 Fairchild Philips TI
7 Hitachi Fujitsu Fujitsu
8 Toshiba Matsushita Samsung
9 Intel Mitsubishi Mitsubishi
10 Siemens Intel MatsushitaSource: Electronic News, various years
©Michael Borrus, 2003
Evolution of Chip Competition IEvolution of Chip Competition I1960s-late 1970s1960s-late 1970s
Policy: Military/Space R&D, Procurement; Antitrust, Tax
Launch Market: Military, then Computing
Demand: High Performance at any Cost
Structure: Vertically Fragmented, Start-up Merchants
Development Trajectory: Product Innovation
Policy: Credit allocation, technology controls, trade and investment protection
Launch Market: Consumer Electronics
Demand: High Reliability at lowest Cost
Structure: Vertically Integrated; Keiretsu
Development Trajectory: Manufacturing Innovation
U.S. Japan
Result: US seizes global market leadership
©Michael Borrus, 2003
Evolution of Chip Competition IIEvolution of Chip Competition IILate 1970s - late 1980sLate 1970s - late 1980s
Lead Market: Emergence of PCs/desktop systems Demand: Performance AND Reliability at Lowest
Cost Structure: Merchants vs. Vert. Integr/Keiretsu Strategic Advantage: Capital spending to add
capacity with manufacturing innovation to deliver quality at low cost (i.e., lean production)
Policy: VLSI Project in Japan; US Trade Policy culminating in US-Japan STA
Result: Japanese firms become global leaders, dominating memory; US firms retain key position in logic
©Michael Borrus, 2003
Sales, Market Shares, Capital SpendSales, Market Shares, Capital Spend1982-19901982-1990
Market Shares
Sources: SIA; Leachman and Leachman in Macher, Mowery, Simcoe
Capacity Shares
©Michael Borrus, 2003
Strategic Market GameStrategic Market Game
Fragmented Open
Potential Competitive Dependence
Industry Coordination Difficult
Assets Accessible
Integrated Closed
Potential to Marginalize Competitors
Strategic Coordination Scale/Price Discrimination Inaccessible Assets
US Japan
Consequences:
