The Semiconductors Industry
The semiconductor industry is a collection of various companies that take part in the design and making of semiconductor devices. The semiconductor devices found in this industry are a variety of memory devices along with transistors. The semiconductor industry formed around 1960 and has continued to grow into the industry that is seen today.
Threat of New Entrants
As presented in the case, the semiconductor industry is a growing industry that has new versions coming out with a limitless possibly of advancement. The semiconductor industry started off with the discovery of memory chips in the 1940s. In the beginning the semiconductor industry had a high threat of new entrants due to the fact that certain models of memory chips could be easily duplicated. There were a couple barriers at the beginning that kept other companies from entering the market such as, the number of necessary patents. The use of cross-licensing among the established players made it more difficult for new entrants because these companies did not have access to sharing network developed. The threat of new entrants continued to grow in the 1970s when Japanese companies like Hitachi and Mitsubishi entered the market. These companies were multibillion dollar companies while Intel was still a small company. The Japanese companies were also much further in manufacturing than the U.S. companies were which resulted in a huge loss of advantages. Today there is a group of large companies that run the semiconductor industry which creates barriers that makes the threat of new entrants smaller.
The supplier power in this industry is high. Intel states that working with suppliers is the key to maintaining the technology leadership position. In the industry having technology leadership is important and allows for the company to stay ahead. Thee early access to the advanced capabilities keeps Intel coming out with new technology first. The variety of smaller equipment suppliers provides sole investors. This is how Intel would continue to secure the access to the leading equipment.
The buyer power in the semiconductor industry is low due to the fact there is a limited number if manufactures in the industry. There are key players in the industry that tend to dominate. The consumers that purchase computers from Dell are still using the Intel processor because Dell computers purchase the processors from Intel. Dell and Intel are collaborating in order to create a product for the consumers. The main competitors in the industry are Intel, IMB, Samsung, Toshiba and Microsoft, which in turn drives down the buyer power due to the smaller pool of players in the industry.
The threat of substitutes in the industry is moderate. The reason for this is because Intel used the idea to co-op with companies like Dell and IBM. The integration of companies allowed for Intel to create supercomputers that would allow the use of 128 microprocessors that would allow for processing of difficult calculations at extreme speeds. When Intel would use complementors like Microsoft the industry started to move into a horizontal structure. The complementary software that was created was critical for driving demand.
The rivalry in this industry is moderate to high; with technology continuously growing companies like Intel and Apple are always looking to come out with new products and new updated versions of already existing products. There is also a high demand for new technology from consumers. Increasing global competition allows for higher rivalry between companies. This is a competitive industry where the possibilities are endless and the sky is the limit.
(January 24, 2012). MoFo Advises Intel on Supercomputing Deal. Retrieved from: http://www.mofo.com/mofo-advises-intel-on-supercomputing-deal-01-24-2012/
(October 1, 2012). FCC Encyclopedia, archive of Major Transactions. Retrieved from: http://www.fcc.gov/encyclopedia/major-transactions-archive
Thomas, B., (July 17, 2009). Intel Successfully Completes Wind River Acquisition. Retrieved from: http://www.windriver.com/news/press/pr.html?ID=7081
Thomas, B., (June 4, 2009). Intel to Acquire Wind River Systems for Approximately $884 Million. Retrieved from: http://www.windriver.com/news/press/pr.html?ID=6921
(November 5, 2007). Industry Leaders Announce Open Platform for Mobile Devices. Retrieved from: http://www.openhandsetalliance.com/press_110507.html
Karlgaard, R., (February 16, 2011). Intel CEO Otellini on Successful Company Culture. Retrieved from: http://www.forbes.com/sites/richkarlgaard/2011/02/16/intel-ceo-otellini-on-successful-company-culture/2/