Carle Aidian PerrySemiconductor/Microprocessor Industry

The Semiconductor Industry lives by the doctrine: “smaller, faster, and cheaper”.

Demand for semiconductors is high worldwide because new technology requires

new chips and more of them. It is a simple fact that computers require PC

components.

The industry is marked by intense rivalries between individual companies. The

whole industry is dominated by a small number of large companies. Intel is the

dominant force with over 80 percent of the whole market and with the likes of AMD

and Qualcomm capturing majority of the remainder.

One of the most important factors to understand is the extremely short live-cycle of

products in the PC industry. State-of-the-art components only stay that way for

several months before they are replaced by newer and better products.

State-of-the-art products become obsolete almost immediately after being released.

The short product cycle makes it next to impossible to try to keep up with the

largest established companies in the industry. As such, there are extremely high

barriers of entry within the industry. This is mainly due to enormous capital that

must be poured into fixed assets such as a chip manufacturing plant.

Differentiation is the main strategy for the Semiconductor Industry. Companies

must constantly visit drawing board to come up with products that are superior to

their competition.

As such, Intel is committed to provide the best products to its customers and

achieves this by extensive capital investment in Research and Development. Intel

spends over $4 billion on R&D yearly and maintains over 6,000 scientists and

researchers committed to the task.

Intel became successful primarily because of their advanced design and

manufacturing processes. They are able to produce high quality products in very

high quantities differentiating itself from other companies in the industry.

With this they are able to boast the “Intel Inside” brand that provides premium

quality for the added price premium in the marketplace.

Intel has consistently left AMD et al. behind in terms of process technology and will

continue to hold its dominance over the PC microprocessor market.

References

Carle Aidian PerrySemiconductor/Microprocessor Industry

Can Intel Continue To Dominate The PC Microprocessor Market? http://www.forbes.com/sites/greatspeculations/2012/05/31/can-intel-continue-to-dominate-the-pc-microprocessor-market/

Intel, AMD remain leaders in global microprocessor industry - See more at: http://www.newelectronics.co.uk/electronics-news/intel-amd-remain-leaders-in-global-microprocessor-industry/32576#sthash.PiccW3R1.dpuf

Semiconductors. U.S. Industry Quarterly Review: Electronic Components & Computers [serial online]. January 2014;:1-8. Available from: Business Source Complete, Ipswich, MA. Accessed March 9, 2014.

Space invadershttp://www.economist.com/node/21542402?zid=291&ah=906e69ad01d2ee51960100b7fa502595