95-731: Business Strategy and Electronic Commerce
Homework 3 | Business-to-Business | 02-15-2000
Semiconductors
Lisa Bembenick | Naresh Bhaskar | Yi-hsin Chen
Yuan Chen | Teguh Djojoargono
Heinz, CMU | Spring 2000
Major Semiconductor Players: US
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Broadcom Corporation
TriQuint Semiconductor
Micron Technology Inc.
Altera Corporation
Intel Corporation
AMP Cooperation
KLA-Tencor
National Semiconductor
Applied Materials
Micrel Semiconductor
www.broadcom.com
www.triquint.com
www.micron.com
www.altera.com
www.intel.com
www.amp.com
www.kla-tencor.com
www.national.com
www.appliedmaterials.com
www.micrel.com
• Semiconductor Industry Association: members account for 90%
of U.S.-based semiconductor production www.semichips.org
Semiconductor Industry Outlook
“Today's global sales
numbers represent an
18.9% growth rate for
the semiconductor
industry in 1999. With
year-end global sales
reaching $149 billion,
1999 broke all
predictions and industry
sales records and was
an exceptional year of
record growth and
productivity for our
industry.”
Sales Trends in billions of US $ as of Dec 1999
Source: www.semichips.org
- George Scalise,
SIA President
PHLX Semiconductor Index
• Growth trend in stock price of semiconductor industry – from
Philadelphia Stock Exchange (PHLX)
5-year chart of index
1995 - 2000
1-year chart of index
02/1999 – 02/2000
Source: www.cnbc.com
World Semiconductor Market
Semiconductor World Revenue Trends by Region (in $ billions)
90
80
70
60
50
1999
2003
40
30
20
10
0
America
Asia/Pacific
Europe
Japan
Source: www.infopower.com.tw/
Semiconductor Product Definitions
Products are broadly categorized in two forms:
•Packaged or encapsulated die or chips
•Die, chips or wafers which have not been encapsulated
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Diodes: General purpose signal and switching diodes
Small Signal and Switching Transistors: RF and microwave
small signal transistors, dual transistors, field effect transistors
Power Transistors:Transistors (power dissipation >= 1W)
Rectifiers: Discrete rectifiers (0.5 AMPS average or greater)
Thyristors: Unidirectional and bi-directional thyristors
Sensors: Devices whose electrical properties can be translated
into physical, chemical or biological measurements
Opto-electronics: Opto-sensing and emitting semiconductors
Integrated Circuits: Both digital and analog circuits
Customers
Semiconductor Industry has numerous
customers in/across several industries
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Internet Startups (Intel)
Universities (Altera)
Aerospace and Defense (AMP)
Automotive (AMP)
Electronic Appliances (Altera)
Computer Manufacturers (Intel, KLA)
Communication Companies (Triquint)
Attracting Customers: 1
In General, major players market through:
• Well-established “off-line” business relationships
(AMP, Intel)
• Online advertising (All)
• Trade Magazine ads (Broadcom, AMP)
• Product information on website (All)
• Free product samples (Altera)
• Downloadable annual company report (Triquint)
• Group affiliation (Intel, National)
Attracting Customers: 2
• Broadcom established strategic customer relationships
with partners in other industries, including 3Com, NortelBay, Cisco Systems, General Instrument, Motorola,
Panasonic and Scientific-Atlanta
• Altera created a University Program whereby it provides
free educational software to universities that purchase
Altera hardware
• AMP developed a tailored sales program aimed at
electrical subcontractors – purpose is to aid subcontractors
in the sale of AMP products -- program includes product
promotions, profit opportunities, fast access to on-line info
Online Order Comparison
 Well Designed
Online Order (National)
Poor Designed Online
Order (Triquint) 
Online Support Comparison
 Complete on-line
support (Intel)
Insufficient online
support (Micron)
Basic Value-Add
Value proposition of online presence:
• Various items to choose (Micrel)
• Automated system for tracking the status of
customer complaints (National)
• Glossary of Technical Terms (Broadcom)
• Offers application note, brochure, manual and
reliability report of products (TriQuint)
• Online search channel to quickly locate regional
sales rep’s and distributors (TriQuint)
• Current stock price of the company (TriQuint)
Additional Value-Add
• Customer training classes on product installation
(KLA, Altera)
• Customer Service support 24/7 -- order inquiry,
emergency service, technical service (KLA)
• Customized Engineered Semiconductors Program
enabling the placement of specialty orders (AMP)
• Expert recommendations on product design
(National)
• Website Hosting for customers (Micron)
• Provide ecommerce strategy solutions (Micron,
Intel)
Repeat Customer Generation
• Cross reference database that customers can
access to compare products and prices of various
semiconductor manufacturers (AMP)
• Product catalog/price lists and updates on new
solutions and products (Altera)
• Keep offering next generation products and
solutions (Broadcom)
• Establish joint development program with major
clients to deliver better service (Broadcom)
Our Recommendations
• Integrate semiconductor suppliers’ online
ordering system with large customer’s
ordering and billing systems
• Implement leading-edge equipment as a
primary research method and makes
teardown research available to clients on a
custom basis
• Use partnership and alliance with major
customers to build vertical marketplace