COMPETITIVE DYNAMICS IN SEMICONDUCTOR FOUNDRY INDUSTRY

Woonghee Lee, Hanyang University, Seoul, Korea

Published in

JOURNAL OF INTERNATIONAL BUSINESS AND ECONOMICS
Volume 23, Issue 3, p43-51, December 2023

ABSTRACT

Semiconductor foundry industry is perhaps one of the industries that is characterized by the most intense competition among technology giants. TSMC and Samsung Foundry is competing head-to-head in 3nm nodes. The two companies have different approaches to their 3 nm nodes, with Samsung using GAAFET (Gate All Around), whereas TSMC is continuing with its FinFET technology. Past and present competition in this industry is analyzed to understand the sources of competitive advantage in this industry. Three managerial implications were drawn. First, economy of scale not only lowered cost but also increased quality in this industry. Second, scope is as important as scale in determining success. For example, extending vertical scope in this industry resulted in conflict of interest with customers. In the third, first mover advantage in technological advances do not seem to play much role in this industry because clients were more interested in the stable and reliable supply of chips rather than unproven technological breakthroughs.

Keywords

Semiconductor, Foundry, TSMC, Samsung


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