System-on-A-Chip Integration in the Semiconductor Industry: Industry Structure and Firm Strategies

CCC Working Paper No. 99-2, Haas School of Business, University of California at Berkeley (previous version of paper)

47 Pages Posted: 15 Feb 2001

See all articles by Deepak Somaya

Deepak Somaya

University of Illinois at Urbana-Champaign - Department of Business Administration

Greg Linden

Institute for Business Innovation

Date Written: December 10, 2000

Abstract

Ever increasing on-chip integration in the semiconductor industry, spurred by miniaturization, is at the point where large-scale electronic systems can be put on a single chip. The proliferation of such "systems-on-a-chip" has important repercussions for the structure of the electronics industry, and the strategies of electronics firms. In a detailed case study, we apply a theoretical framework developed in Somaya and Teece (2000) to understand how system-on-a-chip integration is altering the balance between integrated approaches, components trading, and the licensing of "design modules" in the semiconductor industry. Consistent with the framework, we observe a burgeoning market for licensed design modules in the industry, along with the primarily in-house design approach being pursued by large integrated firms. Important technical and institutional factors that are shaping industry structure, and the strategies being pursued by different types of firms are documented. Based on the framework, implications are drawn for the strategies of firms responding to technological change of the kind engendered by system-on-chip in the semiconductor industry. We extend the Somaya-Teece framework to include firm strategies that seek to influence the institutional environment in which they operate, and thus alter the balance between competing organizational modes.

Keywords: Semiconductor industry, modularity, transaction costs, innovation

JEL Classification: O31, O34,

Suggested Citation

Somaya, Deepak and Linden, Greg, System-on-A-Chip Integration in the Semiconductor Industry: Industry Structure and Firm Strategies (December 10, 2000). CCC Working Paper No. 99-2, Haas School of Business, University of California at Berkeley (previous version of paper). Available at SSRN: https://ssrn.com/abstract=259878 or http://dx.doi.org/10.2139/ssrn.259878

Deepak Somaya (Contact Author)

University of Illinois at Urbana-Champaign - Department of Business Administration ( email )

1206 South Sixth Street
Champaign, IL 61820
United States

Greg Linden

Institute for Business Innovation ( email )

F402 Haas School of Business, #1930
Berkeley, CA 94720-1930
United States

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