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
Date Written: December 10, 2000
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: Suggested Citation