Lastly violating the assumption of identical seller

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Unformatted text preview: t in 2006 and it is dominated by module makers. Participation in the upgrade market can provide opportunities to not only increase market share but also to enhance brand power. Conclusion The DRAM industry has evolved for 35 years in terms of mass production and the industry dynamics has continuously changed. At first, US companies dominated the market with technology, then, Japanese companies grabbed leadership with government support and efficient production process in the 1980s. From the mid 1990s, Samsung took the number one position from Japanese companies. The change of leadership was the result of various factors such as technology, government support, and economic situations of nations. Just an analysis of the current DRAM industry cannot prescribe the ways to ensure permanent future success. Technology will be continuously enhanced and applications will be more diversified. Therefore no one has the right answer for permanent success and DRAM providers continue to check the industry dynamics and downstream market as well. To do this, departures from perfect competition can provide strategic points to DRAM providers. Analyzing the industry and applying it to the framework can be a way for DRAM providers to pursue sustainable profitability. In the initial stages of the DRAM industry, US companies had a deep relationship with the defense industry in terms of R&D expenditure and demand. Therefore, US companies had government subsidies. Technology leadershipand relationshipwith the government were the competitive advantages for US companies. Following this stage, Japanese companies took the market leadership from the US companies. The Japanese government helped Japanese semiconductor companies obtain technology transfers from foreign companies and provided subsidies for research cooperation. Also, the unique Japanese vertical company structure gave Japanese companies easy access to huge capital. Japanese DRAM providers were a vertically integrated division in large electronics companies. Lastly, domestic demand for DRAM is one of the sources for business stability. There is a simple reason why the US companies and Japanese companies lost their leadership in the DRAM industry: their competitive advantages were changed into disadvantages. The US companies focused on design technology and didn't have leadership in the process technology which was an important part of mass production. This led US companies to lose market leadership as the DRAM industry was expanded. In case of Japanese companies, a strong domestic demand basis was a huge competitive advantage. But, high dependence on domestic demand led Japanese companies to lose their market leadership during the recession in Japan. In the third stage of development, Samsung earned the leadership position with a latecomers advantage. Samsung considered all possible competitive points which the company could use. At the initial stage, government subsidy was provided. Then Samsung invested for capability, design and process development, and cost reduction. Also, it enjoyed a unique corporate organization termed "Chaebol" - which in Korean means a "business family" or "monopoly". Also, the industry competitors have been reduced because of high risk of investment and market fluctuation. At this point, Samsung meet other kinds of challenges which are different from the previous challenges faced by the US and Japanese companies. As was discussed, physical limit of technology is the critical point for Samsung. Therefore every DRAM provider is trying to develop disruptive products such as MRAM and PRAM. But, these kinds of products still have cost issues to be commercialized. Also, usage of DRAM at each application is not easy to 62 forecast. Historically, the DRAM market is developed by a growth of the PC market. But, clouding computing has emerged and various applications substitute the PCs which are the main applications for the DRAM. Also, growth of density per PC is limited since OS providers are trying to make their OS lighter than before. From this perspective, Samsung should forecast future changes in the DRAM industry. Considering all aspects of the industry environment, the DRAM industry can be more commoditized like HDD (Hard Disc Drive). Therefore, the marketing and sales functions of Samsung will become more important than before with continuous technology leadership. Along the same lines, brand power can be the core for Samsung to increase market share in the commodity DRAM market. From the historic evidence, the DRAM industry has continuously evolved with the IT industry. Currently, the IT industry is changing with new products and a business paradigm such as smart phone and clouding computing. It means that IT ecosystem surrounding the DRAM providers can be changed. Samsung should keep tracking the changes in the industry so as not to experience the same fate of the previous leaders in the DRAM industry. BIBLIOGRAPHY BrownClair, & LindenGreg. (2009). "Chips and Change." The MIT Press. Chip makers gripe bitterly, but litho costs keep soaring. (1999, September). EETIMES. Christensen, C. M. (1997). The innovator's dilemma. Harvard Business School Press. ChristensenM.Clayton. (2003). "The innovator's solution." Harvard Business School Press. Corts, K. S., & Rivkin, J. W. (1999). A note on Microeconomics for Strategists. The president and Fellow of Harvard College. (2005). How to Respond to Changes in the Semiconductor Value Chain. Gartner. Hutcheson, G. D. (2005). The R&D crisis. VLSI Research INC. Ma, D., & Mark, J. (2003). The DRAM Market Structure: The rise and fall in concentration. London. Mal, D., & Yu2, J. (2007). Strategy Evolution and Market Leaderships: New Evidences from Semiconductor Memory Industry. (pp. 372-376). IEEE. Palepu, K. G., Healy, P. M., & Bernard, V. L. (2004). Business ANALYSIS & Vlauation: Using FinancialStatements. Thomson. Porter, M. E. (1980). Competitive Strategy - Techniques for Analyzing Industries and Competitors. New York: The Free Press. Siegel, J. I., & Chang, J. J. (2009). Samsung Electronics. Harvard Business School Publishing....
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