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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
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
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- Fall '07