Semiconductors Lisa Bembenick | Naresh Bhaskar | Yi-hsin Chen Yuan Chen | Teguh Djojoargono Heinz, CMU | Spring : Business Strategy and Electronic Commerce Homework 3 | Business-to-Business |

Broadcom Corporationwww.broadcom.comwww.broadcom.com TriQuint Semiconductor Micron Technology Inc. Altera Corporationwww.altera.comwww.altera.com Intel Corporation AMP Cooperationwww.amp.comwww.amp.com KLA-Tencor National Semiconductorwww.national.comwww.national.com Applied Materialswww.appliedmaterials.comwww.appliedmaterials.com Micrel Semiconductor Semiconductor Industry Association: members account for 90% of U.S.-based semiconductor productionwww.semichips.orgwww.semichips.org Major Semiconductor Players: US

Semiconductor Industry Outlook “Today's global sales numbers represent an 18.9% growth rate for the semiconductor industry in With year-end global sales reaching $149 billion, 1999 broke all predictions and industry sales records and was an exceptional year of record growth and productivity for our industry.” - George Scalise, SIA President Sales Trends in billions of US $ as of Dec 1999 Source:

5-year chart of index year chart of index 02/1999 – 02/2000 PHLX Semiconductor Index Growth trend in stock price of semiconductor industry – from Philadelphia Stock Exchange (PHLX) Source:

World Semiconductor Market Source: Semiconductor World Revenue Trends by Region (in $ billions)

Diodes: General purpose signal and switching diodes Small Signal and Switching Transistors: RF and microwave small signal transistors, dual transistors, field effect transistors Power Transistors:Transistors (power dissipation >= 1W) Rectifiers: Discrete rectifiers (0.5 AMPS average or greater) Thyristors: Unidirectional and bi-directional thyristors Sensors: Devices whose electrical properties can be translated into physical, chemical or biological measurements Opto-electronics: Opto-sensing and emitting semiconductors Integrated Circuits: Both digital and analog circuits Semiconductor Product Definitions Products are broadly categorized in two forms: Packaged or encapsulated die or chips Die, chips or wafers which have not been encapsulated

Customers Semiconductor Industry has numerous customers in/across several industries –Internet Startups (Intel) –Universities (Altera) –Aerospace and Defense (AMP) –Automotive (AMP) –Electronic Appliances (Altera) –Computer Manufacturers (Intel, KLA) –Communication Companies (Triquint)

Attracting Customers: 1 In General, major players market through: Well-established “off-line” business relationships (AMP, Intel) Online advertising (All) Trade Magazine ads (Broadcom, AMP) Product information on website (All) Free product samples (Altera) Downloadable annual company report (Triquint) Group affiliation (Intel, National)

Attracting Customers: 2 Broadcom established strategic customer relationships with partners in other industries, including 3Com, Nortel- Bay, Cisco Systems, General Instrument, Motorola, Panasonic and Scientific-Atlanta Altera created a University Program whereby it provides free educational software to universities that purchase Altera hardware AMP developed a tailored sales program aimed at electrical subcontractors – purpose is to aid subcontractors in the sale of AMP products -- program includes product promotions, profit opportunities, fast access to on-line info

Online Order Comparison  Well Designed Online Order (National) Poor Designed Online Order (Triquint) 

Online Support Comparison Insufficient online support (Micron)   Complete on-line support (Intel)

Basic Value-Add Value proposition of online presence: Various items to choose (Micrel) Automated system for tracking the status of customer complaints (National) Glossary of Technical Terms (Broadcom) Offers application note, brochure, manual and reliability report of products (TriQuint) Online search channel to quickly locate regional sales rep’s and distributors (TriQuint) Current stock price of the company (TriQuint)

Additional Value-Add Customer training classes on product installation (KLA, Altera) Customer Service support 24/7 -- order inquiry, emergency service, technical service (KLA) Customized Engineered Semiconductors Program enabling the placement of specialty orders (AMP) Expert recommendations on product design (National) Website Hosting for customers (Micron) Provide ecommerce strategy solutions (Micron, Intel)

Repeat Customer Generation Cross reference database that customers can access to compare products and prices of various semiconductor manufacturers (AMP) Product catalog/price lists and updates on new solutions and products (Altera) Keep offering next generation products and solutions (Broadcom) Establish joint development program with major clients to deliver better service (Broadcom)

Our Recommendations Integrate semiconductor suppliers’ online ordering system with large customer’s ordering and billing systems Implement leading-edge equipment as a primary research method and makes teardown research available to clients on a custom basis Use partnership and alliance with major customers to build vertical marketplace