UNIVERSITY OF CATANIA SCHOOL OF ECONOMICS AND BUSINESS Nanotech Business Models: A multiple case study approach Flavia Li Calzi 28 November 2012

Research Structure What are nanotech business models and how do they work? Chapter 1: To give a basic understanding of Nanotechnology, by describing its main features and implications Chapter 2: To provide a framework to study the business models by detecting the concept via a thorough literature review 1. What is nanotechnology? 2. What is a business model? Chapter 3: To explain the methodology adopted to study the nanotech business models 3. What is the methodology adopted and the data collection process? Chapter 5: To study the nanotech business models from an empirical viewpoint by analysing seven in-depth case studies Chapter 4: To study the nanotech business models from a theoretical perspective by providing a taxonomy 5. What kind(s) of nanotech business models do we know and which ones have recently emerged? 4. What is a nanotech business model?

1. What is nanotechnology? The understanding and control of matter at dimensions of roughly 1 to 100 nanometers A nanometer (nm) is one billionth, or 10−9, of a meter An emerging technology: from 1980’s The key technology of the 21st century Different from Microtechnology From early 2000s nanotech commercial applications A vaste range of nanotech applications In 2008, over 800 nanotech products are publicly available Positive and negative implications

2. What is a business model? A statement (Stewart and Zhao, 2000); A description (Applegate, 2000; Weil and Vitale, 2001); A representation (Morris, Schindehutte and Allen, 2005; Shafer, Smith and Linder, 2005); An architecture (Dubosson-Torbay, Osterwarder and Pigneur, 2002; Timmers, 1998); A conceptual tool or model (Osterwarder, 2004; Osterwarder, Pigneur and Tucci 2005; Teece, 2010); A structural template (Amit and Zott, 2001); A method (Afuah and Tucci, 2001); A framework (Afuah, 2004); A pattern (Brousseau & Penard, 2006); A set (Seelos & Mair, 2007).

Source: Osterwalder (2004) Business Model Layer “A business model describes the rationale of how an organization creates, delivers and captures value”, Osterwalder (2010) Source: Osterwalder (2004)

Source: Osterwalder (2005) The relationship between Business Model, Business Strategy, Business Organization and ICT Source: Osterwalder (2005)

Source: Osterwalder (2010) Business Model Canvas Source: Osterwalder (2010)

The nine building blocks aggregated in four pillars Source: Author’s elaboration from Osterwalder (2010)

http://modellidibusiness.wordpress.com/ http://www.youtube.com/watch?v=QoAOzMTLP5s

Vantaggi del Business Model di Groupon: Un esempio … Sconti massicci, in un determinato giorno, in una determinata città, sbloccati al raggiungimento di un numero minimo di utenti coinvolti Vantaggi del Business Model di Groupon: 1. alle aziende viene garantito un numero minimo di nuovi clienti e una buona dose di pubblicità, senza aprire il portafogli; 2. agli utenti vengono proposte incredibili offerte (fino all'80-90 %), senza spostarsi dalle proprie città; 3. a Groupon spetta il 50% di servizio/prodotto in offerta acquistato dagli utenti.

http://www.youtube.com/watch?v=7J-PHRNoc20

3. What is the methodology adopted…? The Multiple Case Method Approach Source: Author’s own work adapted from Pauwels and Matthyssens (2004)

…and the data collection process? February - March 2011 Secondary source: literature review, web browsing, library research, corporate materials, analyst reports, business journals; April 2011 “Winter School on Emerging Nanotechnologies”, from 28th March to 1s April 2011 organized by the Grenoble Ecole de Management (GEM) in Pinsot (France). Research period at Grenoble (France), from 2nd to 16th April 2011 twenty interviews have been performed in person, in one-to-one sessions with key managers and CEOs belonging to the Grenoble nanotech cluster; May - July 2011 Interviews with STMicroelectronics managers in Catania (Italy); Integration and analysis of the data collected in light of the triangulation; Application of the multiple case method by reporting the seven case studies

Nanotech Setting Grenoble Nanotech Cluster Catania Nanotech Cluster

Nanotech Firms by Target Applications (by Number of Firms) Source: SEMI (2007)

Semiconductor firms’ activities Source: GSA – Global Semiconductor Alliance

technology solutions” “Design and manufacturing work in unison” 4. What kind(s) of nanotech business models do we know and which ones have recently emerged? High Integration TRADITIONAL MODEL “one size fits all technology solutions” BEFORE AND LATER 1980’s IDM HYBRID FABLESS NEW MODELS “Design and manufacturing work in unison” FROM MID 1980’s FOUNDRY IP HOUSE TEST HOUSE DESIGN HOUSE ASSEMBLY HOUSE PACKAGING HOUSE Low Integration

Source: Author’s own work The time arrow for business model changes in the semiconductor industry: IDM vs Fabless vs Foundry business model Source: Author’s own work

Semiconductor firms’ business models and their relationships Source: Author’s own work

“The fabless model is an attractive and popular option for many semiconductor companies. By adopting a fabless business strategy, a company can focus time and resources on the design of innovative integrated circuits, while avoiding the high cost of building, operating, and upgrading a manufacturing facility” . “Pure-play semiconductor foundry is a company that does not offer a significant amount of IC products of its own design, but instead operates semiconductor fabrication plants focused on producing ICs for other companies. Companies create their own designs and pay the foundry to manufacture the chips.”

Source: IC Insights, USA

Source: IC Insights, Strategic Reviews Database

Source: IC Insights, company reports

Source: IC Insights, USA

5. What are the nanotech business models? IDM END USER 2. Nanotech Business Model HYBRID/FABLITE FOUNDRY OEM 3. Nanotech Business Model FABLESS FOUNDRY 4. Nanotech Business Model FABLESS TEST HOUSE ASSEMBLY HOUSE PACKAGING HOUSE FOUNDRY

IDM IDM1 IDM2 IDM5 IDM3 IDM6 IDM4 5. Nanotech Business Model IDM 1 FABLESS FOUNDRY END USER 6. Nanotech Business Model IDM1 IDM2 1 OEM FABLESS FOUNDRY IDM5 IDM3 IDM6 IDM4

The Seven Business Case Studies IDM FABLESS DESIGN HOUSE TEST HOUSE FOUNDRY STMicroelectronics ST- Ericsson Dolphin Integration Presto Engineering Tronics Microsystems Movea Pyxalis

STMicroelectronics’ business model Source: Based on author’s interviews with Christophe Bernard and Andre Judge (ST Grenoble Site), Maurizio Cairone, Manlio La Duca and Daria Puccia (St Catania Site)

Source: Interview with Philippe Rommeveaux – Grenoble, 12/04/2011 Pyxalis’ business model Source: Interview with Philippe Rommeveaux – Grenoble, 12/04/2011

Disintegration of the Semiconductor’s Value Chain Conclusions Advent of Nanotechnology Miniaturization Process More complexity Increased Costs Disintegration of the Semiconductor’s Value Chain From one high integrated nanotech business model to many high disintegrated nanotech business models From large to small nanotech firms

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