Case | HBS Case Collection | July 2013 (Revised July 2013)

Powerchip Semiconductor Corporation

by Willy Shih and Chen-Fu Chien

Abstract

Powerchip Semiconductor Corporation has a horizontal firm structure in an industry that is predominantly organized vertically. While it has been successful in up markets, in the current down market its strategic rationale was being tested. As a capital-intensive manufacturer of DRAMs that had to license its designs from abroad, was it able to compete with large vertically integrated firms that controlled the whole value chain? How did its approach compare to that of its partner Elpida? Can Powerchip and Elpida together make up a "virtual integrated device manufacturer"? The case examines some of the unique characteristics of the DRAM industry, in which manufacturers employ large scale to compete on cost in the production of standardized commodities.

Keywords: Industry Structures; Organizational Structure; Partners and Partnerships; Competition; Horizontal Integration; Vertical Integration; Semiconductor Industry; Taiwan;

Citation:

Shih, Willy, and Chen-Fu Chien. "Powerchip Semiconductor Corporation." Harvard Business School Case 609-063, July 2013. (Revised July 2013.)