intel case

1. Intel: Strategic Decisions in Locating a New
Assembly and Test Plant
(External)

2. The Semiconductor and
Microprocessor Industry in 2005

226 billion in revenue worldwide.

The industry was expected to hit over $300
billion by 2008

Intel, Renesas Technology, Samsung and
Texas Instruments

market had been historically dominated by
Intel, which held a market share in excess of
80%.

3. Brief history

Founded in Mountain View, California in 1968
by Robert Noyce and Gordon Moore

first commercially available dynamic random
access memory (DRAM) chip in 1970.

2005 Barrett became chairman of the board
and Paul Ottelini was named CEO.

Intel supplied about 80% of the central
processing units (CPUs) used in PCs,
workstations and servers

4. Problem statement

Finding a suitable location for next AT factory
considering the Cost,work force and customer
satisfection.

The new facility would be Intel’s largest AT
plant to date, doubling the size of any existing
AT plant and providing the company with more
efficient capacity.

5. Criteria to choose location

local infrastructure costs (power, water, labor)

transportation cost

security and environmental conditions

Government Policies

6. External point of view

Situations in the countries under consideration
(China,India,Vietnam)

Competitior's point of view.
1.Samsung
2.Advanced Micro Devices(AMD)
3.TSMC
4.Texas Instruments

7. 1.Nearly all worldwide
semiconductor market growth in
2005 was due to new electronics
systems production occurring in
China.
2.Demand in China for
semiconductors was responsible
for 90 percent of total worldwide
market growth.
3.36 of the top 70 suppliers to
the worldwide semiconductor
market had below-average
shares of the Chinese market in
2005.
Why China ?

11. Samsung

Merchant market
component sales 35% of
Samsung Electronics’
total revenue.This
contrasts with Intel,
which generates virtually
all its revenue from
merchant market
component

Intel currently gets 93%
of its revenue ($49.4-
billion in 2012) from
microprocessors and
other logic devices. By
comparison, Samsung

12. 1.In 2003 AMD had a large
and successful flash
memory business
2.Was facing aggressive
microprocessor competition
from Intel
3.After dotcom burst AMD
spun-off its flash memory
business
Advanced Micro Devices

13. AMD's Strategy
AMD Adopted fabless strategy to survive in business and tied with
TSMC ( world's larges dedicated independent semiconductor foundry).

14. Why India ?

15. 
India seemed Promising
considering the growing
economy

Absence of
semiconductor policies
is one of the big
hurdels.
Why India ?

16. 
The economy was one of
the fastest growing in the
region, with annual growth
of about 7%.

A untapped Market for
semiconductor industry.

Factory wages were about
$60 to $80 a month, less
than in China.
Why Vietnam ?

17. GDP Growth (India,China,vietnam, Philippines)
Why Vietnam ?

18. Texas Instruments
Texas Instruments’s $1 billion
assembly plant in the
Philippines
Reasons :
1.To avoid direct contest with
Intel
2.Constantly rising land
prizes in China
3.Comparatively low labour
cost in Philippines

19. Conclusion

All the advantages and disadvantages of the
location has been studied from an external
and internal point of view.

Finally intel established AT plant in Vietnam:
Ho Chi Minh City