Corning_Cornell_EMI_Case_Competition_2023 (1).pdf

Emerging Market Institute
Case Competition 2023

Welcome to the 7th Cornell Corning Emerging Markets Institute Case Competition!
Dear Participants,
Welcome to the 7th Cornell Corning Emerging Markets Institute Case Competition. This case competition is part of the flagship event
of the institute – The EMI Annual Conference. On the 13th anniversary of the EMI at SC Johnson College of Business at Cornell University,
this year’s conference theme is ‘Risks and Realignments’. The committee is excited to hold this event with the immense support of the
Emerging Markets Institute at Cornell SC Johnson College of Business and the enthusiasm of all the participating schools across the globe.
The panel of judges is eager to see each your unique response. We wish you the best of luck in the competition!
-EMI Case Competition Committee
This case study was developed by: Julian Galarza, Shivani Mulji, Kara Styers, Feifei Hung
Thank you for the contributions of Marcelo Koji, Chris Bordoni, and EMI Interns
Under the supervision of Lourdes S. Casanova, Anne Miroux
Special thanks to Corning International for its financial support and in particular to Claude Echahamian, President and General Manager,
Corning International
Acknowledgements

EMI Cornell Corning Case Competition 2023 - Rules
3
Deadline
Criteria
q Each team’s submission will be reviewed and evaluated based on criteria below
q Five final teams will be announced on October 12th
, 2023
q Presentation slides must be formatted using Microsoft PowerPoint
q Each team is allowed a maximum of 10 content slides (the first slide must be an
Executive Summary), and a maximum of 5 slides of appendices (Note: Title slides
and appendices do not count towards the maximum allotted total of slides). For
example, 1 title slide + 1 executive summary + 9 content slides + 5 appendices; the
max number of total slides is 16.
q This presentation will also be used in Round 2 – no edits will be allowed.
q You must record an audio presentation using Zoom to accompany your slides. Your
recording must be less than 10 minutes and will only be used for Round 1
evaluation.
q Instructions for Recording: If you do not have Zoom, please create a free account and
download the free software. Ensure your cameras are disabled and your microphone
is enabled. Please share your screen, so the slides are displayed. Press the record
button and begin presenting your slides. At the end, please stop recording and
submit the recorded file with your submission. If you need further instructions, please
reference this video.
q Teams must include their team's name on the submission.
q Teams may not mention their respective university or program in their
presentations.
q If your team received assistance from an advisor, include his/her name and position in
your team’s submission.
q Any avenue of primary and secondary research is allowed so long as it does not
violate copyrights. Key details within this case must be kept confidential and not be
shared with external parties.
q Additional media such as music and third-party animation are prohibited.
q File size cannot exceed 15 MB.
Rules
Submission Deadline: Saturday Sep. 29th 11:59 pm EST
Prizes
1st Place: $6,000
2nd Place: $3,000
3rd Place: $1,000
*All teams invited to the
finals in NYC will receive
support for accommodation

Brazil's semiconductor industry – content
4
SemiconductorCo: Case Prompt
SemiconductorCo
Brazil
and
region
Tech
Political
Finance
This information is confidential. It cannot be shared with any external party without prior written approval.
SemiconductorCo: Products and Services
History of SemiconductorCo
Position vs. Competitors
Market and Projections
Semiconductor Clients
Brazil Economy
Brazil in Latin America
Export and Imports
Science and Research in the Region
How to Produce Semiconductors
Supply Chain
R&D and Other Costs
Company Financials
Shortage of Semiconductors
Brazil and Other Countries

SemiconductorCo: Case Prompt
Situation
Complication
Questions
5
• Despite government contributions of $200M over two decades, the state-owned company still depends on annual injections of
more than $10M from the government to break even.
• Due to negative financial projections, the previous Brazilian government initiated the liquidation process of SemiconductorCo in
December 2020, leading to a temporary suspension of operations.
• The liquidation process created many problems for the company’s under-developed projects, with the majority of its engineers and
chip designers leaving the company for international manufacturers.
• However, the recent surge in demand for chips and the rise of technologies (e.g., Artificial Intelligence, Virtual Reality, and
autonomous vehicles) triggered an interest in the new government to halt the liquidation process and reinstate operations.
• Your team was hired by SemiconductorCo, a global leader in Brazil’s semiconductor industry that designs and manufactures
semiconductors in Latin America. The company is a state-owned enterprise. Therefore, the company contracted your team by the
Brazilian government’s order on Sep 2023.
• The company specializes in (1) agriculture (e.g., bovine traceability chips), (2) transportation, (e.g., tolls and trucks tracking), and
(3) identification (e.g., boxes and passports serial numbers)
• In 2019, SemiconductorCo experienced a decrease in sales, resulting in significant losses for the government of Brazil. Experts
postulate that the decrease was due to a highly competitive environment possibly driven by higher chip prices or a decrease
in government demand (one of SemiconductorCo's biggest clients).
• What should SemiconductorCo’s business strategy/model be to reverse the privatization and liquidation process?
• How should SemiconductorCo position itself in the semiconductor industry to regain competitiveness?
• How can SemiconductorCo attract and hire new employees, as well as build team morale/cross-collaboration?
• What are potential initiatives or policies that the Brazilian government can implement to support the domestic semiconductor
industry’s growth and facilitate SemiconductorCo's revival?

6
SemiconductorCo works on integrated circuit (ICs) projects and fabrication and on wafer post-processing operations. It has machinery of
international standard and commercial-scale production capacity. The company engages in the following: (1) processing silicon wafers or
similar, (2) performing electrical tests of devices, (3) thinning and cutting of wafers (saw or laser), (4) processing micromodules
(SmartCards), and (5) developing and producing products such as discrete devices, sensors, microscale mechanical systems and optical
devices. The company produces its own products and offers eight services to the market across four core segments.
1. Microfabrication: on 6-inch wafers of silicon, quartz, silicon carbide,
and gallium nitride
2. Wafer test (wafer-level probing): Qualified and experienced team for
development, implementation, and execution of production tests - 6-
inch, 8-inch, and 12-inch diameter wafers
3. Wafer backgrinding: Wafer thickness is reduced to allow stacking
and high-density packaging of integrated circuits (IC).
4. Wafer cutting: Laser cutting – “stealth dicing” – of silicon wafers with
diameters up to 12 inches, with high IC density, small circuits, and
large volume
5. Automatic optical inspection: Defect detection and classification with
1 µm resolution
6. Integrated circuit micromodule processing: "Smart chip" type
modules (for payment methods – common or dual-, SIM card, etc.)
7. Classification (die sorting): Separation of “chips” into categories
8. Imaging and Editing Integrated Circuits with Focused Ion Beam:
High-resolution microscopic inspection for IC failure analysis
SemiconductorCo offers eight services across four core segments:
Agriculture, Automotive, Logistics, and Security
Out of its eight services, SemiconductorCo has international
recognition in microfabrication and wafer testing
SemiconductorCo creates products in four core
segments, including:
Agriculture: Chip allows for the electronic
identification of animals by being affixed to the
animal
Automotive: Chip allows for (1) fleet tracking and
car identification and (2) automatic payment at toll
gates, parking lots, etc., by integrating with tags on
vehicle windshields.
Logistics: RFID in object label/tag allows for the
identification of assets without the need for the asset
tag to be visible, which helps control the flow of
products through the supply chain.
Security: Chips that incorporate user records
and biometric data with a high degree of
security; integrated into ID cards and passports

7
11/2008 03/2009
Establishment of
SemiconductorCo in
Brazil, during Lula's
second term government,
with headquarters in Porto
Alegre
SemiconductorCo is set
up in Porto Alegre,
Brazil, with state-of-the-
art facilities and
laboratories for
nanotechnology
research
SemiconductorCo and
German company X-FAB
sign a technology
transfer agreement to
produce integrated
circuits.
During an international trade
show, the Fockink group
launches an electronic ear
tag to identify animals,
featuring SemiconductorCo’s
cattle chip
SemiconductorCo and
the Brazilian mint sign
an agreement to
develop a new chip for
Brazilian passports.
SemiconductorCo
launches a chip for use
by companies that are
developing solutions for
the National Automatic
Vehicle Identification
System (SINIAV)
SemiconductorCo and
the National Land
Transport Agency sign
an agreement to
develop an electronic
identification solution for
trucking companies and
their fleets to improve
the Brazilian logistics
system
SemiconductorCo has experienced more political changes in the past
two years than in the past decade of operations
08/2012
08/2011
09/2012
10/2014
01/2013
SemiconductorCo
signs contract for the
sale of the first million
units of the chip for
vehicle identification.
This chip can be used
for automatic payment
of tolls and in federal
highways.
05/2017
SemiconductorCo surpass
110 million chips produced
since 2012. In the last two
years, there has been a
154% increase in the
company's production
01/2019 12/2020
The Bolsonaro
government claimed that
the state-owned
company was
unprofitable and
initiated the company’s
privatization and
liquidation process

8
06/2021 05/2022
The Investment
Partnerships
Program (PPI)
recommended the
extinction of
SemiconductorCo
- official decision
was published in
December
Lula creates inter-ministerial
group to reverse
SemiconductorCo’s
liquidation. The group will be
composed of representatives
of the Ministry of Science,
Technology, and Innovation,
which will coordinate it, the
Attorney General's Office, the
Civil House of the Presidency
of the Republic, the Ministry
of Finance, the Ministry of
Management and Innovation
in Public Services and the
Ministry of Development,
Industry, Commerce and
Services
02/2023
Bolsonaro
government
announced that
it would try to
attract
companies that
could take over
Semiconductor
Co's role in the
country
01/2023
Luiz Inácio Lula da
Silva was sworn in
as Brazil's
president in the
capital of Brazil to
assume office for
the third time
04/2023
Lula visits China -
China is expected to
invest in
SemiconductorCo,
and cooperate with
Brazil’s 11 operating
semiconductor
production centers
06/2023
New PPI board
recommends Lula
withdraw
SemiconductorCo
from privatization
plan. Minister of
Science, Luciana
Santos, wants to
focus on rebuilding
“a national
semiconductor
policy, which
clearly defines its
role and mission.”
SemiconductorCo has experienced more political changes in the past
two years than in the past decade of operations

SemiconductorCo generates $5M a year in revenue, making it a small
player relative to the top 20 companies in Latin America
Company Total Revenue ($USD billion) Headquarters
TSMC 71.66 Taiwan
Intel 69.54 U.S.
Qualcomm 42.10 U.S.
Broadcom 33.20 U.S.
Micron Technology 30.76 U.S.
Top 5 Semiconductor Companies in the World
Company
Total Revenue
($USD millions)
Headquarters Parent Company
Texas Instruments de
Mexico, S. de R. L. de C. V.
259.1 Mexico Texas Instruments, U.S.
AIR Computers S.R.L. 196.9 Argentina N/A
GEM Services, Inc. 164.6
Cayman
Islands
Elite Advanced Laser
Corp, Taiwan
Renovigi Energia Solar S.A. 110.4 Brazil Intelbras, Brazil
Componentes Intel de
Costa Rica
105.8 Costa Rica Intel, U.S.
HT Micron Semiconductores
S.A.
90.8 Brazil
HANA Micron, South
Korea
O2Micro International
Limited
86.2
Cayman
Islands
FNOF Precious Honour
Limited, Hong Kong
GCS Holdings, Inc. 42.8
Cayman
Islands
GCS Holdings, U.S.
based
HY Electronic (Cayman)
Limited
39.3
Cayman
Islands
HY Group, Taiwan
Rectificadores
Internaclonales, S.A. de
C.V.
38.4 Mexico
International Rectifier
Corporation, U.S.
Top 10 Semiconductor Companies in Latin America
Company Total Revenue ($USD million) Headquarters
NXP Semiconductors N.V. 13,205 Netherlands
Avery Dennison Corporation 9,039 U.S.
Zebra Technologies Corp 5,781 U.S.
Honeywell Intl Inc. 3,546.6 U.S.
HID Global Corporation 819 U.S.
Datalogic S.p.A. 702.1 Italy
Invengo Information Technology Co. Ltd. 476.5 Singapore
Impinj, Inc. 257.8 U.S.
Nedap N.V. 247.3 Netherlands
Unitech Electronics Co. Ltd. 75.3 Taiwan
Top 10 Companies in the Radio Frequency Identification**
**Direct competitors
9

• Global Sales for Semiconductors reached $574.1 billion USD in 2022, an increase of 3%
from the previous years
• Regionally, China remained the largest market for semiconductors, with 31% of global
sales
• However, this was a decline of around 6% for China compared to the previous year
• The largest increase was for the Americas, seeing a 16.2% increases YoY from 2021
• Communication and PC/Computer Chips collectively make up 62% of global market
share with regards to end-use
• Automotive, industrial and consumer electronics accounted for the remainder, all of
whom registered a growth in market share over the year 2022
10
Top Five Semiconductor Segments
Wireless
Communication
Automotive
Electronics
Consumer
Electronics
Computing &
Data Storage
Industrial
Electronics
Global Market Size and Key Geographies
Computing & Data Storage projected to increase ~55%
by 2030
225
350
170
280
50
150
60
130
50
95
35
60
2021 2030
Market Value Growth Projections by Segment in
USD Billions
Computing & Data Storage
Wireless Communication
Automotive Electronics
Industrial Electronics
Consumer Electronics
Other
Five sectors dominate the semiconductor industry and projections
estimate a growth of 30% by 2030

11
U.S.
48%
South
Korea
19%
Japan
9%
China
7%
Taiwan
8%
EU
9%
Design Market Share in the Semiconductor
Industry (2022)
Americas,
11% Others ,
9%
Europe, 5%
Taiwan,
21%
South
Korea, 23%
Japan,
15%
China, 16%
Global Wafer Fab Capacity by Country and
Region (2021)
• The U.S. accounted for almost half of the global market share in 2022, driven by their well-
funded investment in R&D and capital expenditure, leading to steady semiconductor innovation.
• East Asia accounted for 75% of the global wafer fabrication capacity. This is particularly
contributed by the rise of China’s production capacity, favorable government policies, access to
skilled labor, and cheaper costs compared to the West.
• Taiwan (92%) and South Korea (8%) hold dominance in the manufacturing capacity of advanced
IC chips (5nm and 7nm), where TSMC has a global monopoly in the supply of advanced 3nm chips.
• Despite the U.S.’ heavy investment in the global semiconductor, its decreasing manufacturing
capacity marks its increasing dependence on the East Asia market.
0
20
40
60
80
100
120
140
160
180
200
China Asia
Pacific
Americas Europe Japan
Sales
(in
USD
billion)
Country/Region
Global Semiconductor Sales by Region in
2022
China accounts for around 32% of global
semiconductor sales in 2022, 30% of US
semiconductor industry’s revenues, and the
biggest market for South Korean chip
suppliers. This demonstrates the high demand
for chips in their domestic electronic market.
The decrease in U.S. manufacturing capacity marks a dependence on
semiconductors in the East Asia market

Multiple players across five industries utilize semiconductors in their core
products, including small and large companies
12
Wireless
Communication
Automotive
Electronics
Consumer
Electronics
Computing &
Data Storage
Industrial
Electronics

Brazil faces high levels of inflation and unemployment
13
Pre-pandemic growth:
From 2017 to 2019, Brazil experienced a modest increase in GDP,
with a slight decline in 2018.
Covid-19 impact:
GDP contracted significantly with lockdown measures and
disruptions to economic activities
Recovery and resilience:
Various factors, such as fiscal stimulus measures, vaccination
efforts, and economic reforms, have contributed to the country's
rebound
Post-pandemic growth:
Expected to experience a rebound in economic growth. The pace of
recovery and the extent of growth will depend on factors such as
vaccination rates, domestic policies, and global economic
conditions.
Distribution of economic
activity by sector
Agriculture Industry Services
Employment by sector (as % of
total employment)
9.1 20.0 70.9
Value added (as % of GDP) 6.9 18.9 59.4
Value added (annual growth rate
in %)
-0.2 4.5 4.7
UNEMPLOYMENT
OIT 2023
9.5%
POPULATION
Census 2022
215,313,498
INFLATION
IPCA ∣ annual
3.99%
GDP
SCNT ∣ annual
1.92 (2022 billon)
INFLATION
IPCA ∣ monthly
-0.08%
Sep 2023
PIB
SCNT ∣ 4-quarter cumulative
1.92 (2022 billon)
UNEMPLOYMENT
1 tri 2023
8.8%
Indicators Dashboard
GDP VARIATION
4.0%
1 tri 2023
INDUSTRY
0.3%
May 2023
SERVICES
0.9%
May 2023

In 2020, Brazil was the world's 25th largest exporter, accounting for
1.1% of the world's total exports
Top ten export destinations (2021) :
14
In 2021, Brazil exported US$280.4 billion worth of goods and imported US$219.4 billion, with a surplus of US$61 billion.
Top ten import locations (2021) :
Top ten export products (2021) :
Country: Exports
China: US$87.6 billion (31.28%)
United States: US$31.1 billion (11.09%)
Argentina: US$11.8 billion (4.24%)
Netherlands: US$9.3 billion (3.32%)
Chile: US$6.9 billion (2.50%)
Singapore: US$5.8 billion (2.10%)
Mexico: US$5.5 billion (1.98%)
Germany: US$5.5 billion (1.97%)
Japan: US$5.5 billion (1.97%)
Spain: US$5.4 billion (1.94%)
Country: Imports
China: US$47.6 billion (21.72%)
United States: US$39.3 billion (17.95%)
Argentina: US$11.9 billion (5.45%)
Germany: US$11.3 billion (5.17%)
India: US$6.7 billion (3.07%)
Russia: US$5.7 billion (2.60%)
Italy: US$5.4 billion (2.50%)
Japan: US$5.1 billion (2.35%)
South Korea: US$5.1 billion (2.33%)
France: US$4.8 billion (2.19%)
Products: Sales**
Iron ore: US$42.2 billion
Soy: US$37.3 billion
Crude petroleum oils: US$27.4 billion
Sugar: US$8.5 billion
Beef: US$7.4 billion
Soybean meal: US$7.2 billion
Petroleum fuel oils: US$6.6 billion
Manufacturing Industry: US$6.4 billion
Chicken meat: US$6.3 billion
Cellulose: US$6.1 billion
**The country also exports maize, coffee, cotton, tobacco, orange juice, footwear, airplanes, helicopters, cars, vehicle parts, gold, ethanol, semi-finished iron,
among others.
EXPORTS IMPORTS
EXPORT PRODUCTS

Brazil’s political instability, uncertainties, and tax policies are creating
barriers for foreign investors to enter the Brazilian market
Political Landscape
Domestic outlook: Political instability
• The narrow victory of current left-wing President Lula de Silva in the 2022
Presidential election prompted supporters of the far-right wing President
Bolsonaro staging a congressional attack in January 2023
• Political polarization led to an extreme shift in economic policies
• The government faces difficulty building a solid legislative majority to
advance its government agenda
Foreign policy
• Strong emphasis in diplomacy, multilateral institutions, and peaceful
settlement of conflicts
• Non-intervention, non-alignment, promotion of self-determination
• A member of G20, and BRICS (Brazil, Russia, India, China and South
Africa)
Trade Agreements
Agreement on Trade and Economic Cooperation with the U.S.
Free Trade Agreement with the EU, Chile, Mexico, Egypt, Israel,
Peru, India, and Andean community
Member of the World Trade Organization (WTO)
1
2
3
Tax Policies
• Duty and tax waiver for imports originating from the trading bloc
Member of the MERCOSUR trading bloc (Paraguay, Argentina,
Uruguay, Brazil)
4
• Abides to the most-favored-nation (MFN) clause for all other WTO
member countries
• Implemented preferential duty rates for certain products
• Ongoing initiative to boost direct trade and investment relations, tariffs
and non-tariff barriers still exist
15
Export Tax Exemption
• “Ex-tariff”: temporary reduction of import tax rate if no similar equipment is
being manufactured locally – e.g., information technology, capital goods,
telecommunication products (0%)
• Repealed the 40% ownership threshold requirement to attain tax
exemption for non-resident investors in 2022, meaning that foreign investors
may have full ownership in an FIP and benefit from 0% tax rate
Indirect taxes Description Tax %
ICMS Levied on individuals/corporations who
commercialize goods, import products
from abroad
7-25%
IPI Levied on owners who import goods 0-15% (<300%)
PIS & COFINS Federal taxes imposed monthly on
gross revenue earned by legal entities,
levied on gross revenue
1.65%; 7.6%

© GeoNames, Microsoft, OpenStreetMap, TomTom
Powered by Bing
Latin American countries with
GDP above 5 Billion USD
5.6 1920.1
GDP in USD
Billions
16
Country
GDP
(Billions
USD)
Country
GDP
(Billions
USD)
Brazil 1920.1 Costa Rica 68.4
Mexico 1414.2 Bolivia 43.1
Argentina 632.8 Paraguay 41.7
Cuba 545.2 El Salvador 32.5
Venezuela 482.4 Honduras 31.7
Colombia 343.9
Trinidad &
Tobago
27.9
Chile 301.0 Haiti 20.3
Peru 242.6 Jamaica 17.1
Ecuador 115.0 Nicaragua 15.7
Dominican
Republic
113.6 Guyana 15.4
Puerto Rico 113.4 The Bahamas 12.9
Guatemala 95.0
Cayman
Islands
6.0
Panama 76.5 Barbados 5.6
Uruguay 71.2
The GDP of the region is 6.75 Trillion USD, with
GDP growth at 3.8% in 2022. The GDP per
capita is $10,236. Brazil’s GDP makes up
nearly 30% of the total.
5710 5620
4780
5950
6750
1917 1873
1476
1650 1920
5.00%
-7.20%
6.01%
3.07%
0.98%
0.45%
-3.92%
4.44%
2.43%
2018 2019 2020 2021 2022
Comparison of GDP Growth in Brazil and
the LAC Region (USD Billions, 2022)
Latin America and the Caribbeans
Brazil
Growth Rate LAC
Growth Rate Brazil
Brazil represents 30% of the Latin American GDP

Brazil invests 1.2% of its GDP in technology
17
Country
Expenditure on R&D
(2019)
% of GDP
Trinidad & Tobago 20.4 0.026
Guatemala 14.6 0.061
El Salvador 52.2 0.138
Paraguay 358.2 0.157
Uruguay 47.0 0.175
Peru 3602.0 0.284
Cuba 1039.2 0.322
Chile 949.5 0.341
Colombia 2046.8 0.457
Argentina 299.7 0.483
Mexico 572.0 0.553
Brazil 22629.9 1.208
Latin America & Caribbean 37434.1 0.665
• Brazil and the European Union are
actively discussing a free trade agreement
(FTA). The abolition of tariffs on
semiconductor products and the
harmonization of technical standards are
two aspects that the FTA is anticipated to
feature
• Updated Trade and Economic
Cooperation Agreement between the
United States and Brazil with New Trade
Rules and Transparency Protocol in 2020.
The abolition of tariffs on semiconductor
products and the establishment of a
framework for resolving trade disputes
are only two of the features of this protocol
that are anticipated to be advantageous to
the semiconductor sector.
• Brazilian and Taiwanese authorities and
businesspeople from the world's
technology capital are coordinating their
efforts to assist the largest economy in Latin
America grow its budding chip industry.
Trade Agreements in Latin America and
Caribbean Region

18
1 - Integrated circuit design
Process starts with theorical design
of the chips. The most used
software is CAD. It allows to include
every component needed.
2 - Verification
Here some simulations and tests
are made in order of the good
performance.
3 - Mask fabrication
Some photolithography masks are
fabricated. Those are used to transfer the
wafer(semiconductor slice) during
lithography process.
4 - Wafer fabrication
We do the necessary steps to
deliver the result.
5 - Lithography
With UV rays through the masks
pointing the wafers transfers the
patterns to make the circuit.
6 - Diffusion and deposition
Here are some diffusion of impurities
and deposition of tiny layers of some
metal in order of creating new
connections
7 - Verification of the product
According to the quality standards
some tests are made to the product
8 - Packaging and Distribution
Here the final product is sent to
the buyers.
Semiconductor
• Semiconductors are materials that have
medium electricity conductivity.
• Silicon and germanium are good
examples
• Costs are mostly related to the material
Chips
• Chips have many components
including semiconductors. In fact, chips
are the final product of the
semiconductors.
• Its production are expensive for the
lithography process
The Chip manufacturing process requires seven different steps from
design to packaging and distribution
Manufacturing a Chip

Wafer
fabrication
Wafer
processing
Packaging
Performance
Testing
Fabless Semiconductor Companies Foundries
Outsourced Semiconductor Assembly and
Test (OSAT)
Foundry Market Share
(Q3-21)
[USD bn]
Headquarter
TSMC 55% Taiwan
Samsung 17% South Korea
UMC 7% Taiwan
GlobalFoundries 7% U.S.
SMIC 6% China
OSAT Market Share
(Q3-21)
[USD bn]
Headquarter
ASE Holdings 24.2% Taiwan
Amkor Technology 18.9% U.S.
JCET Group 14.1% China
SPIL 11.7% Taiwan
Powertech Technology 9.0% Taiwan
Fabless
Semiconductor
Companies
Revenue
(Q3-21)
[USD bn]
Headquarter
Qualcomm 7733 U.S.
Nvidia 6612 U.S.
Broadcom 5430 U.S.
MediaTek 4703 Taiwan
AMD 4313 U.S.
Integrated Circuit
(IC) Design
Upstream: Design Mid-stream: Manufacture
Foundry Market Share
(Q3-21)
Headquarter
Samsung 22.32% South Korea
Intel 18.79% U.S.
SK Hynix 10.14% South Korea
Micron 8.47% U.S.
Texas
Instruments
4.3% U.S.
Intellectual Property
(IP) Design
Electronic Design
Automation (EDA) Equipment
Raw materials
Multiple companies across the supply chain make the chips and
semiconductors manufacturing a complex process
19
Downstream: Assembly

A fragile global semiconductor supply chain with an increase in demand
generated a semiconductor shortage in 2020
20
> 28
nm
Legacy Chips
Post-COVID prevalence: Imbalanced investment in legacy chips & advanced chips
Legacy chips are used in the production of
most automobiles, aircraft, home appliances,
broadband, consumer electronics, factory
automation systems, military systems, and
medical devices
• Lockdowns and government quarantine restrictions have forced manufacturing plants to shut down
their production lines.
• Port closures caused heavy shipping delays and chip distribution.
• The negative impact of manufacturing concentration in East Asia became apparent.
Increasing Global Demand Supply Chain Disruption
• While automobile manufacturers
drastically decreased their chip orders
due to an anticipated downturn in sales, the
industry failed to take into account the
massive increase in demand for
electronic products.
• There is a 13% increase in global
demand for PCs as people worked from
home and conducted online schooling
during the pandemic.
• With most foundries transitioned in
producing more expensive chips to fulfil the
increase demand for consumer products,
automobile companies failed to reinstate
their orders when automobile demand
increased.
• Global demand was not met despite
increased capacity of fabs to a utilization
rate of over 95%.
The COVID-19 pandemic in 2020 led to semiconductor supply chain disruption, especially in the automotive industry. Although the situation has
eased since the semiconductor shortage is persisting to date. Main causes:
• Chips shortage was mainly confined to
legacy chips rather than leading-edge chips.
• Most investments in the semiconductor
industry go to the R&D of cutting-edge
chips, inc. the largest foundry players
(TSMC, Samsung, Intel)
• Although governments enacted policies in
response to the shortage, the tax incentives
and funding do not benefit older fabs that
produce legacy chips.
• Only US$2 bn in the US$52.7bn (4%) is
allocated to legacy chips in the U.S. CHIPS
Act, displaying a lack of sustained funding to
alleviate fundamental shortages.
Advanced chips supports AI, used in
supercomputers, self-driving cars, 5G data,
and the military
< 28
nm
Advanced Logic Chips
1 2
3

Recent policy changes with other major global players:
21
The U.S. CHIPS Act
(2022)
Overview:
• A response to the growing semiconductor
supply chain threat, aimed to decrease U.S.
dependence on East Asia
• Provides $52.7 billion for semiconductor
manufacturing, R&D, and workforce
development, aiming to expand domestic
manufacturing of mature and advanced
semiconductors
• Funding recipients are not allowed to expand
their semiconductor manufacturing capacity
and conduct joint research or technology
licensing in certain foreign countries like
China, North Korea, and Iran for the next 10
year. Brazil is not included.
Potential Chinese
investments
Overview:
• China and Brazil have a long history of strategic
partnership
• China has recently experienced a rapid growth
in revenue across all subsegments in the supply
chain, demonstrating its effective government
policy for boosting sales and technological
enhancement
• President Lula is eager to establish a
competitive semiconductor industry in Brazil
after his presidential election
• Lula visited the Huawei factory in Shanghai,
China in April 2023, where both countries
agreed to set up a working group
Overview:
• Brazil and Taiwan conducted $4.25 billion
worth of trade in 2021, which was up 40% from
the previous year, demonstrating a well-
established trade relations
• In the 13th
Taiwan-Brazil Joint Business
Councils Meeting in 2022, Brazil demonstrates
intentions to strength cooperation with
Taiwanese chip enterprise, increase chip
manufacturing, lower start-up costs, and
improve the process of commercialization
• Brazil and Taiwan holds a preferential tariff
agreement
• Foxconn Technology (Taiwan-based) operates
an assembly plant in Brazil
• Taiwan produces over 60% of the global chips
Potential Taiwanese
investments

Investment in a new semiconductor manufacturing plant can cost up to
~$11B
22
• In research and development SemiconductorCo spends near of million
dollars.
• CEITEC also spent 4 USD million in salaries in 2022
• Including administrative and general costs are approximately 6 million
dollars
• The company spent 9.7 million dollars in total operating expenses
The costs of designing are extremely high. For instance, the cost
of designing a 3nm device ranges from $500 million to $1.5 billion,
according to IBS
• Building a fabric for chip manufacturing ranges from billion
dollars. TSMC invested a total of $9.3 billion in building its plant
of fabrication including equipment
• The most expensive equipment is a EUV machine. Each EUV
machine has over 100,000 parts and costs $150 million. They’re
shipped in 40 freight containers or four jumbo jets.
Design Cost Fabrication cost
General Cost

Financials of the Company (Balance Sheet)
23

24
Financials of the Company (Income Statement)

25
Financials of the Company (Cash Flow)

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