Intel Inside Case Study PDF

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Zusammenfassung der ersten Case Study für International Management mit den relevantesten Informationen damit ihr euch gute Mitarbeitsnoten holen könnt!...

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Intel

Case 1

Intro: -

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Average cost of new AT $80 million (annual cost between $150 and $300 million) Krzanich focused primarily on Asian and South East Asian locations  Lowest cost of operations in the world (& U.S. prohibited to build one in China -> intellectual property concerns but in China is already a infrastructure) Alternative: India, Intels Chairman knows country and leadership, he felt the time is right Krzanich had a lot of negotiations and analysis -> travels to Chennai,India for additional negotiations BUT Krzanich wanted the boards approval before entering next stage of negotiations

Semiconductor and Microprocessor Industry:

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Semiconductor industry generated $226 billion revenue (worldwide) $17,5 bln (USA) Sem. Cond. Industry fragmented by top 4 companies (Intel, Renesas Technology, Samsung and Texas Instruments) controlling 30% of the production In silicon based electronic circuits Intel and ADM hat 90% of global sales

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Microprocessor Market dominated by Intel due to

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High paced innovation -> competitors offers obsolete Ability to slash prices high margins  because of unit sales increased & production cost declined (econo. of scale) But: Nov. 2004 Dell announces touse AMD processors

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Chip production & Manufacturing:

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Semiconductor made out of pure silicon in fabs 300mm wafer fab costs $3.5 -$4 billion in US ($2.5 - $3 billion for an international location)  $1 billion annual cost Production of a chip is 300 – 350 steps

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ATs typically located near producers oft he electronic products that incorporates processors Also important -> low cost labor (example of glass manufacturer Corning) -> S3 1. Abschnit

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AMD: Wafer fabs: Austin,Texas; Japan AT: Bangkok,Thailand; Kuala Lumpur; Penang; Malaysia; Suzhou, China

Fairchild Semicoductor: Manufacturing sites: China, Korea, Malaysi, Philippines, Singapore; Idaho, Utah, Singapore

Micron: Wafer fabs: Idaho, Virginia, Italy, Japan AT: Idaho, Utah, Singapore Memory module assembly: Boise, Puerto Rico, Scotland

Samsung: Wafer fabs & AT: south korea

STMircoelectronics: Wafer fabs: France, Italy, US, Singapore

Taiwan Semiconductor Manufacturing Company: China, Singapore, Taiwan, USA

Intel Corporation: -

Founded in Mountain View, California in 1968 (Robert Noyce & Gordon Moore) created first commercialy available dynamic random acess memory (DRAM) moved to Santa Clara, California & IPO ($6.8 Million) first international assembly plant (Malaysia) 1972 2005 -> Intel ist he largest semiconductor manufacturer in the world (80% of all CPU)  90% of Intels gross profits Largest customers: Dell 19% sales; HP 16% (no other customer is above 10%)

Research labs: Berkeley & Santa Clara, California; Pitsburgh,Pennsylvania; Hillsboro, Oregon; Seatle, Washington Intel labs: Bejing,China; Europe (16sites); Banglore,India; Guadalajara,Mexico; St.Petersburg, Russia Innovation centers: Dubai, Ireland , Russia, Turkey

AT -

low cost, could be managed by two college educated personnel; last step before shipped Took about 3-5 years to build (converting existing plant takes same time) No plant should account more than 40% of intels revenues (plant should be able to do more than one product)

Requirements for a new plant:

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Fabs: produce a variety of semiconductors: e.g.: microprocessors, chipsets & flash memories Locations: Arizona, China, Costa Rica, Malaysia 250.000 square foot -> 5 years construction until running -> 2000 personel (3500 later) 500.000 square foot -> 14 years constr. 4000- 5000 personel

Locating a new Plant: 1. 2. 3. 4. 5.

New plant or update an older facility Where to build? Domestically or internationally Local infrastructure (power, water, labor, ect.) How much footprint on the locaiton & transportation Security and environmental conditions weighed against costs

Country, State and local goverments incentives: -

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Incentives to lure companies to set up local facilities  Benefeits like job creation, local investment in community resources (education, healthcare, steady tax revenues )  Influence other industry suppliers and service providers to locate Boost for the local economy ($14 million tax a year from companies doing busines with Mercedes, new Target super store, modern shopping mall, sushi in the local grocery store) Incentives can be money or land grants (e.g.: 200 hectars from Czech Republic to Hyundai for $7 Million – hope that they build a $700 million plant. Boing in Washington state -> tax incentives worth $20 billion Alabama offered Mercedes Benz: o 20 year exemption from state income taxes o Bought the plant (market value) sold it for $100!! o Tax concessions that enabled Mercedes to pay for plant construction out of money they were saving because of paying no state income taxes o Build a $35 million trainingscenter and pay the salaries for employees were in training o Mercedes wanted to double the size -> $115 million more incentives

The Short list: -

Relevant data for an AT- factory’s needs: o Utility availability o Reliability o Rates o Environmental health and safety issues o Waste disposal & other plant waste o Human resources o Workforce development o Employee training issues o Incentives including grants or exemptions o Logistics o Supply chain needs o Risk management issues ( natural disaster insurance, IP protection & security) o Political risks

Potential Sites: China: Dalian Positive Negative Low costs, existing AT plants in China, Imposed tarifs, restricted foreign companies rapidly expanding industrial complex, to certain sales regions, mandated sales ambitious workforce, eager to foreign caps, & required some companies to enter investments, goverment sponsored tax joint ventures with chinese companies breaks & other development incentives

India: Chennai positive negative Goverment based on a constitution and Complex maze of regulations, tax structures English common law, low labor costs, and multiple layers of goverment entities & language/education standards, highly regional water shortages, private power educated engenieering talent, growing supply middle class market

Thailand: Amata Industrial Estate Parks Positive Negative Several technology and healthcare Low unemplyoment rate, shortage of skills in the economy, higher labor costs, poor companies in the region, less burdensome infrastructure and natural desaster (water & business regulations, tax incentives, nonpower supply) tax privileges& well educated workforce (literacy rate close to 90%)

Vietnam: Ho Chi Minh City Positive Negative Fast growing economy, motivated Young and undeveloped workforce, workforce, low risk of natural desasters, immature business and manufacturing favorable grants, including a seperate grant environment, and cultural issues assigned to a joint bank account, long term low rates on water & power, operational manager of the technology park who was goverment official and member oft he communist party...