Business Model and Strategic Plan Part I
Business Model and Strategic Plan for New Product at Amkor Technology Inc.
Overview of Amkor Technology Inc
Amkor Technology is one of the world leaders in semiconductor technology. The mission of the company is to be the world’s top trusted provider of reliable test manufacturing and assembly services as well as innovative solutions to microelectronics and semiconductor companies utilizing advanced technology which is a product of close collaboration with clients and partners engaged in supply chain. Its major area of interest is offering testing services for manufacturing as well as contract services for semiconductor assembly. The company was the pioneer in the outsourcing services for the Integrated Circuit (IC) assembly and testing. Amkor clients include more than 300 global leaders in electronics and semiconductor industry. Amkor has various departments with different responsibilities. There are packaging, technology, test services, design services, turnkey services, and customer center (Amkor, 2016).
The proposed product will be a super thin silicon wafer based on Magnesium Diboride and will be developed at technology division. Currently, the department employs various technologies including Chip-on-Chip POSSUM, System in package, Flip Chip, 3D/Stacked die, MEMS and Sensors, Copper Pillar (CuP), Silver Wire Bonding, Package on Package, Copper Wire Bonding, and Through Silicon Via. Previously, gold was used as one of the major bonding components in the semiconductor manufacture at Amkor (Amkor, 2016). However, due to increasing prices of gold, alternative materials had to be sought. However, the materials have to possess similar or better properties than gold. Magnesium Diboride has been found to possess superior superconducting characteristics that can be employed in the semiconductor industry (Berkeley Lab News, 2002). The material is not yet employed in the manufacture of semiconductors. It is a very cheap material and it can conduct at higher temperature than other superconductors. This makes it a good candidate for the production of the super thin silicon wafer. The idea of using this material is that given its ability to conduct current at elevated temperatures, it can work at elevated temperatures without necessarily requiring some cooling. This will further reduce the complexity of the resultant chip assembly but also its cost. It would be therefore possible to sell the product at a lower cost. However, manufacturing it is a complex process.
Addressing Customer Concerns
The electronics and semiconductor industry is very dynamic and so are the customer requirements. The company, through its department of technology, strive to meet the ever changing customer requirements. Customers have concerns that has to be addressed. All the sections including design, assembly, integration, fabrication, and reliability have to work harmoniously while tying up these technologies and come up with a product that is of high reliability, low cost, and of high quality (May and Spanos, 2006). The technology department responsibility is to come up with a product that exceeds the customers’ needs in terms of size, weight, speed, and cost. Generally, the proposed product will be very small in size, light in weight, high speed, and can be sold at a lower cost. These are the most important factors that customers want from semiconductor products. The use of Magnesium Diboride imply there will be no need for sophisticated cooling systems that increase the weight, size, and cost of the product.
While coming up with the product, five environmental forces (buyer power, threat of substitution, supplier power, threat of new entry, and competitive rivalry) will have to be analyzed as advocated by Porter (Hills and Jones, 2010). In this market, there is low threat of new entrants who want to manufacture the product. The product requires investment of heavy capital. Economies of scale cannot be easily achieved the customer loyalty is very high. Customers who wish to go for other products would encounter higher switching costs. Currently, Amkor Technology hold trademark and patents for its products and its brand reputation is well established. On the side of suppliers, they have a lower bargaining costs. There are many suppliers in the market. The cost of adopting alternative raw materials is low. Further, there exists a wide variety of raw materials to substitute with. However, one of the major problems is high bargaining power of buyers. Buyers are very sensitive to the cost of the product. They can also access other substitute products manufactured by rivals. The only favorable observation is that there are very many buyers for semiconductor materials. Given that customers can find products with almost similar performance with the proposed product, there is a great threat of substitutes. Finally, there exist intense rivalry among the current competitors in the semiconductor industry (KPMG, 2014). Ten companies command 60% of the semiconductor global market while others, with each less than 2% market share, contribute the other 40% (Statista, 2015). There has been a slow growth in global sales of semiconductors. Sometimes the growth has been negative and this tends to heighten the competition. The department will strive contribute to the company’s efforts in overcoming the challenges identified using the Porter’s 5 Forces model.
Vision for the Business
In order to make sure the product and the overall business enjoy a lasting success, the technology department would have its vision. The department will have not only core purpose but also core values that will guide it to the path of success. The company’s vision is founded on the understanding that while certain things are open to change certain things cannot be changed. The department’s vision will offer guidance about the kind of future necessary to stimulate progress and the core that need to be preserved. This will be in agreement with the views of Collins and Porras (1996) who pointed out that a vision that is well-conceived has not only the component of envisioned future but also core ideology. The core ideology will comprise core purpose and core values while the envisioned future will consist of a vivid description and a big long-term goal. The department’s purpose is to produce advanced silicon wafers which are cheap, faster, light, and small. The core values will be dedication to the production of high quality and reliable products, respect for others, and environmental care. The department’s core ideology is to be a leading center of advanced micro-chips by the year 2030. The vision statement would read ‘to be the leading innovative center producing cheap, reliable, faster, quality, light, and small semiconductors by the year 2045.’ The mission statement would read ‘to utilize innovative skills and other resources to produce advanced microchips that are in line with the dynamic nature of the semiconductor industry.’ The core values will be promotion of a culture of innovation, respect for others, and environmentally responsible business practices.
The mission of Amkor Technology is to use advanced technology to offer innovative solutions to electronic and semiconductor industry. It vision is to be the world’s most trusted reliable manufacturing test services and assembly for electrical and semiconductor industry. Amkor Technology core values are fostering a culture of innovation, operational excellence, fairness, respect, integrity, and cultural diversity. The mission statement of the department is ‘to utilize innovative skills and other resources to produce advanced microchips that are in line with the dynamic nature of the semiconductor industry’ while that of the company is ‘to use advanced technology to offer innovative solutions to electronic and semiconductor industry.’ The vision of the department is ‘to be the leading innovative center producing cheap, reliable, faster, quality, light, and small semiconductors by the year 2045’ while that of the company is ‘to be the world’s most trusted reliable manufacturing test services and assembly for electrical and semiconductor industry.’ The core values of the department are promotion of a culture of innovation, respect for others, and environmentally responsible business practices while those of the company are to foster a culture of innovation, operational excellence, fairness, respect, integrity, and cultural diversity. A comparative analysis of the mission, vision, and core values of the department show that they correspond with the mission, vision, and core values of the company.
The mission, vision, and the core values of the department help in guiding the strategic direction. The mission of the department explain why the department exists. It inspires those working in the department to make relevant decisions needed for overall organizational progress. The mission also define or establish what the organization does. Further, the mission helps in realization of the department’s and organizational vison. It defines how the organization’s resources should be allocated and the nature of operational and strategic goals that the department need to set. The vision of the department establish the destination and it is this destination that guides the strategy to be adopted in order to reach there. Strategies adopted acts as a bridge between the current reality and the destination/vision. Core values are essential and lasting principles of the department. The department’s core values does not require justification from the outside. They have intrinsic value to the employees. The values that are central to the department’s strategic direction are promotion of a culture of innovation, respect for others, and environmentally responsible business practices.
Culture plays a great role in the success of the department. For example, the employees need to embrace a changing culture. Culture can also mean fostering high standards of integrity, respect, teamwork, creativity, and diversity. Although the company is profit, it has to give back to the community through its corporate social responsibility program (CSR). The department can as well contribute towards CSR in a small scale by organizing employees to participate in charitable events such as donating blood, donating food, visiting the sick in hospital, and safety awareness campaigns among others. The company strongly believe in ethical business practices. It has to stand to its goal of ensuring reliability and earning public trust. As a result, every employee in the department is expected to do what is right. To ensure this, an ethical code of conduct will be issued so that every employee become conversant with the ethical principles. These ethics will draw upon ethical theories of utilitarianism, Kantian, and virtue ethics (Power 2008;
Amkor. (2016). Speeding Time to Market: Turnkey IC Design, Assembly, Test and Logistics Solutions. Retrieved from: http://www.amkor.com/go/about-us
Berkeley Lab News. (2002). A Theory to Explain Superconductivity in MgB2. Retrieved from: http://www.superconductors.org/39K.htm
Collins, J. & Porras, J. I. (1996). Building Your Company’s Vision. Harvard Business Review. Retrieved from: https://hbr.org/1996/09/building-your-companys-vision
Hill, C. & Jones, G. (2010).Strategic Management Theory: An Integrated Approach. Mason, OH: South-Western Cengage Learning.
KPMG. (2014). Global Semiconductor Survey: cautious optimism continues. Retrieved from: https://www.kpmg.com/US/en/IssuesAndInsights/ArticlesPublications/Documents/semiconductor-survey-2014.pdf
May, S.G. & Spanos, C.J. (2006). Fundamentals of Semiconductor Manufacturing and Process Control. Hoboken, NJ: John Wiley & Sons.
Power, F.C. (2008). Moral Education: M-Z. Westport, CT: Praeger Publishers
Statista. (2015). Global market share held by semiconductor vendors in 2015. Retrieved from: http://www.statista.com/statistics/266143/global-market-share-of-leading-semiconductor-vendors/
Tittle, P. (2000). Ethical Issues in Business: Inquiries, Cases, and Readings. Orchard Park, NY: Broadview press Ltd.