1 CPET 575 Management of Technology Case II - 10 Intel Corporation: the DRAM Decision Discussion Note Professor Paul I - Hai Lin A Special Course for M.S. in Technology Graduate Program Purdue University Fort Wayne Campus References: [1] George W. Cogan and Robert A. Burgelman , Case II - 10 Intel Corporation: the DRAM Decision, pp. 521 - 544, Strategic Management of Technology and Innovation, 5th edition , McGraw - Hill, ISBN 0073381543, 2009 . Prof. Paul Lin 1 Intel – Santa Clara, CA Intel, 1971 – present, http:// www.intel.com/about/index.htm?iid=hdr+about • Technology Leadership Architecture & Silicon Product Technologies Manufacturing Research Standards • Healthcare Technologies Intel in Healthcare Intel - GE Care Innovations LLC • New Technology Development Intel’s 22 nm 3 - D Tri - Gate Transistor Technology, http:// newsroom.intel.com/docs/DOC - 2032 Prof. Paul Lin 2
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1
CPET 575 Management of Technology
Case II-10
Intel Corporation: the DRAM Decision
Discussion Note
Professor Paul I-Hai LinA Special Course
for
M.S. in Technology Graduate Program
Purdue University Fort Wayne Campus
References: [1] George W. Cogan and Robert A. Burgelman, Case II-10 Intel Corporation: the DRAM
Decision, pp. 521-544, Strategic Management of Technology and Innovation, 5th edition, McGraw-Hill, ISBN 0073381543, 2009.
RAM History: from SRAM 1101 to … Process Innovation
• Bipolar Schottky Process, 64-bit SRAM 1103
• P-MOS Process, 256-bit SRAM 1101
• MOS Process Technology, 1-k bit DRAM Required external circuitry: Access & Refresh
• Process yield
Industry/Market• Technology
Magnetic core memory
• Customers Replacement of core memory
Mainframe – shift register
• Market Competition: Japan
Prof. Paul Lin 6
The Major Themes of the Case
The DRAM (Dynamic Random Access Memory) situation in 1990.
The rationalization of “technology strategy” with changing industry dynamic and paradigms.
The continuing implications for corporate strategy of tensions between commodity and proprietary businesses: EPROM and Flash.
Changing modes of corporate entrepreneurship and strategic renewal: RISC (Reduced Instruction Set Computer) versus CISC (Complex Instruction Set Computer), Flash
Forward integration and the future of Intel
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Prof. Paul Lin 7
Investment Decision … 1984 Assessment of Investment Decision
• DRAM Memory chip business Commodity, price/performance, facility & manufacturing
equipment investment
$$ Investment
Competition
ROI..
• Microprocessor business
Decision to exit the DRAM• DRAM product volume – low
• DRAM business grown unfocused Changing environment and competition
It was a critical component in the sales product mix
• DRAM technology – core
• Competitive advantage – may be
Prof. Paul Lin 8
Selected Intel Final Statements (Reports): 1976-1984, Exhibit 2
Sales (revenue)
COGS (Cost of Goods Sold)
Gross margin
R&D (Research & Development)
SG&A (Selling, General & Administrative Expenses)
Operating profit
Interest & other
Profit before tax
Income tax
Net income
Depreciation
Capital invest
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Prof. Paul Lin 9
Selected Intel Annual Final Reports: 1976-1984
Cash and ST invest (sum of cash & short-term investments)
Working capital (current assets – current liability)
Fixed assets
LT debt (Long-Term)
Equity (net assets)
Employee
ROS (Return on Sales) • Operating profit margin, before interest & tax, expressed as
a percentage of sales (revenue)
• ROS = EBIT/Revenue
• EBIT – Earning before Interest & Tax
ROA (Return on Assets)• ROA = Net Income/Total Assets
ROE (Return on Equity) = Net Income/Equity
Prof. Paul Lin 10
Development of DRAM
1-kbit DRAM “1103”: 2nd Technical innovation in 1970
Technology advantage• Increased storage capacity
• Price/performance advantage
Disadvantages• Required external circuits for access and refresh
• Most difficult to use product
Customer adoption/development• Customer training
• MSO (Memory System Operations) Leaning kit, Development kit
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Prof. Paul Lin 11
New DRAM Generation
1-kbit DRAM “1103”: 2nd Technical innovation in 1970
Early 1103 Runs – low yields (25/250 fully functional)
• Intel Fab 6 Lives on Through Equipment Donation to Arizona State University’s Polytechnic Campus, https://asunews.asu.edu/20000816_donation
• Intel Cancel Fab 42 (Chandler, AZ), 2014/1/16, http://www.eetimes.com/document.asp?doc_id=1320670
• Intel cancels 14 nm Fab 42 in Arizona, due to increasing competition from ARM, 2014/1/15, http://www.extremetech.com/computing/174832-intel-cancels-14nm-fab-42-in-arizona-but-its-nothing-to-worry-about
Intel’s other worldwide facilities • List of semiconductor fabrication plants (accessed 2014/3/27),
USA: AZ (Tempe, Chandler), OR (Gresham, Hillsboro) Texas (Austin, San Antonio), NM (Rio Rancho), MA (Hudson), Virginia(Manassas), Idaho(Boise), NY (Malta), MN
World-Wide: Singapore, China, Ireland, Israel, China, Taiwan, UAE, Japan, Germany, UK, Netherlands, France, Italy, South Korea