A Case study of Intel
A Case study of Intel
In this case, I’ve studied the globally known semiconductor manufacturer, which is the Intel. The purpose of the study is to analyze the objectives and strategies used by Intel, SWOT analyzing and discuss major issues or problems that the company faced.
Intel Corporation is the biggest semiconductor manufacturer in the world and has changed the global marketplace radically since it was founded in 1968. The first handheld calculators and PCs (Personal Computers) were developed through the innovation of Intel’s microprocessors. In the early 70’s increased competition from Japanese semiconductor manufacturers had dramatically reduced the profitability of this market this made Intel to shift the company’s focus to microprocessors.
From the late 80s until the late 90s Intel had a 10-year period of unprecedented growth as the primary hardware supplier to the PC industry, supplying microprocessor to IBM. Intel’s product line of Pentium processors had become a household name. Today at least 80% of Intel’s processors are used in PCs globally. Their product line consists of: chipsets, motherboards, flash memory used in wireless communications, networking devices, laser printers, industrial machinery, and cellular phone base stations.
Delight our customers, employees, and shareholders by relentlessly delivering the platform and technology advancements that become essential to the way we work and live.
Great Place to Work
“Extend our silicon technology and manufacturing leadership Deliver unrivaled microprocessors and platforms
Grow profitability worldwide
Excel in customer orientation”
Major issues and Problems:
1. Dust would contaminate the circuits during manufacturing.
Intel developed “clean rooms” for keeping dust out of the process. Recommendation:
I agree with the decision of the company to develop “clean rooms”. Now that they already have these rooms, they can now have a product that would work 101% at its best for the consumers. .
2. Etch circuit lines on silicon wafers, without having the etched lines fracture and break as the water was heated and cooled repeatedly during the manufacturing process.
To “dope” the metal oxide with impurities, making it less brittle. Intel subsequently went to some lengths to keep this aspect of the manufacturing process secret from competitors for as long as possible. Recommendation:
Intel is so intelligent and optimistic for its products. With this problem at that time I am pretty sure only Intel thought of this wonderful solution. With this, the challenge now is to maintain this technique or process to constantly produce “quality” products.
3. Intel underestimated Japanese threats in terms of technology which resulted to dropping off DRAM; one of their flagship product.
Intel did not risk investing a new fabrication facility at a cost of $600 million that might affect the operation of its other products especially the microprocessor. Recommendation:
Intel should’ve been more conscious and aware of the possibilities and facts that new entrants and competitors will always be a threat for the company. With its decision, it is kind of frustrating for the fact that the DRAM was once the best innovation and product of Intel. But the company left with no choice but to exit the DRAM business. I wouldn’t risk my other products to get affected by this mistake.
4. The company exited its struggling communication chip business. The workforce was cut by 20,000, while costs were reduced by $3 billion.
The company did not lose sight of the need to produce processors for mobile devices. In mid-2008, Intel introduced a new line of low-power consumption chips called atom. Intel has also been making moves into the graphics chip business. Recommendation:
Persistence and perseverance for your product should always be present in the company. I just commend Intel for being so flexible and how quick they are in satisfying the ever changing demands of the consumers.
Key success factors for Intel:
Intel placed top priority on their people, and encouraged openness, fairness, and responsibility, Intel was able to take full advantage of its workers.
The most talented and brightest people that were employed were given leverage when mistakes were made so that they would be encouraged to develop breakthrough technologies.
Moore and Noyce refused to shy away from their inexperience and being willing to do what work they needed. Also admitting their limitations, they were able to seek out qualified employees to help build the company.
They learned that the key to entrepreneurial success was by being in a constant state of awareness and fear of your competitors, entrepreneurs can become proactive instead of reactive, seizing new opportunities as they present themselves instead of letting them pass them by.
By specializing and focusing on a niche market, Intel was able to not only stand out from the crowd, but to become market leader in the industry.
Expertise in Manufacturing
Highest standards in high-quality clean production
The company invests vast sums in R&D and manufacturing
It designs quality products
It is able to leverage its manufacturing capability. This means it can increase production to bring product to market in large volumes. Increasing volume and getting the product onto the market as quickly as possible are important elements in creating and maintaining a competitive advantage. It has a regular cadence (or rhythm) to the development of new products or improvements to existing ones
Intel is a globally recognized brand name and has strong brand loyalty from its consumers.
Intel was the pioneer in microprocessors for PCs and memory devices.
Intel is a global technology corporation and the world’s
largest producer of semiconductor chip, based on revenue.
Intel presently has around 80% of the microprocessor market share whereas AMD has roughly 17% of the market.
Intel distinguished itself from a ‘commodity’ like position and established itself as the ‘brains’ of the computer industry
Intel has been accused of using divisive strategies in defense of its market position against its competitors.
Intel had uses its market dominance to unfairly stifle competition
Since 2000, Intel could not maintain the position as the dominant supplier of microprocessor in the industry.
Retail prices are higher compared to competitors.
Product development and markets penetration in the existing markets is also a good opportunity.
Advancement in technology also provides the opportunity to offer new products.
Offering more diversification with their products in related and unrelated business such as: security devices, broadband and cellular industry.
Backward and forward integration may reduce the cost, improve the quality and service.
Advancement in technology obsoletes the manufacturing facilities and products. The strong price war is going on between PC producers.
Many competent PC makers are using inferior performance IC’S.
Changing customer taste and preferences along with the reduction in brand loyalty is a major threat.
Currency changeability in different countries create problem for the business of the company.
The company is facing strong competition to sustain its market share.
Intel Corporation is facing strong political instability, regulation and tariffs in different countries.
Product specialization of Intel can become a big threat. Having a limited product line Intel runs the risk of being forced out of the market by a better product.
The fast development of cell phones and other mobile gadgets can perform the same tasks as PCs and is having a major negative impact on the PCs market.
Intel began in memory production and development in 1968
Competition with Japanese firms with larger economies of scale reduced Intel’s market share (see functional map of Intel’s DRAM market share) Intel’s development of the microprocessor (first designed in 1970) led to more and more R&D being assigned to this branch of the company Technology strategy change came from the middle of the company, DRAM was still pursued from senior managements perspective until 1986 Microprocessor development allowed Intel to sustain its revenue increases In 2001, Intel produced microprocessors with integrated Wi-Fi In early 2000s, Intel invested heavily in semiconductor production facilities to achieve overwhelming economies of scale
Also in early 2000s, Intel launched several products into non PC markets for their semiconductor technology, most of which were unsuccessful
Intel’s technology strategy has changed from a focus on DRAM, to a focus on microprocessors, and then on to heavily specialising in the field of microprocessors to achieve overwhelming productivity that has enabled Intel to sell their logic products at competitive prices to companies producing things other than PCs
Aggressive marketing strategy in 1980 (Project “CRUSH”) coincides with IBM’s entry into the PC market, this repeats with Project “CHECKMATE” to secure more IBM contracts Intels primary buyer shifts to Compaq in 1986 because IBM would not commit to 80386, Intel can effectively play the big buyers (see functional map of buyers revenue) against each other, Intel’s higher revenue (see functional map) suggests more power lies with Intel
“Intel Inside” marketing strategy to engage with the end user in 1990 lead to big gains in revenue 1990-1995 (see functional map of Intel revenue) Developed pricing strategy to increase premium on new chip designs to reduce demand when production was being ramped up, this extra profit also helped to cover start-up costs (see functional map, price of different processors) Marketing strategy moved away from PCs in late 1990s, early 2000s as the prices of semiconductor products came down Diversified buyers as Intel produces chips for different types of products, e.g. phones, TVs, communications equipment
Intel’s product/market strategy has changed from having buyers only in the PC industry to having buyers in many different industries that rely on semiconductor products. Its current efforts are to increase its market share in these non-PC areas.
Development goals from 1968 to early 2000s remained constant, be the first to market with the best product This goal was not achievable in DRAM, but was achievable in microprocessors Practically, the development of the company had shifted towards the ‘logic’ side of the business before the official stance changed, so Intel was well positioned to take advantage of conditions within the industry (using clever marketing and buyer manipulation) to emerge as the star player As the PC market for semiconductors matured, other industries opened up that required logic, in the early 2000s Intel was trying to develop into a supplier for many different industries, and in some cases selling directly to consumers Intel’s goals have changed from dominating the PC semiconductor industry to diversifying their products and buyers to participate in more markets.
Bibliography and References