IntraIndustry RivalryINTELLEIGENCE IN INTELINTELLEIGENCE IN INTELI for: Intel, Industry, and Information SystemsHemal R. PatelMarch 05, 2004Business Analysis Paper- 2 -ISM158Table of ContentsObjectiveSection I: The PC Components IndustryA. Industry ProfileB. Competitive Strategies Within the IndustryC. Porter Model Evaluation of Industry ForcesD. Globalization of the IndustryE. Importance of Information Technology in the Industry’Section II: Company Perspective: An Analysis of IntelA. Company ProfileB. Business LeadersC. Competitive StrategyD. Market and Financial PerformanceE. Significance of Information SystemsF. Strengths and Weakness of IntelSection III: Structured Analysis of Information SystemsA. Strategic Option GeneratorB. Roles, Roles, and RelationshipsC. Redefine and/or DefineD. Significance of TelecommunicationsE. Success Factor ProfileSection IV: Final Analysis of Intel- 3 -ObjectiveThe primary objective of this paper is to analyze the important business strategies and the use of information systems by Intel to gain a competitive edge in the PC components industry. The paper deals primarily with the PC component industry, by correctly defining its structure, the strategies, and trends within the industry. Secondly, it analyzes Intel and its competitive strategies, financial standings, strength and weakness, and their use of information technology. Third, it will look deeper into the Information Systemsas Intel. The final analysis looks Intel and their success with business strategies, in addition to the use of IT relative to success to date and whetherthese efforts have prepared them for future challenges.To say Intel is in the semiconductor industry is semi-accurate. To say that Intelis in the Microprocessor, Microcontrollers, and DSPs is defining the industry too narrow. Figure 1 below gives the break down of the semiconductor industry. Presently, it is not just about microprocessor, rather it is also a broadrange of products such as embedded and flash memory components, compilers, networking and communication products, motherboards and servers. For this paper however the main products that will be discussed are: microprocessors, chipsets, and flash memory. It is worth to note that all companies do not compete in all product categories. Because of the wide range of products and their categories, the semiconductor industry has to offer, it is ideally best suited to place Intel in the middle, namely, the PC component industry. Figure 1- 4 -SECTION 1: THE PC COMPENENT INDUSTRYA. Industry ProfileAccording to Wikpidiea.org, Semiconductors are materials with electrical conductivities that are intermediate between those of conductors and insulators. They are the fundamental materials in many modern electronic devices. As performance has increased and size and cost have decreased, semiconductors have expanded beyond their original primary applications to telecommunications systems, consumer goods, automotive products, and industrial automation and control systems. Semiconductors materials were first developed in laboratories as early as 1830. Roughly at the same time the semiconductor industry was being to form in Japan. Over the post-war period American-Japanese alliances reflected changes in technology, commercial competition, the position of the US and Japanese semiconductor industries. Some domestic companies were able to see and understand that Japan was onto significant advancements in semiconductors and electronics. Seeing a trend, US semiconductor firms realized their need to get in on Japanese growth. With joint ventures, marketing and sales, distribution, service, and standards coordination, US was about to get involved with Japanese semiconductor industry growth. However, the true impact of semiconductors was taking place in the US. Domestically, in 1959, with the use of semiconductors, scientist were about to perform only one function on all electronic components. New technology emerged and integrated circuits were soon developing with various components (i.e. Transistors, resistors, and capacitors) forced on the same chip. In that same year, Jean Hoerni and Robert Noyce, engineers at Fairchild Semiconductor, enabled these semiconductor chips to diffuse on various layer of a silicon wafer. By the end of 1960s, nearly 90% of all components manufactured were integrated circuits, and thus started the revolution of semiconductors and created a roadway for emerging technologies. The chart below shows the total shares of the world’s production of semiconductor from1974 to 2000. Since the invention of the transistors, continuous improvements in semiconductor process and design technologies have led to smaller, more complex, and more reliable devices at a lower cost per function. A company that has dominated the semiconductor industry is Intel Corporation.- 5 -The PC component industry is a day-to-day roller-coaster ride. It’s normal to see the industry go from boom to bust and visa versa at a fast rate. Year 2000 for the industry was great. It brought in more than $200 billion in sales worldwide 1 . Then came year 2001 when the industry saw the sharpest decline in the industry’s history. Moreover, global semiconductors and pc component products has tanked more than 30% to roughly $140 billion. Currently, the market capitalization of the PC component industry is a staggering 550 billion.2 Weak sales in electronics, such as PCs, cell phones, and networking products slowed down demand for pc components like processors, and flash memory, and communication equipments. Today, Intel is by far the largest chip company, which makes about as much money from its chips than the other competitors like AMD, Texas Instruments, IBM Microelectronics, National Semiconductor, and Fairchild Semiconductor (whichwas the existing company of National Semiconductor). Figure 2 gives a clear picture of where Intel is positioned in the industry against its competitors. Figure 2 (in billions)- 6 -Clearly, with a market capitalization of $196.09 billion, Intel dominates the PC component industry. The key competitor of Intel is AMD. Currently, AMD is distant second in both microprocessor and flash memory. The bitter rivalry between the two companies became more intense as AMD finally began to squeeze in Intel’s unassailable microprocessor market share. As a result, this leads Intel to slash prices and step up its manufacturing schedule. In addition, AMD is now giving Intel a run
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