A conceptual methodology of “industrial engineering” for “the industry as a whole”: Semiconductor industry as illustration

The discipline of industrial engineering has been declining in many countries in light of the changes of industry structures in developed countries, in which the competition is no longer among individual companies while the collaboration among horizontally specialized value providers are critical for the success of the individual companies as well as the whole supply chain. There should be a systematic methodology of “industrial engineering” that focuses on “industry as a whole” as the subject of study to differentiate our discipline from others such as electrical engineering or chemical engineering. Focusing on semiconductor industry as the specific subject, this study aims to propose a conceptual methodology of industrial engineering to investigate semiconductor industry. In particular, semiconductor industry is one of the most complicated and capital-intensive industries. Driven by Moore's Law, semiconductor industry has a clock speed faster than other industries and thus can provide an important benchmark for other industries. In the presentation, we propose a framework to explain the evolution of the semiconductor industry from the point of view of modularity and integration driven by technical and economical considerations to simplify complex production problems. Several case studies of the companies in different positions of the semiconductor value chain are illustrated to discuss some of the challenges and ongoing changes. TSMC established a pure wafer foundry business model in 1987 that assumes all the costs of capital expenditure and expenses in wafer fabrication never competes with its clients of fabless design houses and IDMs. The pure foundry can easily scale up or down its production capacity according to an individual customer's needs, while maximizing fab utilization with a portfolio of various customers. Such a business model freed fabless and IDM designers from the burden of capital investment for advanced technology capacity. Thus, IC designers can concentrate on chip design for various applications including PC and consumer electronics. Meanwhile, the semiconductor industry is moving to more narrow specialization such as Ardentec that focuses on the middle layer of wafer sort between front-end of IC design and wafer fabrication and backend of IC packaging and final testing. Nevertheless, Global Unichip Corporation that positions itself as a design foundry focusing on SoC (System on a Chip) is trying to virtually integrate the supply chain to deal with technical challenges driven by Moore's Law and technological inseparability involved in SoC and SiP (System in Package). This talk will conclude with discussions of the implications of semiconductor industry evolution to computers and industrial engineering research.