Deep industrial dynamics shaping next-generation semiconductor manufacturing

This paper explores dynamics and sequences by which the semiconductor industry has been transformed during the past decade. It demonstrates that strategic and fab-focused cost-reduction initiatives of lead producers tell only part of the story. Equally important are the more spontaneous developments triggered by shifting cost structures throughout the industry. These developments include (a) the emergence of entirely new producer segments which have redefined the ecology of the industry and (b) the increased vertical disintegration of major producers. Viewing the industry as a complex adaptive system, rather than a collection of producers following a technology roadmap, this paper illustrates the many new and unorchestrated ways the industry now creates value and brings innovative products to market competitively. In so doing, it underscores the significance of the innovation potential embedded deep within the industry.