Q and A Archives

Peruse a rich archive of questions and answers that ran from 1999 to 2017
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December In the semiconductor industry what is the biggest reason for a supplier to establish a local presence in a particular region of the world?
A: Companies go into international markets because their customers want them to be there. For example Intel, which has operations in Ireland and Israel, wants standardized equipment throughout all their plants. If customers are moving technologies, tool sets and processes to other locations, they require vendor support in all locations.
November The semiconductor equipment industry has in the past had a CAGR (compound annual growth rate) in the 15%-25% range. What will the CAGR be over the period of 1998-2008, which we are half-way through?
A: Even with a lower than "normal" growth projection of about 8% overall CAGR for 1998-2008, there will be many opportunities. The key to profitability for the semiconductor device and equipment industry is to recognize the slowing overall growth rate trend and plan accordingly.
October It is not uncommon to find organizations in the SEM industry to be "Order-Driven" Enterprises. What do we mean by this?
A: When the company’s product development is driven by orders, or potential orders, that company is an order driven enterprise. Features that are customer specific are developed to capture a specific customer order, and then often misinterpreted as a total market need. Those special (customer) features or material characteristics often do not add total market value, but increase complexity, cost, change control requirements, reliability, and manufacturability.
September What is a "Pitchpak?"
A: A Pitchpak is normally created by product marketing for field sales, but sometimes field sales needs to put it together themselves. It contains all of the selling information they might possibly need when face-to-face with a prospect or client. It is normally put into some kind of binder and contains: product specs, application notes, data sheets, testimonials and references, corporate background information, features-advantages-benefits (in reverse order), value propositions applicable to specific clients, and any other material that would help with persuasion.
August When quoting delivery terms to a customer, what do ARO and AAO mean?
A: ARO means after receipt of order. AAO means after acceptance of order. The latter is a much better way for the vendor to set up delivery terms because, in today’s markets, some customers will send you an order with unacceptable details and lock you into a delivery time based upon when you got their order. It may take you another 30-60 days to negotiate acceptable details and you may have no way to meet the quoted delivery date.
July Knowing the demographics of your market is important. What percent of market share did the top 50 integrated device companies (non-foundry) capture in 2000-2003 period?
June In the semiconductor equipment and materials industry is the sales function become bigger or smaller?
A: The answer is both bigger and smaller. The quantity of pure sales people or account managers is decreasing as the customer (device manufacturers) continue some degree of consolidation and foundries produce an ever increasing share of devices being shipped into the markets. These large customers often demand a single contact with a Global/Strategic/Key Account Manager from each vendor.

On the other hand the sales team is increasing in size. We are in the era of the "team sale" and various disciplines become active parts of the sales team, indirectly reporting to the Global/Strategic/Key Account Manager and focusing upon strategic issues key to an account.

May In the semiconductor industry IDMs (Integrated Device Manufacturers) tend to change strategic direction periodically. Which IDM currently has the following stated strategy—“To be the preeminent building block supplier to the worldwide internet economy”?
A: The IDM is INTEL. This strategy involves three key objectives: Extend silicon leadership; deliver architectural innovation; and pursue worldwide opportunities.
April Inside today’s IDMs (Integrated Device Manufacturers) vendors typically encounter committees. There are two types of committees that are prevalent. Name them.
A: One type is the formalized standing committee like Intel’s PED (Process Equipment Development) committee or IBM’s SEC (Strategic Equipment Council).

The second type is a floating or ad hoc committee that is convened, as required, to make equipment and materials evaluations, recommendations and decisions. The former is more difficult to deal with because internal power relationships tend to be set . . . that is, unless you are already "inside" and an accepted vendor, in which case it works to your benefit.

March PRC (mainland China) has made a major commitment to become a dominant semiconductor manufacturer. Which Chinese company is the country’s first foundry and currently constructing a state-of-the-art fab, scheduled to open in late 2004?
A: Semiconductor Manufacturing International Corporation (SMIC)
February If you sell to IDMs (integrated Device Manufacturers) and want to identify the largest likely consumers of your products, tracking which of the following would be most beneficial: chip sales in dollars or chip sales in units?
A: First it is important to realize there are many other things to look at in identifying target key accounts. However, in the chip department, units are a much more meaningful data point than dollars. The revenue per unit can fluctuate wildly depending upon market conditions, yet if units are being produced they still require the necessary materials and equipment.

Furthermore, some companies can command large margins on their unique chips compared to companies that produce commodities. Intel, for example has the largest chip revenues, by a multiple, over the number two company. Yet by number of units shipped NEC, Toshiba, Hitachi, Mitsubishi, etc. are much bigger. Intel may be way down the list in terms of consumption or use of your products.