Abstract
Among semiconductor industries, the logic LSI industry, of which products are used for cell phones and PCs, is geographically fragmented. This fragmentation is called fabless - foundry model. The foundries specialize in the manufacturing of the semiconductor and the fabless companies specialize in the design process of the semiconductor. While most foundries are located in Taiwan, fabless companies are still located in the U.S.
In this paper, evaluation of overall competitiveness considered by location-specific advantages and ownership-specific advantages is conducted using semiconductor industry data based on OLI eclectic theory.
This research has two steps.
1. To verify the effects of location factors such as tax, depreciation, infrastructure cost, and labor cost on the competitiveness of semiconductor companies in the U.S., Taiwan, South Korea and Japan, a simulation using semiconductor foundry model and fabless company model were conducted. In addition, sensitivity analysis is conducted how much these location factors affect profitability. As a result, the location specific advantages in Taiwan and South Korea exceeded far more than those in the U.S. and Japan. Sensitivity analysis revealed that corporate tax had the most influence on profitability among various location factors.
2. However, in spite of location disadvantage, many fabless companies in the U.S. remain in competitive position. This implies that the location specific advantages alone are not enough to explain the competitiveness of fabless companies. In case of fabless companies, not only location specific advantages but also owner-ship specific advantages should be considered to explain their competitiveness. The most representative element of owner-ship specific advantage is filing patent in the U.S. Comparative analysis was given using case data of leading fabless companies in the U.S. and Taiwan. As a result, integrated value of both elements clearly explained the reason why many fabless companies in the U.S. have kept their competitive advantage. Fabless companies in the U.S. had more competitiveness than fabless companies in the Taiwan because their strong ownership specific advantages overcame their weak location specific advantages.
