Suppliers’ bottleneck strategy in complex product system development

The case of IP vendor and foundry in semiconductor industry

Abstract

In contrast to the existing core concept, this paper attempts to elucidate the process of bottleneck’s emergence and removes during a complex technological system evolution. Moreover, this paper also reveals suppliers’ bottleneck strategy how IP vendors and foundry collaboration could influence chip development among traide interfirm divison of labor in semiconductor industry. The data was collected from interview result and mainly composed of 10,000 IP from 42 IP vendors and 256 generation of semiconductor processes from the world largest foundry, TSMC. According to the data, the bottleneck of chip development could be strategically manipulated only by suppliers themselves, within IP vendors and TSMC. This relationship between component and contract manufacturing suppliers could be collaborative and also competitive in the same time. However, this flexible bottom up approach could be significant during a complex technological system evolution.