Samsung and DRAM Industry

Topics: Supply and demand, Flash memory, Microeconomics Pages: 83 (11487 words) Published: April 9, 2014
A Study of the DRAM industry
By

Joonkyu Kang
B.S., Sogang University, 2001
Submitted to the MIT Sloan School of Management
In Partial Fulfillment of the Requirements for the Degree of

Master of Science in Management Studies

ARCHNES
MASSACHUSCS INSTUE
OF TECHNOLOGY

At the

Massachusetts Institute of Technology
June2010

JUN 0 8 2010
LIBRARIES

@ 2010 Joonkyu Kang. All Rights Reserved.
The author hereby grants MIT permission to reproduce and to distribute publicly paper and electronic copies of this thesis document in whole or in part.

Signature of Author Signtur ofAutor.

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Joonkyu Kang
Master of Science in Management Studies
May 7, 2010
Certified by
UI
Michael A. Cusumano
SMR Distinguished Professor of Management
Thesis Supervisor
Accepted by

Faculty

Michael A. Cusumano
irector, M.S. in Management Studies Program
MIT Sloan School of Management

A Study of the DRAM industry
By

Joonkyu Kang
Submitted to the MIT Sloan School of Management on May 7, 2010 in Partial Fulfillment of the Requirements for the Degree of Master of Science in Management Studies
Abstract
Samsung Electronics as a DRAM provider has kept its leadership in the DRAM market with leading technology and production capacity since the 1990s even though there were unpredictable market fluctuations and dramatic changes in competition. Through the depressed market starting from 2006 to 2008, and the financial crisis, Samsung Electronics tightened its leading position in the DRAM market with changes in the dynamics of competition. But, from the industry wide view, the IT industry is getting complex since its system change from vertical integration to horizontal ecosystem. Also, the shrinkage of optical lithography, the main technical issue in semiconductor industry, is predicted to reach the uppermost limit. In this sense, Samsung Electronics as a DRAM provider should analyze and evaluate its current position in the DRAM market and the IT industry and needs to set a strategic goal and methods for sustaining its current position and also pursue more growth. I examine the current DRAM market dynamics, diagnose Samsung's current business status and strategy in the DRAM industry, and try to find a way to create value as a complementor in diverse IT industries. Furthermore, I will try to find opportunities where Samsung can sustainably capture value in the DRAM market. For this analysis, I use several frame works and concepts: Value creation and capture, Michael Porter's five forces analysis and Value Chain, Departure from a perfect competitive market, Ecosystem, and Complementor. Thesis Supervisor:

Title:

Michael A. Cusumano
SMR Distinguished Professor of Management

A Study of the DRAM industry
Table of Contents
Chapter 1 Introduction
Chapter 2 Overview of the DRAM Industry
2.1 History of DRAM Industry
2-1-1 US Era (1970s)
2-1-2 Japanese Era (Late 1970s ~ 1980s)
2-1-3 Korea and Asia pacific Era (Middle of 1990s ~ present) 2-2 The main Industry Features
2-2-1 Short Product Life Cycle
2-2-2 Technology Driven Industry
2-2-3 Equipment Industry
Chapter 3 Analysis of the DRAM Industry
3-1 Semiconductor Value Chain
3-2 DRAM Industry Analysis
3-2-1 Threat of Entry
3-2-2 Threat of Substitute Products
3-2-3 Bargaining Power of Suppliers
3-2-4 Bargaining Power of Buyers
3-2-5 Rivalry among existing firms
3-3 DRAM Market Challenges
3-3-1 Increase of cost in fabrication
3-3-2 Limitation of technology
3-3-3 Change in customer segment
3-4 Current DRAM Market Analysis
3-4-1 Recent key factors of market dynamics
3-4-2 Supply Analysis
3-4-3 Demand Analysis
3-5 Summary
Chapter 4 Framework from Microeconomics: Departure from perfect competition 4-1 Basic concepts of microeconomics
4-1-1 Demand
4-1-2 Supply
4-1-3 Market Equilibrium
4-1-4 Perfect Competition
4-2 Framework: Departure from perfect competition
4-3 Apply to framework to DRAM Industry
Chapter 5 Case Study with...

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