Strategic analysis of a semiconductor company’s migration into consumer markets

SemiconInc is a Canadian fabless semiconductor company, who has been successful developing innovative, high-margin semiconductor devices for the telecom industry. The company was affected by the slowdown in telecom spending that followed the crash of the technology sector in 2000/2001, but has since recovered and is pursuing new areas for growth. The rapidly growing consumer electronics industry is one potential market that SemiconInc should explore, as SemiconInc’s core competencies in semiconductor design and integration will help create sustainable competitive advantage. Despite these core compete ncies, entering the consumer electronics industry will be a challenge. SemiconInc’s current products, processes, cost structure, and culture are that of a differentiator. In order to compete in the high-volume, low-margin consumer electronics industry, the company will need to develop a lower cost strategy, develop new core competencies, and optimize development costs wherever possible. This paper analyzes several of these strategic issues, and recommends solutions to help address them.