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Latecomer Strategies:Semiconductor Industry
in Japan and Korea
Arbiyanti Febthavia Azhar (z50!"#$
%anyu &ang (z50'))"$
Ju*ita &idyastuty (z5050')$
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+resentation Agenda
• ,ar-y mover vs Latecomers
• +ositiona- Advantages o. Latecomer Firms
• S/i--s and esources• 1haebo-s vs Keiretsu
• Frame*or/: Absorptive 1apacity
•
Frame*or/: 2echno-ogy 2ra3ectory• 1omparisons o. Latecomer Firms
• 1onc-usion
• 1-ass 4iscussions
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,ar-y overs versus Late 1omers
• A 6rm may have ear-y mover advantagesor -atecomer disadvantages7
• Latecomers have room to overcome theear-y mover advantages or -atecomerdisadvantages7 Furthermore8 being -ate
a9ords certain advantages7
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,ar-y over Advantages
S*itching1osts
•1onsumer-oya-ty
• 2ransactioncosts
• Forma-contracts
+reemption• Input .actors•+roductioncapacity•ar/etsideopportunities
Learning by4oing• 2echno-ogica--eadership• Learning curvee9ect•;vercomingmar/etcomp-e
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Latecomer Advantages
)7 1hanges inconsumertastes
=7 1hanges intechno-ogies
7 Freeridere9ects• 1onsumer
education• In.ormation
spi--over• S/ipping tria-s and
errors
ar/et
Incumbentinertia• Loc/in o.
assets>resources• ;rganizationa-
inertia
1ompetition
,nhanced -eve-o. in.ormation• esource.u-ness• Shared e
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Positional Advantages of
Latecomer Firms
,nvironmenta-
S/i--s?
esources
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S/i--s and esources
Japan
• Se@uentia- competencybui-dingand top management
-eadership7 – Securing ta/e o9 in the ne*
industry
– astering manu.acturing s/i--s
– ui-ding techno-ogica- -eadership
• 2echno-ogica--y -eap.rog
invest in ne* processtechno-ogies
• 4omestic riva-ry andgovernment support
Korea
• ep-icating the Japanese
strategy – egan *ith a particu-ar
product segment and 4A
– Invested in the sateo.theart manu.acturing .aci-itiesand process techno-ogies
• ,ntrepreneuria- -eadership• 4omestic riva-ry and
government support
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1haebo-s Bs Keiretsu
Chaebols
• Fami-y embers
• 1entra-ized• Fami-y members in top
management
• e-ationship *ith
government ishierarchica-
• Financia- supportcame .rom
government
Keiretsu
•
Less Fami-y embers• 4ecentra-ized
• ore pro.essiona-managers
•e-ationship *ithgovernment is e@ua-
• an/ as a center o.Keiretsu
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Frame*or/: Absorptive 1apacity
2echno-ogica-capabi-ity high
and rising rapid-y
2echno-ogica-capabi-ity high
but .a--ing
2echno-ogica-capabi-ity -o*
but rising
2echno-ogica-capabi-ity -o*
and .a--ing rapid-y
%IC%
%IC%
L;&
L;&
,
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&here *as KoreaD
Technological capability lowbut rising
2he Intensity o. ,9ort
,
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&hat about JapanD
Technological capability high and
rising rapidly7o Strong ?4 and education its capacity
to use imported techno-ogy ecient-y7
o Increasing on imported techno-ogy anddomestic ?47
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Frame*or/: 2echno-ogy 2ra3ectory
Advanced Countries:
• F-uid: radica- product innovation8 ne* techno-ogies8
changeab-e product and mar/et• 2ransition: product design8 mass production8 competition
• Speci6c: innovation8 ne* entrants8 incrementa- innovation8-o*er cost
eveloping countries:
• Ac@uisition: ac@uire techno-ogies .rom advanced countries8production process
• Assimi-ation: di9use *ithin the country8 competition
• Improvement: mature techno-ogies
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J K
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Japan Korea
Ac@uisition • )"50s: -icense o. Americanpatents
• Shi.t .rom thermionic va-vesto transistors
• +roduced radios
• )"#5: initia- investment byKomy E7S7 assemb-y p-ant
• mid)"!0s: .oreigninvestment (2oshiba$
assemb-y -ine
Assimi-ation
• )"#: SharpGs ne* producttransistor e-ectronicca-cu-ator
•
)"#')"'): H,1 increased50 in corporate capita-• )"'=: 2oshiba -aunched
4A bui-ding manu.acturingcompetence
• 2oshibaGs success in 4Ahave inspired Koreancompanies
•
)"'0: estab-ished theirpresence on massive sca-e• )"'5: SamsungGs
aggressive investment inmanu.acturing .aci-ities andre-ated process techs
Improvement
• )"!0s: H,1 increased ?4e
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2he 4eTransistor export (no. of devices$
Semiconductor sales
Source: A !istory of the "orld #emiconductor $ndustry %http:&&www'wtec'org&loyola&(ei&welcome'htm
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1omparisons o. Latecomer Firms
#imilarities i)erences
Ac@uired techs .rom E7S7 Japan: -icense .rom E7S7
Korea: A--iance *ith E7S7
Find the most suitab-e productsand directions in the ear-y stage(Japan: transistors Korea: 4A$
Korea: on-y .ocusing on 4A
Investment in mass productionand re-ated techs
Japan entered the industryear-ier than Korea Korea gote
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Insight.u- Lessons .rom Japanese and Korean1ompanies
o ;dd timing Japanese companies adoption o. ne*process techno-ogies and Korean companiesaggressive investment
o 2ime compression by mobi-izing the directe
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4iscussion uestions
)7 1ompared to Japan8 Korea *as a-so/no*n as the -ate entrant inSemiconductor industry7 %o*ever8 in=0) Korea became the second -argest
semiconductor supp-ier in the *or-da.ter outpacing JapanGs mar/et share.or the 6rst time7 &hat do you thin/ isthe /ey .actor o. the success.u- o.KoreaD
=7 &hy did JapanGs semiconductorindustry .a--D