A Three-Tier Business Model for benefitting the Global Semiconductor Industry

By _Apekshit Mulay Blog

December 9, 2013

It is an open secret that, for a variety of reasons, the U.S. manufacturing base has sharply deteriorated over the past three decades, and the semiconductor industry is no exception. In fact, this industry may have suffered harder than some other American enterprises. The purpose of this paper is to explain the causes of this decline and offer some commonsense economic policies that may lead to the industry’s revival.

In the microelectronics area a semiconductor fabrication plant (also called a fab) is a factory where such devices as integrated circuits are manufactured. A business that operates a semiconductor fab for the purpose of fabricating the designs of other companies, such as fabless semiconductor companies, is known as a foundry. If a foundry does not produce its own designs, it is known as a pure-play foundry [9]. As of today, the semiconductor industry follows multi-national corporations’ (MNCs) business model based on globalization, as shown in figure 1 below. Following WWII the United States pursued globalization, believing that American firms would be able to capture foreign markets, but the opposite happened. Other nations imported technology from gullible American companies, and, with their low real wages, out-competed U.S. firms all over the world.  The rest is history. By now many American industries have disappeared, while most others have shrunk, resulting in a loss of jobs and stagnant wages.

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