Integration in the semiconductor industry
The semiconductor industry began when a trio of Bell Labs / AT&T researchers first successfully demonstrated the capabilities of a transistor in 1947. Their findings were published the following year and they would eventually go on to win the Nobel Prize.
Between 1950 and 1980, semiconductor companies became more vertically integrated.
Companies like Texas Instruments, Fairchild, and Motorola designed, fabricated, and packaged their semiconductor chips for consumption largely by systems companies.
By 1970, the industry faced its first wave of deconsolidation, as new entrants like National Semiconductor, Intel, and AMD stole market share from dominant industry players by targeting new applications like minicomputers, microcomputers and eventually, PCs. They did this using new microprocessor technologies.
Strategic options for semiconductor companies
The rapid transformation of end markets has threatening to disrupt the lives of every semiconductor company. Semiconductor companies must now get creative to maintain their growth trajectory or risk becoming commoditized by their customers. They have three competitive plays to capture value as more businesses bring their hardware development in-house.
Major trends driving vertical integration
Four trends that have heightened the demand for system integration and have shifted the balance of power in favor of delivering targeted end-customer solutions: