The semiconductor industry

The semiconductor industry is one of the largest and fastest growing industries in the world. From calculators to super computers, chips are an essential part of today’s technology. The leading semiconductor producer, Intel Corporation, holds a dominate market share in the industry and has the largest customer base. Intel never had problems with competition in the past. Intel offered the fastest, latest technology at a fair price. However, in more recent years, another company with a far less market share has managed to shake up the industry so to speak. Advanced Micro Devices Inc., or simply AMD, began to market itself to show the market that Intel was not alone.

With higher quality chips offered at low prices, AMD began to eat away at Intel’s dominance. In January of 1999, AMD actually outsold Intel Corporation. Intel took notice, and using its industry power the company lowered prices and pumped more money into research and development to offer high innovations. AMD lost in the end because of Intel’s dominance, but AMD managed to make a name for itself and continues to struggle to fight the domination of Intel in the semiconductor industry.

Intel and AMD, while competitors in the same industry, operate and function in completely different ways. The culture practiced at Intel is one of professionalism, integrity, and strict organization. AMD, on the other hand, offers a culture of working together in a decentralized environment. AMD is casual and laid back. Intel’s strategy is to constantly create new innovations, drive Moore’s Law, and lead the industry in high technology. AMD, however, puts innovation on the way side for quality. AMD uses its resources and available knowledge to enhance the current technology and offer high customer satisfaction.

Finally, employees at both Intel and AMD are offered numerous opportunities and perks. Intel concentrates on diversity, and offers minorities many benefits as well as career development. AMD has partnerships with many diversity groups, but also offers all employees numerous job perks and emphasizes having fun as a group. Intel and AMD are essentially very different organizations. If a recommendation would have to be made as to which company was the best, one would have to give two recommendations.

If the better company was defined as one which dominated the market, had high integrity, and was a less risky endeavor, then Intel would be the choice. However, if one wanted a company that valued employees and centered on people instead of technology, then the recommendation would be AMD. Intel and AMD are the same technology and the same industry, yet completely opposite organizations.

Introduction

Compared to each and every domestic industry, the semiconductor industry is unique. Every year, the chipmakers dramatically increase the performance of their products while decreasing prices, making high-end technology goods increasingly productive and affordable for consumers. The benefits to the U.S. economy of this manufacturing dynamic are dramatic. In the past five years, information technology, fueled by cheaper, faster chips, has not only reduced the U.S. inflation rate by .5% per year, but has doubled our domestic productivity growth rates.

Two of the top tier companies in the semiconductor industry are Intel Corporation and Advanced Micro Devices Incorporated (AMD). While Intel holds almost half of the industry’s market share, AMD has gained a substantial amount of market share within the past ten years. By analyzing the companies’ corporate culture, operating strategies, and employee relations, one can see how each company is unique of the other and how this uniqueness contributes to the companies’ failure or success.

Background Intel Corporation

Robert Noyce, Intel’s cofounder, once said, “Do not be encumbered by history. Go off and do something wonderful.” It was with this incentive that Intel Corporation was formed back in 1968. The main goal was to make semiconductor memory more practical. Intel’s first chip designs were moderately successful, but Intel did not gain success until the 1970’s. In 1971, Intel introduced the 4004 microcomputer which was faster than the 3000 square foot ENIAC supercomputer. The 4004 was only the size of a thumbnail and proved that intelligence could be programmed by software instead of the current method of burning it into hardware.

This procedure saved time and money, and helped to put Intel on the map. Intel changed history by making programmable intelligence (the microprocessor) so cheap it could be embedded into household appliances and so powerful that people could have their very own PCs. Intelligently, Intel decided to pursue this microprocessor production and shift most of its resources from memory products to computer chips, although they continue to make memory products today. For the past 25 years Intel has been a leader in the design and production of microprocessors its biggest customers are large computer conglomerates such as Dell.

Advanced Micro Devices Inc. (AMD) AMD was first established on May 1, 1969 and started as a company working out of one of the co-founders living rooms. AMD’s main goal was simple, they wanted to create a successful semiconductor company. By September AMD had raised enough money to open their first permanent home, at 901 Thompson Place in Sunnydale, CA. By the end of AMD’s fifth year, there was around fifteen hundred employees making over two hundred different products.

In their first five years AMD made nearly $26.5 million in annual sales. AMD’s sales steadily grew throughout the years until 1986 when the tides of change swept the industry and Japanese semiconductor companies began to dominate the market. AMD, along with the rest of the industry, began searching for new ways to compete within the market. AMD’s solution was to begin building its submicron capability with the Submicron Development Center. AMD’s new ability to compete within the market led to the development of microprocessors compatible with IBM computers.

AMD continued to grow drastically from 1995 to 1999, due mainly to their increasingly competitive products offered at such low prices. With the development of the AMD – K6 processor, AMD was able to become a serious competitor to Intel in the microprocessor market. In the late 90’s, AMD managed to erode Intel’s dominance of the market only to see Intel strike back with steep price cuts and faster introduction of new models.

AMD has experienced recent set backs due to design flaws and other manufacturing problems, including lack of production capacity. After a stellar year in 2000, the company announced job layoffs and plant closings in 2001. In 2003, AMD announced forming a new company, FASL, with long-time joint-venture partner Fujitsu to pool the two chip makers’ flash memory operations. This new venture stands to be the world’s number 2 maker of flash devices when it begins operations in the end of 2003.

Corporate Culture

Every organization has its own unique culture or value set. Most organizations don’t consciously try to create a certain culture. The culture of the company is typically created unconsciously, based on the values of the top management or the founders of the business. The definition of culture in this sense is “the moral, social, and behavioral norms of an organization based on the beliefs, attitudes, and priorities of its members.” A company’s culture can also determine the success or failure of its business. For example a rotten culture can produce rotten individuals within the organization and essentially the failure of the organization. Therefore it is important for organizations to promote a positive culture within their company to keep employees motivated and working towards the success of the company.