A strategic management paper for Amkor Technology Philippines

• Main Author: Mallari, Odette M.
• Format: text
• Language: English
• Published: Animo Repository 2002
• Subjects: Semiconductor industry > Philippines; Business Administration, Management, and Operations
• Online Access: https://animorepository.dlsu.edu.ph/etd_masteral/2879
• Institution: De La Salle University

The main purpose of this study is the formulation of strategy for Amkor Technology Philippines (ATP). Focus of the study will cover mostly operation strategies due to limitations on data available. ATP is a wholly-owned subsidiary of Amkor Technology Inc. based in the US. It is the largest subcontract semiconductor manufacturing and has been in existence since 1989. The paper will start by examining the current condition of the industry and the company itself. Trends and economic conditions will also be presented. Presentation of current strategies will then follow. These strategies will then be assessed based on the general framework to verify its firmness to the company. Recommendations and projections will then be presented based on the findings, putting more emphasis on how to achieve its objectives based on the company's strengths and weaknesses. ATP belongs to the contract semiconductor manufacturing industry which provides assembly and test services to semiconductor manufacturing companies. Semiconductors have several uses and applications. These products are being used in almost all electronic product like computers and other office equipment, telecommunications, consumer electronics and even in automobiles. The demand for semiconductors are driven by the global demand for electronic devices. Current issues facing the industry are its high dependence om imported raw materials and on equipment. Large investments were also required to be able to enter and or stay in the industry. This is due to costs of equipment in manufacturing such products. There is also the presence of declining unit prices for semiconductor products (due to the excess inventory which resulted from last year's performance) which would affect the industry since only the companies who produce great volumes will be able to sustain in this kind of situation. Any company who cannot offer better prices will be left out and will eventually be out of business. The slowdown in the US economy has really affected the entire industry since large percent of semiconductor market is in the US. Philippine political and economic situation also affected the Philippine semiconductor industry since most investors now hesitates to put their money in our country due to lack of security. Weakening peso, lower GDP are also some of the threats that the company must overcome. One opportunity that company must take is the fast-turn of technology that is evident in the industry. With this development, more semiconductor companies will seek the services of the subcontractors like ATP in order to have faster access to new technology, enjoy low cost of back-end operations, for them to focus on improving their core competencies. Issues faced by the company on the other and include the presence of other competitors and other new entrants who offer better prices. The company should also take note that it is not only the companies who offer the same services who are their competitors but also their customers. And to only stay in the business and to continue services provided for its customers, the company must find ways to enable them to offer lower prices. The current slowdown of the economy should be treated positively by ATP. Training and education of employees and improvement of its processes should be undertaken now that the demand is low. Among the company's objectives are (1) to maintain its leadership as the no. 1 subcontractor of semiconductor (2) to be ranked no. 1 by at least 12 of its top customers and (3) to achieve at least 30% net income from year 2002. To be able to achieve these ]objectives and address the issues faced both by the whole industry and the company, the company must implement the following strategies: (1) focus design and development efforts on new technologies to further advance the value of packaging to its customers and maintain product technology leadership (2) implement various programs across all functions to promote cost effectiveness on overall operations not sacrificing the ultimate goal of providing quality products/services to its customers and (3) constantly monitor the 6 total customer satisfaction (TCS) indices. The author also recommends the following strategies to be implemented to further enhance its operations: (1) implement productivity improvements actively on administrative and support areas of the organization (2) create supplier matrix for specific equipment and raw material purchases to eliminate vendor sourcing, evaluation of bids, contractor selection and other purchasing activities (3) always allocate enough budget for research and development activities, budget for this should not be fixed as a percentage of net revenues or profit, rather budget should be assessed based on the benefits it will bring to the company (4) create partnership with its customers, know what they really want you to produce (5) continue enhancing employee capabilities through education and (6) establish a communication system that is always available for the employees across all functions.