Overview Of The Global Semiconductor Industry

This study useschipless firms’ operating in the global semiconductor industryas the research setting.Chipless firmsare highly innovative firms at the heart of most technological breakthroughsin the semiconductor industry. Their technologies are used as inputs in a far range of industries frombasis industries such as steel and medical devices, photographic and communication equipment to more sophisticated computers and consumer electronics, and automobile and aerospace industry. They are considered as principal licensorsin the semiconductor industry and engaged extensively in cross and unilateral licensing. As specialised firms that depend mainly on licensing, the licensing choice that they use to exchange their technology is of paramount importance. It influences the amount of value that they capture from their innovation and has a profound implication on their very survival. Also, the characteristics of chipless firms vary significantly, from small players operating in a single market to large firms with broad markets scope and licensing experience. Hence, chipless firms operating in the semiconductor industry provide us with aninteresting setting to study the effect thatthe licensor size, market scope and licensing experience play on its licensing preference. In addition, fromchipless firms licensing activities we can capture the effect that thelicensor characteristics vis-à-vis the licensee have on the licensor licensing choice. In the last three decades, the semiconductor industry has seen a horrendously increase in the rate of technological developmentas downstream users of the industry technology have demanded more advanced chips. This hasled to shortening in the product lifecycle and meant that chiplessfirms have to innovate continuously in order to keep up with the increasingly high pace of innovation. The tremendous speed of technological change in the industry has enabled chipless firms to build their innovative capabilities but also enhanced the degree of competitive rivalry. Chipless firms license their technology to partners operating in a broad range of industry settingsbutare more likely to suffer from negative effect from partners entering their market place.Chipless firms innovative potential relative to that of licensees can militate the negative effect of increased competition in the market place. Large firms and firms with large market scopes and experiencecan easily assimilatechipless technology developing product/technology that can better meet customers need.By tracking and mapping out partners thatare capable of entering chipless firms’ market space,we candetermine the effect that the licensor characteristics relative to that the licenseehas on the licensor licensing preference. This identification provides us with a fine-grained representation of rival firms and allows us to establish a more effective test on the impact that the licensee ability to enter the licensor marketplaceplayson the choice of licensing model that the licensor uses to exchange its technology. 3.2 Sample and Data Totest our hypotheses wecollect licensing data onchipless firms operating in global semiconductor industryfrom 1985 to 2005. The rationale for using time scale is because a large number of chipless firms operating in the semiconductor industry entered the industry in the late 1980’s. The sample period represents a new dawn in the evolution of the semiconductor industry that incorporates cycles of fierce competition as well as phases of disintegration (Grindley&Teece, 1987). It coincides with a paradigmatic shift in the industry whereby complementary metal-oxide semiconductor (CMOS) replaced bipolar technology as the dominant design.Before the introduction of CMOS technology, bipolar technology or PCB generated too much heat and consumed too much power as more chips were added to transistors (Jian et al, 2010; Linden &Somaya, 2000). The introduction of CMOS made it possible for a large number of chips to be inexpensively placed on a single transistor (Garnsey …show more content…
Ofthe 458 licensing agreements, 91% were unilateral licensing, while 9% of all the licensing agreements were cross-licensing agreements. About 53% of the licensing agreements were signed between chipless firms and other semiconductor industry participants (SIC 367_, IDM’s). Other industry participants with whom chipless firm entered into licensing agreements included: computer firms and all SIC 35 firms accounting for around10.3%,software and services firms 11.6 %, all others electronics/comm equips firms 9%, automobile/ Aerospace firms 1.1%, Photographic equip firms0.4% andfirms form all other industry sectors 12.4%. These figures indicate the networked nature of chipless firms licensing engagements and their extensive use of cross and unilateral