RESEARCH NOTECyclical industrial dynamics: The case of the global semiconductor industry
Section snippets
Business cycles, industrial life cycles and industry cycles
Previous studies relating firms' behavior such as innovative or marketing initiatives to their cyclical economic environment have primarily focused on business cycles in the aggregate economy [21], [47]. Business cycles in this sense are defined as “a type of fluctuation found in the aggregate economic activity of nations […] a cycle consists of expansions occurring at about the same time in many economic activities, followed by similarly general recessions, contractions, and revivals which
The global semiconductor industry and its industry cycle
Since its infancy the global semiconductor industry has featured continuous growth accompanied by pronounced cyclical swings.3 A number of significant factors are likely to contribute to the
The implications of the cyclical industrial dynamics to market structure and firm strategy
The industry cycle identified, when checked against the evolution of market structure and strategic behaviors of firms, brings out many interesting phenomena. In this section, we present three ‘stylized facts’ concerning the change of market structure, the overall investment pattern of the whole industry, and the consequences of capital investment of individual firms in different timings in the context of the industry cycle.
Discussion
These three stylized facts derived from the global semiconductor industry demonstrate that the cyclical industrial dynamics, especially the industry cycle downturns, play an important role in firm rivalry and industrial growth. The first stylized fact suggests that during the industry cycle downturns the industry was restructured with resources being re-allocated to stronger players. The second stylized fact confirms that firms in an industry as a whole follow the immediate market conditions
Concluding remarks
Players and observers in all industries bemoan downturns, and see them purely as times of distress, when firms are forced into closure, when workers are laid off, when revenues, profits, prices and investment fall — it's all bad news. Yet in reality capitalism would fail as a system without downturns. They are the necessary episodes for recovery, for ‘rebooting’, for renewal, for an opportunity for a change in industry leadership, when new firms can enter the industry and when old and tired
John Mathews is a Professor of Management at Macquarie Graduate School of Management, Macquarie University, Sydney and holds the Chair of Strategic Management at the School. He has published more than sixty papers in leading scholarly journals including Research Policy; California Management Review; Academy of Management Executive; Organizational Dynamics; Cambridge Journal of Economics; Journal of World Business; Human Systems Management; Journal of Evolutionary Economics; International
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Innovation efficiency of semiconductor industry in China: A new framework based on generalized three-stage DEA analysis
2019, Socio-Economic Planning SciencesCitation Excerpt :However, the Matthew effect is obvious in the semiconductor industry – large enterprises with a strong competitive edge become larger. Given the relatively lower cost of upgrading a technology compared to “re-tooling” with a new supplier, a large proportion of new product sales come from existing customers (Tan and Mathews [6], Tsai et al. [69]). As a result, new product sales in the semiconductor industry are influenced by both new product innovations and the value inherited from old technologies, especially for large companies.
Cyclical Industrial Dynamics
2015, International Encyclopedia of the Social & Behavioral Sciences: Second EditionSemiconductor industry cycles: Explanatory factors and forecasting
2014, Economic ModellingCitation Excerpt :As a consequence, production capacity is contracyclical, which can explain overcapacity problems. It is interesting to observe that firms which make counter-cyclical capital investment during the industry downturn reap rewards in the subsequent cycle period (Tan and Mathews, 2010a). Despite this argument decision-makers in such an uncertain market depending on innovation have difficulty convincing investors during the downturn.
Managing TFT-LCDs under uncertainty: When crystal cycles meet business cycles
2011, Technological Forecasting and Social ChangeCitation Excerpt :Mathews [6] applied a five-force framework to the analysis of the cyclical TFT-LCD industry. Using the semiconductor as a case study, Tan and Mathews [18] demonstrated that the dynamics of cyclical industries play an important role in the rivalry between firms and in industrial growth, particularly during downturns. By building on these empirical studies, we study the links between business and crystal cycles in an attempt to anticipate changes in the cyclical dynamics of the market for TFT-LCDs.
John Mathews is a Professor of Management at Macquarie Graduate School of Management, Macquarie University, Sydney and holds the Chair of Strategic Management at the School. He has published more than sixty papers in leading scholarly journals including Research Policy; California Management Review; Academy of Management Executive; Organizational Dynamics; Cambridge Journal of Economics; Journal of World Business; Human Systems Management; Journal of Evolutionary Economics; International Journal of Technology Management; Asia Pacific Journal of Management; and Industrial and Corporate Change.
Hao Tan is currently working at Macquarie University, Sydney as a Research Associate. He holds a Doctor of Business Administration from Macquarie Graduate School of Management, Macquarie University (with a Vice-Chancellor's Commendation for Excellence in Postgraduate Research). He has published on the theme of cyclical industrial dynamics in Journal of Business Research. He is also an author of award-winning papers presented in international conferences such as the Danish Research Unit for Industrial Dynamics (DRUID) conference.