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Question 1
What was Intel’s strategy in DRAMs? What accounts for Intel’s dramatic decline in market share in the DRAM market from 1974 to 1984?

From the beginning, as the first player in the DRAM market, Intel’s strategy was to push the envelop of product design and to be the first to market with the newest devices. Technological leadership was clearly their strategy. Intel always tried to get new releases into the market before any of their competitors, as they know that DRAM’s price would fall as soon as their competition introduced a similar technology. The production process was very complex, expensive, and design intensive which required Intel to constantly look for improvements in their manufacturing process. An important portion of their profits was invested back into the plant and process. From 1979, new Japanese competitors started to enter the market and invested heavily in manufacturing. They invested 40% of their sales revenue in new plants and equipments. Moreover, the Japanese firms had an important technological advantage in photolithography. They also worked closely with equipment manufacturers, which allowed them to get better yields for semiconductors regarding the US firms (i.e 70% to 80 %, against 50% to 60%). By the early 1990s, Japanese firms had captured nearly half of the world market for DRAMs and consequently Intel lost significant market share in DRAM’s. Intel did not change their strategy in response to the Japanese firms, which led to the company’s eventual exit from the market.

Question 2
As an executive leading a DRAMs producer between 1974 and 1984, in what ways would you respond to the various changes occurring in the industry?

If leading the DRAM’s producer between 1974 and 1984, I would have changed the strategy as the Japanese firms entered the industry.

Indeed, the first strategy would have been to skip certain generation of semiconductors. For instance if the market is currently selling the 16-bit generation,...
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