Inotera Memories
INOTERA MEMORIES: DRAM OR DREAM?
Abstract
This case is focused on how Inotera Memories can perform an effective analysis of capital expenditure and return on investment for long-term capital budgeting. Jack plays the main role in this case. He has been suffering due to his preparation to report to the Board of Directors. The DRAM business environment changes too fast and competition is very intense, so large amounts of capital are needed to enhance process technologies by seeking lower production costs and reaching the goal of economy of scale.
It was a time during the late summer of 2004, when the weather conditions in
Inotera Memories Linkou Plant were very pleasant.
Jack, an assistant vice president
in Inotera Memories, let out a big sigh, since his mind was preoccupied.
He was
thinking about the proposal to raise capital that he had to report on to the Board of
Directors next month.
As Inotera was founded as a joint venture by Qimonda AG
(Qimonda; formerly the memory products division of Infineon Technologies AG) and Nanya Technology Corporation, it was widely viewed as a powerful competitor and on the leading edge within the DRAM (Dynamic Random Access Memory) industry. Yet, the DRAM industry was facing tremendous pressure due to capital
expenditures.
In the wake of the well-known foundry model created by Taiwan
Semiconductor Manufacturing Company (TSMC) and United Microelectronics
Corporation (UMC), Inotera Memories had also developed a new DRAM foundry model. However, amid high-degrees of uncertainty and much competition, Jack
thought that it might be necessary to present a convincing alternative regarding this proposal, so that the Board of Directors would believe Inotera Memories did indeed hold some competitive advantages with its business model.
1
Company Profile
Inotera Memories was incorporated in 2002 as a joint venture between Nanya
T cnl y n t w r ’fut l gsm m r m k Qimonda AG. eho g
Abstract
This case is focused on how Inotera Memories can perform an effective analysis of capital expenditure and return on investment for long-term capital budgeting. Jack plays the main role in this case. He has been suffering due to his preparation to report to the Board of Directors. The DRAM business environment changes too fast and competition is very intense, so large amounts of capital are needed to enhance process technologies by seeking lower production costs and reaching the goal of economy of scale.
It was a time during the late summer of 2004, when the weather conditions in
Inotera Memories Linkou Plant were very pleasant.
Jack, an assistant vice president
in Inotera Memories, let out a big sigh, since his mind was preoccupied.
He was
thinking about the proposal to raise capital that he had to report on to the Board of
Directors next month.
As Inotera was founded as a joint venture by Qimonda AG
(Qimonda; formerly the memory products division of Infineon Technologies AG) and Nanya Technology Corporation, it was widely viewed as a powerful competitor and on the leading edge within the DRAM (Dynamic Random Access Memory) industry. Yet, the DRAM industry was facing tremendous pressure due to capital
expenditures.
In the wake of the well-known foundry model created by Taiwan
Semiconductor Manufacturing Company (TSMC) and United Microelectronics
Corporation (UMC), Inotera Memories had also developed a new DRAM foundry model. However, amid high-degrees of uncertainty and much competition, Jack
thought that it might be necessary to present a convincing alternative regarding this proposal, so that the Board of Directors would believe Inotera Memories did indeed hold some competitive advantages with its business model.
1
Company Profile
Inotera Memories was incorporated in 2002 as a joint venture between Nanya
T cnl y n t w r ’fut l gsm m r m k Qimonda AG. eho g