One reason Intel, Samsung and Texas Instruments are perennial leaders in the semiconductor industry is that they develop and produce products that have leading-edge technology. After all, faster and more powerful processors and speedier and denser DRAMs boost performance and improve functionality of electronics equipment, making it more appealing to end customers.
However, technology alone did not make those companies semiconductor industry behemoths. To grow business with existing large OEMs and EMS providers and to find new customers, those suppliers also need to meet the cost, quality, and delivery requirements of chip buyers.
Over the long haul, chip suppliers have to continuously improve their operational performance if they want to stay atop the semiconductor hill.
"Technology and a commitment to invest in our requirements is essential," says John Kern, vice president global supplier management for Cisco Systems in San Jose, Calif. "In addition, we require a commitment to meet our quality expectations and drive defects parts per million improvement, and we expect fair pricing up front and a commitment to drive productivity."
Semiconductor suppliers that meet those requirements and expectations are awarded new Cisco business. Suppliers, no matter how large, that don't meet Cisco's requirements will lose business.
"If large, multinational suppliers don't consistently deliver to our requirements, we won't have a long-term relationship," says Kern.
He adds that getting new business and "engaging with us on new products and technologies is the most significant motivator for our suppliers."
Source: Purchasing, http://www.purchasing.com