Learning outcomes This case can be used to highlight aspects of classic strategic management, such as industry analysis, as well as new business entry in specific stage in value chain in the context of the semiconductor industry. After working through the case and assignment questions, the students will be able to: Case overview/synopsis The global strategic importance of semiconductors because of its varied applications in computing, automobile, space and defense has led to geopolitical race to control and secure the semiconductor vale chain. Case focus is on Tata Electronics Private Limited’s (TEPL) entry into semiconductor industry. TEPL is building India’s first semiconductor fabrication facility in Dholera, Gujarat, partnering with Powerchip Semiconductor Manufacturing Corp, Taiwan for manufacturing 28–110 nm chip at an investment of 11bn (Rs 946bn). The choice of technology of 28 nm and larger chip is an important tradeoff for TEPL. Is it a case of old technology and too late market entry? Should TEPL rather focus on less than 4 nm chip used in Artificial Intelligence (AI) (data center) and defense application? Should TEPL focus on outsourced semiconductor assembly and test opportunity? Should they focus on assembly of Apple iPhone and other companies? Should they set up more greenfield assembly plant or buy out more players like they already bought Wistron and Pegatron contract assembly plant in India for faster entry? In the short term how can they quickly start manufacturing semiconductors at Dholera, Gujarat? Semiconductor user industries such as consumer electronics, automobile and defense are part of Tata group which can provide initial inhouse demand. Can TEPL focus on niche application such as automotive semiconductors because of synergy with inhouse demand and expertise from Tata Motors and Jaguar Land Rover (JLR)? How could Randhir Thakur devise a strategy for TEPL? Was the decision made by Thakur on the stage of value chain in which they should invest, the technology (28–110 nm chip) and strategic alliance partner choice appropriate? Was Thakur’s decision for simultaneously focus on multiple businesses in semiconductor and electronics value chain justified? In the long run should TEPL invest more in own research and development (R&D) and chip design and go the fabless semiconductor industry business model or become integrated device manufacturer or remain contract semiconductor fab manufacturer and electronic manufacturing service assembling Apple iPhones? Each option had different capex and technology requirement leading to different levels of profitability and market capitalization. The case focus is on future strategy of TEPL and the dilemma’s faced by Randhir Thakur. Complexity academic level The case study is suitable for Master of Business Administration (MBA) /or Masters level students. Supplementary material Teaching notes are available for educators only. Subject code CSS 11: Strategy.
Ghosal et al. (Wed,) studied this question.