Strategic bottlenecks in the semiconductor industry supply chain: a Kraljic matrix perspective

The semiconductor industry supply chain is complex, with globally distributed production processes and tightly interconnected segments. By controlling the production and supply of essential technologies and equipment, ‘bottleneck’ firms often dominate specific segments of the supply chain, making them critical to the manufacturing processes of advanced semiconductors. For instance, they dictate specific processes or product types, invest in innovative technologies, and protect their intellectual property to establish new markets with high entry barriers. Additionally, we find bottleneck firms who have support from their governments to maintain a competitive edge over rivals. Through social network analysis, we identify that there are eight bottleneck firms of high nodal centrality. We then present case study results of these firms on their local ego networks, how they have created strategic bottlenecks and detail government actions/interventions in preserving or challenging their bottlenecks. A Kraljic perspective is used to classify these eight firms into leverage, strategic, non-critical and bottleneck partners. Furthermore, we aim to make a theoretical contribution to the bodies of production research knowledge on supply – chain bottlenecks and structural power.