The strategic response of Taiwanese analog IC design houses to the challenges of IDM- A case study of Richtek Technology Corporation

A complete semiconductor supply chain has been established in Taiwan from the upstream such as circuit design and wafer fabrication to the downstream such as packaging and function test since the first fab was set up in 1980. The investment of integrated circuit manufacturing was saved tremendously when the business model, foundry, was proposed. Therefore, a lot of fabless design houses were set up in Taiwan, and the annual production value of IC design in Taiwan is in the second place over the world. Most Taiwanese analog IC design companies start small and target niche markets and acquires the market by replacing the foreign companies at the low price. When the market leader utilizes its advantages like production capacities, capitals, and product portfolios, to adopt the aggressive expansion, it is an important task how to use past advantages to acquire additional resources to transform company for new competition to a Taiwanese fabless design house. This research proposes mergers and acquisitions as a strategic move, and attempts to identify the factors of making decision. Texas Instrument and Richtek are raised as examples to discuss the relationship of the competition in analog IC industry, and five Taiwanese analog design houses are raised as M&A targets. The growth, revenue-enhancing synergy, cost reduction synergy, product portfolio, market positioning, and merging cost are discussed in this research