To achieve high performance, semiconductor companies must lend a more attentive ear and more sharply focus their attention on customers.
The year 2010 has been both profitable and turbulent for the semiconductor industry. As companies across the retail, communications and consumer technology industries build new products with embedded technology and greater programmability, the software-defined nature of devices is changing the usefulness and product life-cycle expectations for semiconductor components. This change requires much deeper understanding by semiconductor designers and manufacturers of shifting customer needs. As such, the end user – the customer – has more power than ever before. To achieve high performance, semiconductor companies must lend a more attentive ear and more sharply focus their attention on their newly empowered bosses. Designing chips, and all the engineering that goes into that, is not nearly enough to achieve high performance in this industry.
In this intensified focus on customers, chip firms need to gather insights into the end market to understand the specific economics, cyclical nature of demand, and its unique nuances. Two areas are critical. First, is understanding end market usage models via channel and data analytics. This means grasping how usage and movement of technology, such as smart phones and e-tablets as a convergence of key forms and functions, are progressing within a specific market. Second, is comprehending end market value chains, meaning what additional insights and expertise are required to succeed in developed and emerging markets that result in added-value to direct and indirect customers. The goal is for chip firms to become value-add design and supply partners versus volume component chip manufacturers.
Beyond becoming value add partners, semiconductor companies must move from being engineering-centric to product-centric. What does this mean? Whereas engineering-focused companies concentrate on a roadmap for technology and specific step-by-step improvement in technical performance, product-focused companies concern themselves more with creating platforms to match uses and interests of their ethnographically diverse customers. Leading firms incorporate this process within their strategic long range product roadmaps with a 3-5 year view.
The transformation from an engineering-centric model to an end-market model calls for a new set of skills. There are five key areas where significant change is required to create the necessary integration and responsiveness in the value chain:
• market and customer segmentation;
• product lifecycle and release management;
• supply chain and supplier management; and,
• sales operations and deal management.
Market and Customer Segmentation
Semiconductor firms must develop a more pragmatic assessment of the market dynamics in which they operate and target for growth. This requires thoughtful segmentation of markets, customers and forecasted demand. The inaccuracy of demand forecasts causes havoc on the sales and operations planning of costly capacity. It requires understanding differences in geographic segments and end-product usage behaviors, and tracking micro-trends in various technologies with advanced market trend intelligence from the channel and emerging markets. Traditional insights must be augmented with knowledge of buyer attitudes, perceptions, needs and values by customer and geographic segment.