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Production Synthesizer
A call to arms
AzmatMalik   5/20/2014 11:21:35 AM

The age old mantra in the semiconductor industry has been 'we'll make it up in volume'. But when we are shipping a few bucks with each chip making it up in volume piles up high rather quickly. There has to be a bit of market power to pull off the suggested actions; if the price is too high in the early stages volume may never pick up to result in reduced costs, and improved margins. One approach that I have toyed with is to have OEMs place a certain amount in escrow, sort of an LoC, that is then an assurance to the seller that if the volumes are not met the higher net price is indeed met, a reverse rebate. Another idea is to have OEMs have a capital stake in the semiconductor plant, not very practical though.

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HaileyMcK   5/19/2014 8:44:06 PM

The idea of fear resonates for me. Businesses run by fear often make poor decisions. One saying "That which we fear we create."

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Supply Network Guru
too true
FLYINGSCOT   5/19/2014 11:01:19 AM
1 saves

Your article really hits home as it always feels like the big OEMs have us semicons over a barrel when it gets to negotiating pricing.  What also helps is not to go after "me too" parts so that the levergae of the cusotmer is less.

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