Organizational Learning and Capital Productivity in Semiconductor Manufacturing

Abstract

This paper presents an empirical study, which leads to a theoretical framework that links organizational learning and capital productivity. The approach described in this paper helps fab managers make fundamental strategic decisions concerning capital investment and point of entry by engaging in scenario planning. Three strategic options for semiconductor manufacturing are analyzed in detail-leading-edge manufacturer, fast follower, and slow follower. The study concludes that profitability and capital productivity can be in conflict with each other. Leading-edge manufacturers can make large profits, if they ramp up to volume production in a timely manner, but their return on investment and thus their capital productivity are relatively low. Generally, manufacturers that do not run state-of-the-art processes are less profitable than those that do, but their return on investment and thus their capital productivity is comparatively high. Fast followers, which import part of their manufacturing process and ramp to volume production rapidly but with a delay, neither break even nor recover their investment.