External Document:

Creating value in the semiconductor industry

According to this recent McKinsey article, the semiconductor inustry contributes disproportionally to growth in US labour productivity, contributing more than 25% of US productivity growth from 1995-1999 - more than any other sector.  But the bad news is that most chip manufacturers only capture a small % of the value add they create, indeed only one or two players create real value.  There are many interesting conclusions in this article, but the importance of ROIC (or other similar measures such as RONA, ROE, ROA, etc) (page 11) seems key, as is the analysis of the market share (MS) (page 11), and the importance of having dominant MS. Follow this link to read more!

Keywords: semiconductor industry value chain, creating value, ROIC, segments, market shares