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Accenture's advice to chip makers: customer focus

Posted: 24 Nov 2010 ?? ?Print Version ?Bookmark and Share

Keywords:semiconductor industry? market analysis? end-user?

The semiconductor industry is experiencing a major shift: Success is no longer about the chips, it's now about the end customers. Now, more than ever, semiconductor companies need to learn to listen to and focus on the customers to achieve high performance.

The year 2010 was profitable for the industry, but it was also turbulent. Companies across the retail, communications and consumer technology industries built more new products with embedded technology and greater programmability, and the software-defined nature of devices has changed the usefulness and product life-cycle expectations for semiconductor components.

This change calls for greater understanding of shifting customer needs by semiconductor designers and manufacturers. 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. The first area 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. The second area is comprehending end market value chains. This means chipmakers must be able to determine 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;

? engineering;

? 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.

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