Dis-Integration Plots New Course for Semiconductor Suppliers

This IDC study analyzes trends in the semiconductor market by applying the theory of disruptive innovation introduced in Clayton Christensen's book The Innovator's Dilemma and extended in The Innovator's Solution. The theory of disruptive innovation reveals how simpler, cheaper, and "good enough" innovations with lower margins than mainstream products can find application in low-end market tiers and customer groups that are not yet able to compete in the market. These innovations inevitably improve, march upmarket, and "disrupt" incumbent technologies by gradually pushing them out of more complex and margin-rich product segments.

"IDMs are either dis-integrating or acquiring in an effort to compete. Some are consolidating to gain economies of scale, and others are shedding assets that are not key to their profitability to retain resources that enable better market execution." — Mario Morales, program vice president, Semiconductors, EMS, and LCD