Semiconductor Manufacturing International Corporation (SMIC) executes a strategy that uses the desire of municipalities in China to build a cluster of high-tech companies. Through a partnership with the cities to create new semiconductor fabs that SMIC will then work on the contract, the company can construct a scale not necessarily before the actual high capital costs. Unlike build-operate-transfer model, that some municipalities have used to build infrastructure, like new subway in Shenzhen, the minimum wage "Reverse model BOT" municipality will build capital-fab and SMIC will operate it, dramatically reducing its capital costs. This model gave the company a unique level of flexibility in the industry, where capital costs have been a major factor in the cost of production.
To enhance their effectiveness, color cases should be printed in color. "Hide
by Willy Shih Source: Harvard Business School 20 pages. Publication Date: 06 January 2009. Prod. #: 609062-PDF-ENG
Related Case Solutions & Analyses:
Killing Craigslist: Entrepreneurship in the Online Apartment Rental Market
The Britney Spears Universe: Social Media and Viral Marketing at its Best
If You cant beat them let them join: The Development of Strategies to Foster Consumers Co-Creative practices
JCDecaux
Liston Mechanics Corp.
Intel’s Pentium: When the Chips are Down (A), Spanish Version
TA Energy (Turkey): A Bundle of International Partnerships
The Ascendance of AirAsia: Building a Successful Budget Airline in Asia
Travelers Bond Construction Services Redesign
Apple Inc.
