Tradeoffs between economies of scale and specialization in efficiency for the global semiconductor industry

This paper combines the semiparametric modified ordinary least-squares approach by Simar et al. (2017) with the nonparametric shape constraint regression approach by Du et al. (2013) to evaluate the performance in the semiconductor industry. Using panel data on 470 companies in the global semiconduc...

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Bibliographic Details
Published in:Applied economics 2022-05, Vol.54 (23), p.2678-2693
Main Authors: Qiao, Guangshun, Zhao, Shirong
Format: Article
Language:English
Subjects:
Business
business model
Business models
Economic analysis
Economic theory
Economies of scale
Foundries
Panel data
Performance evaluation
Semiconductor industry
semiparametric modified ordinary least squares
Specialization
technical efficiency
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Summary:This paper combines the semiparametric modified ordinary least-squares approach by Simar et al. (2017) with the nonparametric shape constraint regression approach by Du et al. (2013) to evaluate the performance in the semiconductor industry. Using panel data on 470 companies in the global semiconductor industry over 1999-2018, we compare technical eficiencies between the integrated device manufacturer business model and the fabless-foundry business model. The performance differences between the vertically integrated device manufacturers and the vertically specialized fabless and foundry firms are disentangled by the intensity of labour and capital in a very flexible form. The estimation results indicate that the capital-intensive integrated device manufacturers taking advantage of the economies of scale are operating more efficiently than the niche fabless companies in the global semiconductor industry.
ISSN:0003-6846
1466-4283
DOI:10.1080/00036846.2021.1994126