Abstract

This case is based on the situation that SMIC has been facing in 2021 as the world economy attempts to return to normal in the midst of the COVID-19 pandemic. To get a better sense of crisis that the company is facing, a year earlier SMIC had received tremendous scrutiny from the US government due to concerns that the company’s increasing dominance in this industry threatened US interests. Through the discussions of the SMIC case, students will learn how to analyze the competitive situation of a company given the prevailing geopolitical factors as well as how to determine a company’s strategic positioning in its respective industry and then use this analysis to evaluate future strategic moves.

Learning Objectives

·         Discuss how geopolitical issues may impact an industry and its respective companies: i.e., effects of globalization vs. protectionism on business.

·         Identify the major (financial and environmental) factors in making investment decisions pertaining to semiconductor manufacturing.

·         Contrast the needs for outsourcing vs. insourcing for semiconductor products.

·         Learn the concept of smiling curve and its implications on backward integration.

·         Develop a supply chain strategy for a highly competitive business.