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Market conditions in the
Semiconductor Industry
Market Structure
In the business of consumer electronics and semiconductors there exist a wide range of competitors. There are the big companies that manufacturer semiconductors chips such as Texas Instruments, IBM, Motorola and Intel to name a few. However, of these manufacturers there are only a few companies that make CPU (central processing unit) processors. For companies such as AMD and Intel this is their key business. In 2007 Intel’s revenue was in excess of over 8 billion dollars. Even though making CPU processors for these companies is a lucrative business there are other manufacturers that make memory chips and other semiconductor devices. These companies also have a large return on their investments. The devices are used in almost everything you can turn on. With the amount of devices, there is also a demand for all these items. With the demand comes fluctuation of prices.
Normally, a new electronic device will be released at the annual consumer electronics show in January. Shortly after if the product is demanded and consumers are willing to pay the price there will always be high price for the first year. Then as the year end comes to a close most retailers will start to drop there prices to sell there inventories knowing new products are just around the corner that they can again make their large profits on. Consumer electronics such as PC’s, laptops, TV’s will normally go down in price as the item is replaced with a new sleeker or upgraded version. However in the case of memory chips, the prices may increase in price as the surplus get low and the demand is still active. Normally consumers will still need to buy items as memory c ...