A Comparative Analysis of Capacity Investment Behavior in the DRAM Manufacturing Industry
Date Issued
2010
Date
2010
Author(s)
Wang, Jhong-Sing
Abstract
The demand of product of High-Tech industry is highly uncertain. Since the development of process technology evolved rapidly, companies may face strict challenges on environment and management planning owing to the cost caused by investment of new capacity and the potential risk of operation. The change on business cycle of DRAM industry is obvious and the investment in capacity is irreversible. The price of products will fluctuate violently because of the gap of supply and demand when demand is full of uncertainty. Therefore, grasping the trend of future demand correctly and expanding capacity in right time rationally is the key of making profits.
This thesis studies the behavior of capacity investment and regards DRAM industry as the research object. By analyzing the real data of the DRAM industry, two kinds of behavioral models are set up: conservative type and aggressive type. The other purpose is to analyze the performance of different types of investment behavior. The concept of business cycle is also considered in this uncertain environment. The results show that the demand of DRAM industry is suitable for being described with GBM process. Different manufacturers have different causality between capital expenditure and revenue. The correlation of manufacturers’ capital expenditure and global DRAM revenue is discrepant in different period. According to the simulation, we find out that manufacturer will have good performances if they have advantages on process technology, no matter which kinds of behavioral types; without technological advantage, the aggressive type will have better performance; and the performance of these two behavioral types is apparently influenced by growth factor and cycle factor.
Subjects
Capacity investment behavior
Business cycle
DRAM manufacturing industry
Industry analysis
Simulation analysis
Type
thesis
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