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Remember Lowly Memory Chips? They're Back Changing Industries

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"Remember Lowly Memory Chips? They're Back Changing Industries"

The above titled article was published on September 30, 2005 in the Wall Street Journal. It contains issues that were examined in the class, and in Chapter 3: Industry and Competitive Analysis. The task of this paper will aim to briefly show how these "lowly" memory chips; through the use of the Five Forces of Competition are changing the global electronics industry. To accomplish this task this paper will begin on some major assumptions. The first is that Samsung's actions with these chips are in fact legal. Which is not necessary the case due to current pending litigations concerning these chips. The second is that the lowly memory chips, known as NAND chips, will be distinguished as both substitute products, and key inputs into other products in the global electronic industry. This assumption allows us the ability to examine how these NAND chips are changing the global electronics industry more easily.

The article states that, "The new-style memory chips are suddenly one of the most important factors behind the surprising size, capacity and general coolness factor of the hottest consumer gadgets finding their way into electronics stores, from ultra-small camcorders and portable video players to Apple Computer Inc.'s iPod nano. In coming years, the rate that such products fall in price will be driven in part by the speed with which NAND-chip prices fall." What this shows is the gaining importance of NAND chips as a key input into the production of consumer electronic goods. For a prospective company looking to get into the consumer electronic industry, one should pay close attention to this fact. What this also shows is the way in which NAND chips are becoming a substitute for other inputs into electronic goods. Intel does not produce NAND chips, but they do produce chips called NOR. That runs personal computers and electronics. However according to the article, NAND production may soon be a higher priority for the company. Also hard drive manufactures may see, the day when it is cheaper to have NAND chips than the conventional hard drives in place currently. Through just these briefly mentioned examples, it is apparent that NAND chips have drastically changed the climate of competition in the arena of global electronics.

Another example the article shows how NAND



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