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Vertical integration vs. specialization: a nonparametric conditional efficiency estimate for the global semiconductor industry

Guangshun Qiao () and Zhan-ao Wang ()
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Guangshun Qiao: Wenzhou Business College
Zhan-ao Wang: Wenzhou Business College

Journal of Productivity Analysis, 2021, vol. 56, issue 2, No 6, 139-150

Abstract: Abstract This paper applies a two-stage nonparametric approach to compare companies operating in different business models in the global semiconductor industry. Using panel data over 1999–2018 on 470 companies in the global semiconductor industry, we explore the operating performance of the semiconductor companies conditional on capital investment and between the integrated device manufacturers and the fabless-foundry business model. We find that vertically integrated device manufacturers are constrained heavily by capital investment. Disentangling the effects of capital investment and business model by a second-stage nonparametric regression, this paper identifies that the vertically specialized fabless-foundry business model helps to improve pure efficiency and mitigate the impact of business-cycle in the global semiconductor industry.

Keywords: Semiconductor industry; Capital investment; Pure efficiency; Nonparametric frontiers; Two-stage conditional efficiency analysis (search for similar items in EconPapers)
Date: 2021
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DOI: 10.1007/s11123-021-00616-x

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