Chi Mei Optoelectronics Essay

1. What prompted CMO to diversify from its c enclose of attention petrochemical base? What were the risks involved? In the lately 1980s, Ho started to think that the future for petrochemicals in Taiwan was not very bright. At that time, he made the for the first time visit to the nascent Hsinchu Science-Based special K where he found that everybody was doing pretty well. Then he began to think diversifying into virtuallything. Hos solid friend Wu had been the principal investigator on the first TFT-liquid crystal display research project at the Electronics Research Service Organization (ERSO), eccentric of the Industrial Technology Research Institute (ITRI). ITRI had been responsible for the original engineering science transfer of RCAs CMOS semiconductor process from New Jersey to Taiwan. d aver the stairs Wu, ITRI had begun an investigation of small TFT-liquid crystal displays in 1989 and had moved on to three- to six-inch technology in 1990. except unlike what happene d with TSMC, the Taiwanese g everyplacenment suddenly cut the budget, exit ITRI without enough capital to complete the plants construction. Wu suggested to Ho and Shi that manuf lay outuring twine filter arrays for liquid crystal display flat panels would be a very safe move for Chi mei, but Shi disagreed.But in 1997, the petrochemical persistence suffered a severe contraction due to the Asian economic crisis. They asked Mitsubishi who said coloration filter was good. So Dr. Wu stayed outside for al almost one and a half(prenominal) years until the founder decided to approve the plan. In fact, Chi Mei had been tracking the TFT-LCD industry since 1996, as many of the refer ingredients used in fabricating TFT-LCD panels were based on stuff and nonsenses derived from petrochemicals and were therefore closely related to CMCs core products. But Shi was skeptical of direct enthronization because he was not trusted whether his caller could get a grasp on the core technologies. S hi in short recognized TFT-LCD as a once in 100-year opportunity for Taiwan. But the TFT-LCD industry counted only Japan, Korea, and Taiwan as major producers, and most of the bespeak at the time was coming from Taiwanese notebook calculating machine manufactures. Nipponese manufacturers supplied most of the color filters which was a lucrative business. Ho explained that by sorrowful to be stick a full-line TFT-LCD producer, the company would be equal to(p) to address a practically larger market. An otherwise consideration in the purpose to enter the TFT-LCD industry was that TFT process technologies were not entirely parvenue territory for CMC.CMC already possessed many chemical processing and mechanical technologies. Although CMCwas privately held, positivity from its petrochemicals operations made it cash-rich, with almost all of its credit lines unused. But Ho and Wu realised the greatness of being a public company in order to attract the right talent, and they were able to convince Shi. CMOs 2006 annual Report detailed a long line of fund-raising activities to finance what after turned into a huge string of investments. The risks involved were relying on the technical, fiscal and merchandising resources of the original product line and the company need acquiring new lines and markets, skills, techniques and facilities.2. How did CMO implement its strategy of being a leading LCD manufacturer? Ho realized that CMO need a different organizational coordinate with different resources, processes, and priorities, so he opted for a separate subsidiary, with an item-by-item anatomical structure and compensation lay as well. He redesigned the pay structure by enlarging the compensation differential across various rankings and put in a larger performance bonus component. They all recognized the importance of attracting key talent and the value such talent placed on an autonomous unit structure with decentralized forethought and the flexibility to act quickly. From the start, CMOs strategy was different from other Taiwanese panel perplexrs. CMO commissioned the prefatory technology from ERSO, and then modified the licensed TFT structured and developed a new structure in Fujitsus fab. Since this new TFT structure was their own design, they could modify the process by themselves as needed.CMO was able to pursue advantage of one of the industry downturn cycles to enter the industry. The pioneering Japanese manufacturers were so able to extend their window of profitability by generating licensing income. So CMO was able to test out some new, experimental cell structure designs employ Fujitsus equipment and develop its inner(a) processed as it was building its own factory. CMO also agreed to work as a Fujitsu supplier for LCD panels. In essence, they exchanged their production capacity for Fujitsus technical support. adept of the key philosophies that CMO has is that it doesnt outright purchase a complete technology pack age. It tries to develop what it needs to and it may put in some basic technology or hire an outside consultant to develop its proprietary, internal technology. What that allows it to do is to understand that technology much better and its much quicker for it to improve the technology. In mid-1999, in addition to becoming a foundry supplier toFujitsu, CMO licensed Fujitsus MVA technology, which enabled wide viewing angles for large-size TV panels.CMOs R&D team subsequently achieved several breakthroughs magic spell working with the original MVA technology, developing its own proprietary Omniview Color, which significantly rock-bottom the color shift of skin tones when viewing the panel from wide angles. In 2002, along with other Taiwanese LCD peers, CMO licensed a plant of common TFT-LCD patents from the ERSO unit of ITRI. As CMO developed its capabilities, it sometimes took some major technological risks. While Fab 1 was still under construction, Shi realized that the accelerati ng rate of competition in the LCD industry necessitated bold investment decisions, so he approved the construction of Fab 2, a Gen 4 facility. By this time, Ho and Wu had become convinced that the key to the market was passing to be flat-panel televisions, which meant larger panel sizes than were used in notebook computers and computer monitors. At that time, Fujitsu VLSI was developing an experimental technology called one-drop fill, in which many, many micropipette dispensers would to each one place a single drop of liquid crystal material between the two pieces of glass before they were sandwiched.CMO had sent a ripened R&D team to evaluate the ODF equipment. Implementing a completely new technology like this in production entailed enormous risks. Ultimately, CMO made the decision to make it work and CMO not only became an industry pioneer in suing ODF but also filed many ODF-related patents. 3. Why did CMO vertically integrate? Was this a sound move? Though Chi Mei had origin ally think to make only color filters, it had quickly moved into making the TFT-LCD sandwich. From 2003 to 2004 alone, as many as 15 Gen 5 fabs came onstream across Asia, driving sinless panel pricing down. In the early part of the decade, display drivers could make up 15%to 20% of the overall production cost of an LCD display. CMO relied exclusively on Texas Instruments for it supply. Strategically, CMO management felt that to be successful over the longer term, the IC design team needed to have flick to a more balanced customer portfolio, instead of supplying CMO exclusively. Therefore, management decided to spin off the team into a separate entity, Himax, so that it could engage other customers without conflict.CMO was able to move into photomasks, polarizer films, and many other key components by simply leveraging its expertise in chemical manufacturing. With the Himax representative as a successful first step in upstreamintegration, over the years CMO formed a web of tightl y relate subsidiaries across its supply chain. These efforts at vertical integration helped alleviate some of the concerns about the availability of critical components. All these efforts made CMO one of the most vertically integrated of Taiwans TFT-LCD manufacturers. CMO created an environment that people come to them, whether internally or externally. 4. How did CMOs leadership and culture impact the companys performance? Shi espoused three credos as his guiding principles (1) business was a way to pursue fulfillment, (2) people-oriented management was important, and (3) harmonious relationships were valuable. These credos set a very indexful tone within the company.A highly decentralized decision-making model enhanced this management philosophy. This made the company a very dinky place to work, allowing it to draw personnel from many quarters of Taiwanese industry when new initiatives were launched. One of the strengths of Chi Meis culture is the entrepreneurship and flexibili ty. The power to attract talent would later turn out to be a key enabler, as the company expanded into areas that required specialized technical expertise. Chi Mei didnt lure people away from other companies it just built a good environment and set up stages for people to develop businesses. In fact, all CMO did was build a good environment and everything else followed.