The geographical shift in the electronics manufacturing industry to Asia and other Pacific Rim countries has meant that companies have had to redesign their supply Chain Network. With customers moving to Asia, and new markets opening up, several K&S competitors have

already invested in new sites. By examining figure 2 (semiconductor equipment spending by geographic region), it is evident that the Asia-Pacific spending on Semiconductor equipment is increasing year on year, and outpaced Europe’s spend slightly in the year 2000, and is expected to continue to grow over the next few years. In order for K&S to continue to hold its dominant position in the market it must investigate possible opportunities and ensure that their supply chain is agile enough to be able to meet customer requirements in this growing market.

Increased Competition/Pressure

In order to sustain their current market stronghold, it is important that K&S examine their current supply chain. With the geographical shift in the market comes increased pressure from competition. Some Semiconductor firms have already taken action and have relocated, with new plants being built in Singapore, Taiwan, the Philippines and South Korea. This allows them to be more closely connected to their customers and increases the firms buying power by taking advantage of cheap labour, reduced operating costs, tax incentives and raw material costs thus gaining possible competitive advantage. Although K&S have a healthy market position, competition within their primary market is intense. Factors such as performance, quality, customer support, price and delivery all influence the nature of K&S’s multicountry competitive interaction.

Limited Flexibility and Agility

Currently, K&S’s Israeli site, hold 50% of the worldwide market share of supplying bonding tools. If the site has production problems, no competitor has the capacity to fill the gap. There are positives to be taken from this point however there are also many negatives. The Yokneam plant in Israel is currently operating at maximum production capabilities. If the Asia-Pacific market continues to grow, the Yokneam site has not got the production capabilities to meet demand of new emerging markets. K&S need to focus on optimizing there supply chain so that it is both agile enough to adapt to market change and efficient enough to meet customer demand. By opening another site it will reduce the supply risk associated with holding the largest worldwide market share of wire bonding tools.

With competition increasing as K&S’s close competitors move into emerging Asian markets, it is inevitable that K&S needed to possibly redesign there supply chain network or even change their strategy. Here we can see how some of Porters 5 forces model of competitive position can be implemented. Michael Porters five forces of competitive position model provide a firm with a simple perspective for assessing and analysing the competitive strength and position of a business.

Bargaining power of buyers/suppliers: with the Asian market booming, and as K&S hold a 50% market share of supplying bonding tools worldwide, it means that their already strong market position can be furthered by prospects of expanding current production to meet market requirements.

When looking at other cost saving possibilities it is apparent that expanding/redesigning and optimizing their supply chain they achieve higher customer satisfaction whilst achieving lower costs. Figures 10 and 11 show how the cheap labour cost can yield a higher return from investment. This is evident when comparing the possible investment return from China against Israel.