Semiconductor Manufacturing International Corporation: Reverse BOT Harvard Case Solution & Analysis

Semiconductor Manufacturing International Corporation (SMIC) executes a strategy that uses the desire of municipalities in China to build a cluster of high-tech companies. Through a partnership with the cities to create new semiconductor fabs that SMIC will then work on the contract, the company can construct a scale not necessarily before the actual high capital costs. Unlike build-operate-transfer model, that some municipalities have used to build infrastructure, like new subway in Shenzhen, the minimum wage "Reverse model BOT" municipality will build capital-fab and SMIC will operate it, dramatically reducing its capital costs. This model gave the company a unique level of flexibility in the industry, where capital costs have been a major factor in the cost of production.

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by Willy Shih Source: Harvard Business School 20 pages. Publication Date: 06 January 2009. Prod. #: 609062-PDF-ENG

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