Intel in the DRAM business

 Introduced 1103 , 1KB DRAM in 1971

 By 1972, 1103 was best selling semiconductor
memory chip
 Which contribute 90% of sales revenue at that time
 By 1979, Intel introduced 4 generation of DRAM (1K,
2K, 4K, 16K)
 In 1979, Intel introduced 16K DRAM with Single
power supply design
 In 1982, Intel introduced improved version of 64K
DRAM
 Intel’s Strategy for DRAM

 Leadership through product development

 Continuous product innovation which led the
company to be the first in the market with
newest product design and charge premium
for it
 Competitor’s Strategy for DRAM

 Invest heavily in production process

Japanese companies invested 40% of sales revenue in
new plant & equipment
Where as American companies invested 22%
By 1982, Production yields for Japanese company
were 70% to 80% where as it was 50% to 60% for
best American companies
Japanese were faster at developing process
technology & ramping up production capacity and
improving yields
 Competitor’s Strategy for DRAM

 Competition responded fast to the new

introduction of Intel’s product
Example: Intel’s 16K DRAM and improved version
of 64K DRAM
Important technological advantage to
Japanese company: Photolithography
Reason for Exit from DRAM business

 Within 11 years (1974 to 1984), Market share

of DRAM went down from 82.9% to 1.3%
 In 1985, 33% R&D expenditure were going to
DRAM which were giving 5% of the revenue
 Intel in Microprocessor business

Year Version Name

1973 8 bit microprocessor 8080

1978 16 bit microprocessor 8086

1980 8 bit version of 8086 8088

1983 2nd generation of microprocessor 80286

1985 3rd generation of microprocessor 80386

1989 4th generation of microprocessor 80486

1993 5th generation of microprocessor Pentium

Intel’s strategy for microprocessor

 Year 1980: Project CRUSH

 Year 1983: Project CHECKMATE
 Exit from DRAM
 Manufacturing Strategy for 80386
 Created niche market for 80386
 Collaboration with complementors
 Collaboration with customers
 Intel’s strategy for microprocessor

 Strategy of offering RISC & CISC

microprocessor together
 Launch of 80486
 Intel Inside campaign
 Intel’s System business
 New product Introduction