Product Development Analysis Essay Example

process is primarily shaped by its technology leadership.

Intel has been increasing its investment in research and development, with an expenditure of $4.8 billion in 2004 and $5.9 billion in 2006, which accounts for 16% of its net revenue (Intel, 2006b; pg. 49).

Intel's capacity to develop multiple generations of microprocessors concurrently is made possible by its substantial investment in research and development. This approach entails the involvement of cross-functional teams and a comprehensive process for completing each step of the design process. To facilitate this, Intel employs "split teams" of designers that work collaboratively with fabrication engineers. These teams are focused on specific chip designs and are responsible for applying appropriate fabrication techniques and solving volume-production issues. The manner in which these teams collaborate plays a significant role in determining Intel's competitive advantage during the development process, particularly in terms of combining technical details from engineering and marketing. (Melnyk and Denzler, 1996; pg 520).

According to Wheelwright and Clark (1992), Intel's product design process involves combining various aspects of chip engineering and marketing, such as dimensions, operating parameters, and component details, into a well-coordinated plan that meets customer requirements and expectations. Utilizing a "split-teams" model allows for more concentrated focus on the engineering and marketing of chips during the product development phase. This optimized process enables Intel to design and support multiple generations of microprocessors concurrently.

The ability to excel in related business areas like its Internet “building block” enterprise helps this company maintain an edge over competitors. The manufacture of silicon chips involves three primary processes: fabrication, assembly, and testing. Assembly typically isn't a limiting factor and can be quickly increased to accommodate capacity needs. Similarly, testing

can be promptly escalated in the short-term.

The bottleneck during times of tight capacity is typically in the fabrication, which is the front end of the process. As fabrication is the constraining resource, it becomes crucial for assigning costs to products. Cogan and Burgelman (1989) state that delivering progress within tight timeframes, driven by Moore's Law (see Appendix 1), is challenging due to the ever-increasing complexity of process technologies. Improvements in yield learning and volume manufacturing capability are necessary to keep up with this demand. The trend for Intel's process technologies is shown in Figure 3, which illustrates a declining defect density over time (Natarajan, et al, 2002). To meet the regular process requirements, Intel focuses on a core set of technologies shared by many of its products.

Intel uses a combination of technologies to bring their products to market, including silicon technology, package technology, test technology, and board technology (Natarajan, et al, 2002). Silicon technology is the process of creating integrated circuits on silicon wafers by adding and patterning layers for transistors and interconnects. Package technology is the assembly process that encloses silicon ICs in an electronic package with accessible connections for the user. Test technology is the process of testing devices from wafer sort through package-level testing and burn-in to ensure that shipped devices meet quality and data sheet requirements.

Board Technology refers to the production of printed circuit boards with multiple components. Intel's manufacturing strategy is to optimize the process for a specific chip and then transfer it to other fabs through "Copy Exactly!" This is done while concurrently integrating product design and manufacture to enhance its time-to-market advantage. Intel's level-production approach equals the production

rate from a fab to the average demand rate for the respective chip range(s) produced in that fab (Stanford, 1999).

As discussed below, the method of accumulating inventory during periods of slack demand and distributing goods from inventory during peak demand periods, is a strategy employed by Intel (Melnyk and Denzler, 1996). Additionally, Intel invests heavily in advanced manufacturing facilities, spending more than $4 billion on capital additions yearly. While most chip companies prototype designs to attract potential customers before investing in manufacturing, or outsource manufacturing rather than building their own facilities, Intel alone creates manufacturing capacity before demand exists. They standardized each facility as they expanded their manufacturing base.

After the manufacturing processes for specific chips are solidified, they are transferred to different production facilities. Each facility specializes in a particular process technology, such as logic devices or EPROM, although some facilities produce multiple types. This ultimately enhances Intel's capacity for manufacturing each product.

Intel conducts capacity planning at varying levels of detail to account for different time frames. Decisions regarding equipment purchase or re-use are based on target capacity, with additional protective capacity to accommodate demand fluctuations. Production planning occurs over multiple years, covering the virtual factory network and including review of resource needs and adjustments to the production plan, labor, materials, and other resources.

Production control is carried out for periods spanning multiple weeks, as indicated by Ali, Campbell, Solomon, Walsh, and Wuerfel (2005).