Q and A Archives

Hard"; data can be looked upon as quantitative information such as statistics. ";Soft"; data is usually qualitative information such as opinions expressed by a number of surveyed people.

It is a simple, but critical, report designed to let you know where you are with respect to where you thought you would be in regard to backlog of orders. It is generally by product and there is a column for each month. The first monthly column shows the ";Beginning Backlog"; at the first of the month, plus the new ";Bookings"; that month, minus the ";Shipments (billings)"; that month, resulting in an ";Ending Backlog"; at the end of the month. The ";Ending Backlog"; then becomes the ";Beginning Backlog"; for the next month. You often will want to show several historical months and a projection of perhaps the next three to six months on the report.

The "Concept of Authority" means that an individual has the ability or authority to give the opposing party something of value. As a result, a basic principle is to always ask for such a person from the other side to be in your negotiating meeting so you can obtain concessions. Conversely, you want to limit the authority of the people in the meeting from your side to provide you maneuvering room.

Japan, by far, is the easiest country in which to obtain information about potential customers. The reason is that Japan has had companies doing business in the industry for a long time. The major challenge, however, is that many of the sources of information are published only in Japanese. Public information sources for the other countries are fairly limited. Venture capital firms and non-competitive sales and marketing people in the country are some of the best sources. Singapore contacts are best sources for Malaysia. Taiwan sources are often best for PRC.

A few years ago the "Back End" began to be called "TAP," test, assembly and packaging. Very recently, it was renamed "Final Manufacturing."

There are three types of manufacturers. First there are IDMs or integrated device manufacturers. These are companies like Intel and NEC—they design, manufacture and sell integrated devices. Second, there are foundries, which are companies that do nothing but manufacture other company's devices. Companies like TSMC and UMC in Taiwan are representative of this group. Currently Fabless Semiconductor Companies are their biggest customers, but increasingly IDMs are using their services.. Third, there are some integrated device manufacturers, or divisions, that there are considered captive which means they make their own chips for themselves inside.

The "Factory Demand Forecast" is normally used in larger companies with larger product bases. Because of the time it takes to build, it is the forecast of specific products that are going to be booked for shipment to specific customers one or two quarters in advance. These committed bookings are identified with specific manufacturing slots. Because the factory will be producing the product, forecasting must be very accurate and tasks must be assigned which will make timely booking of this order a reality.

The question, "When am I selling and when am I negotiating?" is a difficult one to answer. We can, however, assume that it would be difficult to negotiate an agreement with anyone if there is no interest in, or no desire for, the product or service under consideration. To negotiate an agreement we must first have an understanding, belief and desirability for the product, service or idea. The desire to buy must first be established before negotiation begins.

Initial questions should be OPEN ENDED. That basically means that they are of a nature that the customer cannot answer them with a "yes" or "no." This forces the customer to reach into his/her mind and surface his own thoughts and feelings. An example would be, "Your organization is quite successful; to what do you attribute this success?"

When you think you may have identified an important need, you follow up with a REFLECTIVE question. Here you are basically mirroring back the customer's thoughts in order to have them expand upon what they said. An example would be. "So you feel state-of-the-art technology and attention to detail is most important for your continuing success?"

When you feel confident you have a need you can address, you use a DIRECTIVE question to focus the customer's attention. An example would be, "If you like our test results, would our solution address your state-of-the-art needs?"

Most people think it is Intel because it receives 20% of the revenues for devices sold—by far the largest company. However, from the perspective of a materials company, Intel does not at all hold your largest potential. It only produces around 3% of the number of chips sold. Its revenues are so large because of the margins on the Intel microprocessors.

Toshiba and Hitachi sell the greatest number of chips, each about 5-6% of the market. They represent they greatest potential market.

The dominant market segment in semiconductor devices is Computer at 51%* of the total market. Consumer Electronics is second at 22%* and communications is third at 13%*

(* 2000 figures)