Evaluating the Performance of Vertical Integration for Semiconductor Industry

Taiwan's semiconductor industry has developed vertical integration flows in order to survive the competition. The aim of this research is to assist semiconductor companies to evaluate the operational efficiency and find the right partners for vertical integration by using the Malmquist productivity index. Realistic data are collected during the period of 2011 - 2015. The evaluation results demonstrate that the productivity growth of almost Taiwanese IC fabrication industry increased by 20.47% on average, mainly due to progression in technical change. The empirical result shows that there are four companies, TSMC, MXIC, Powertech Technology, and SPIL that estimate the productivity loss due to regression in technological change. The method of evaluation the vertical integration provides the best decision-making strategies for finding the suitable suppliers to improve business performance