Internal- and external-sourcing strategy analysis of group manufacturing enterprises under semiconductor supply chain disruption risk

Abstract

Semiconductor manufacturing enterprises face potential risks of supply disruption owing to economic and political factors. To enhance supply stability and industry sustainability, group manufacturing enterprises can establish internal suppliers to supply components exclusively to internal OEMs. However, under the competition from external suppliers and OEMs, it is unclear how group manufacturing enterprises decide on procurement strategies. We construct a two-echelon supply chain game model consisted of four supply chain stakeholders and analyze the group manufacturing enterprise's decision-makings on developing an internal supplier and procurement strategies. We obtain some remarkable findings. The optimal procurement decisions of group manufacturing enterprise, the internal OEM, and the internal supplier are different. Decision makers should consider which enterprise's profit is more important and choose the procurement strategy preferentially. Group manufacturing enterprise, the external supplier, and the competitive OEM cannot achieve a triple-win situation. Even if the internal supplier's technical level is high, the group manufacturing enterprise and the internal OEM cannot gain competitive advantages in the internal-sourcing scenario. Group manufacturing enterprise needs to pay more attention to the environmental impact. Furthermore, we extend the basic model and analyze the robustness of the conclusions.