Intensity of the Competition within DRAM industry
The competition is high because the competitors are relatively equally balanced in the industry with powerful suppliers and high exit barriers due to high fixed costs and very specialized assets, which keep the companies competing even though they are earning low or negative returns (Exhibit 7a shows an industry average of -15% operating margin). Although the industry growth is at 16% per year, low product differentiation (almost as commodities) and low switch costs for the buyers force the competitors to compete on prices.
Chinese Entrant Strategy
The large-scale entry by the Chinese firms in 2005 adds to this competitive pressure within the DRAM industry. The Chinese firms adopt Samsung’s strategy from 20 years ago by competing in prices of the older product lines; they are willing to sacrifice profits for market share. To overcome the high capital investment barrier to entry, the Chinese firms attract billions of dollars......

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Title: Samsung Strategy
Approximate Word Count: 801
Approximate Pages: 4 (250 words per double-spaced page)

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