Feasibility of International Trade Global Value Chain Contract for International Sale of Goods A Solid Reputation Semicontronics is an Australian manufacturing company that has been in the business of semi- manufactured electronics for over a decade. Semicontronics has a solid reputation for meeting customer demands for quality products on time and on budget. Semicontronics customers are international, mid-market manufacturing companies that produce generic electronics such as smart phones, digital media players and game consoles. Retail stores in foreign countries purchase the generic products and rebrand them for sale. Recently, Semicontronics has been approached by Phoneson to act as a supplier in its supply chain. Based in Japan, Phoneson is an original design electronics manufacturing company specializing in high-end mobility devices, including smart phones, tablets and navigation systems. Phoneson is impressed with Semicontronics' reputation and wants Semicontronics to supply several components for its next release of legacy products. Phoneson has a reputation for producing best-in-class brands of electronics, and is recognized for cutting-edge technology and aesthetic design. It has built a loyal following from electronics enthusiasts in Japan as well as other Asian and European electronics markets. Phoneson wants to extend its brand into the highly competitive North American market and sees standard, 4G compatibility and HD video in its smart phones and tablets as the keys to its success. In order to offer its products as a high-end alternative to the established North American competitors and at its existing top market price, Phoneson has decided to spend millions of dollars on aggressive marketing. It plans to cut production costs by having Semicontronics produce its computer chips, instead of its existing supplier. A Realization Semicontronics has enthusiastically accepted Phoneson's invitation to join its supply chain. If Semicontronics can maintain its track record for supplying cost-efficient, quality products on target, it could open an entire new customer market for expansion. While negotiating the supplier contract, Semicontronics realizes the memory in its current computer chips will have to be significantly increased to support the technical capabilities of Phoneson's electronics. Its current manufacturing plant in Brazil is not equipped to meet these new demands, and an upgrade at this stage of a new customer endeavor is not economically feasible for Semicontronics. FITT 1