1. What changes or modifications to the Quik Chips business model do you think might have helped to alleviate the severe shortages of semi-conductor chips experienced in 2021 and 2022?

Founded in 2017, Quik Chips (QC) is a joint venture of five competing manufacturers of semiconductor chips used primarily in the production of smartphone and tablet technologies. Essentially, QC provides a full-range of e-Commerce and fulfillment services that help to meet customer demands for increasingly faster turnaround times for what are very expensive chips. Although the concept of collaborating with competitors is relatively unique to manufacturers of semiconductor chips, it is not unusual for QC to provide supply chain services to common customers of its members.

Changes and Evolution of Mobile Technologies. Recent years have seen exceptional growth in the demand for smartphone and tablet technologies, and for apps that require an increasing range of chip types and capabilities that support functions of mobile devices such as user interface, texting, gaming, GPS, and other highly-interactive capabilities. This has resulted in a robust group of highly-competitive companies that produce these devices in a several principal geographic regions of the world. As indicated in Figure 1, these include China, Taiwan, South Korea, Japan, Europe, and the U.S. Considering the demand for more expensive, sophisticated chip technologies, these manufacturers have begun to place more emphasis on faster delivery times from their suppliers than on stockpiling inventories of chips to buffer against volatility in demand.

Concept and Capabilities of Quik Chips. The range of value-added services provided by QC for its member-manufacturers include: 1) web-site hosting; 2) cloud capabilities; and 3) supply chain and logistical fulfillment services. QC is a different kind of company in that it does not own, plan, release, or insure any inventory, and does not sell directly to the manufacturers of mobile devices only its member-manufacturers do. These members provide QC instructions as to what needs to move and when, and then QC provides a turnkey fulfillment service to see that customers receive the needed chips when and where they are needed. Although the executive offices of QC are located in Singapore, distribution centers with foreign trade zone status are located in Shenzhen, China, Prague, Czech Republic, and San Jose, California in the U.S.

QC also provides its member-manufacturers with e-Commerce capabilities through its web-hosting service that passes transaction data from customers to the chip manufacturers, using a standardized data format. This common gateway for the transfer of information facilitates the operations of the member-manufacturers and also for the customer firms that manufacture the mobile technologies.

Organization and Membership. QC is a not-for-profit organization that provides the types of services described above. Membership in the joint-venture is open to other chip manufacturers who must undergo a formal application process, pay a membership fee, and agree to use the services of QC for their shipments to customers. All members have full-access to the capabilities available at QC and are assessed fees on a pro-rata basis to cover all the costs of the QC operation.

Sources: VLSI Research projection; SEMI second-quarter 2020 update; BCG analysis