Using DEMATEL method to explore the core competences and causal effect of the IC design service company: An empirical case study

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Using DEMATEL method to explore the core competences and causal effect

of the IC design service company: An empirical case study

Ya-Ti Lin

a,⇑

_{, Yeou-Herng Yang}

a,1

_{, Jin-Su Kang}

b,2

_{, Hsiao-Cheng Yu}

a,3

a

Institute of Management of Technology, National Chiao Tung University, No. 1001 University Road, Hsinchu 300, Taiwan, ROC

b

Institute of Business and Management, National Chiao Tung University, No. 1001 University Road, Hsinchu 300, Taiwan, ROC

a r t i c l e

i n f o

Keywords: IC design service Core competence DEMATEL Semiconductor industry

a b s t r a c t

The booming of Integrated Circuit (IC) design service has become a critical sub-industry to the evolution of semiconductor industry. In this paper, we took the case of a tier one IC design service company to explore the core competences of this emerging industry. Seven core competences are defined throughout the research. More specifically, this paper analyzes the in-depth of the interrelation among the core com-petences by utilizing the DEMATEL method. They are divided into causal and effect groups, enabling read-ers to gain a better undread-erstanding of the interactive relationship between them, as well as making suggestions for improvement to enhance their overall performance. The result has shown that the Intel-lectual Property (IP) design capability is the most important core competence. Enhancing five of the core competences in the causal group will improve the overall performance. Further, DEMATEL method is demonstrated as a useful approach in exploring the interrelationship.

1. Introduction

The rapid evolution of System On a Chip (SOC) design has chan-ged the collaboration structures of the semiconductor industry and its value chain. Conventional semiconductor value chain includes fabless Integrated Circuit (IC) design, wafer fabrication, wafer test-ing, IC packaging and ﬁnal tests, has been extremely fragmented and specialized (Frederix, 1996; OhUallachain, 1997). Moreover, silicon Intellectual Property (IP) providers, design service provid-ers, design foundries and system design integrators are thriving in the new era of semiconductor industry (Chang & Tsai, 2002). In SOC era, IP solution, IC design and Application Speciﬁc Inte-grated Circuit (ASIC) services have become the essential roles in the newly semiconductor value network. This is due to the rising complexity of IC design, SOC implementation, IP integration and customization, and vast numbers of Research and Development (R&D) and Non-Recurring Engineering (NRE) cost, particularly in the advanced sub-wavelength nanometer technology nodes, such as 90 nm, 65 nm, 45/40 nm, 32 nm and beyond.

Today, more IC design or system companies are leaning toward the use of IC design service ﬁrms in making their chips to market

on time and within budget (Clendenin, 2006). The major function of IC design service is to act as a mediator between IC design and manufacturing, providing IC designers with an IP library, IP inte-gration and customized modification, and IC manufacturing pro-cess technique to reduce not only the development cost but also design time. Furthermore, the IC design service companies provide turnkey solutions to produce ASICs and/or handle the manufactur-ing process in the comprehensive supply chain. The solutions pro-vided include wafer foundry, IC packaging, IC testing, reliability qualification, failure analysis and logistic service. In return, the tra-ditional IC design companies can focus on their core competence of product design, as well as becoming the marketing and sales chan-nels which define the product specifications (Shih, Shih, Chien, & Chang, 2008). Currently, there are over 30 fabless IC design service companies in the market worldwide, including Global Unichip Corporation (GUC), Alchip, eASIC, eSilicon, Faraday, Open-Silicon and others (LaPedus, 2009).

This paper is written with three purposes. First, we use GUC as the case to explore the core competences of the IC design service company. The core competences are defined by combining and comparing literature review and interviews with the focus group, thus enable practitioners and scholars to have a better understand-ing of them. Second, abundant papers have contributed to identify core competences of various industries or firms by conducting case studies. However, the further discussions of the interaction of the core competences in the specific case are deficient (Onyeiwu, 2003). Therefore, in this paper, we utilize the DEcision MAking Trial and Evaluation Laboratory (DEMATEL) method to determine

⇑Corresponding author. Tel.: +886 3 5712121x57501; fax: +886 3 5726749. E-mail addresses: eddy_yd_lin@hotmail.com (Y.-T. Lin), frank5591@yahoo.-com.tw(Y.-H. Yang),jskang@mail.nctu.edu.tw(J.-S. Kang),chengyu@cc.nctu.edu.tw

(H.-C. Yu). 1 Tel.: +886 3 5712121x57501; fax: +886 3 5726749. 2 Tel.: +886 3 5712121x57063; fax: +886 3 5729913. 3 _{Tel.: +886 3 5712121x57508; fax: +886 3 5726749.}

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and distinguish the cause and effect relationship amongst these core competences inside GUC, and in turn, provide understandings on how these core competences affect each other and result in its final success. Third, GUC’s core competences are analyzed and several enhancement strategies are proposed based on the causal relationship analysis that would enable GUC to maintain its competitive advantage and achieve an aspire level. A case with suf-ficient representativeness is suggested to be used for this kind of empirical research (Banerjee, 2003; Roux-Dufort & Metais, 1999). Based on this guideline, the reasons made us decide to use GUC as the case are: (1) GUC is accredited as the leading company in this field in terms of capital investment and annual sales revenue. It has 9 years of consecutive revenue growth and reported revenue of $278.8 million in 2008, a 33% increase from 2007, which has proven its superior performance in this niche market and business; (2) GUC is the largest public traded company in this field in terms of annual revenue which provides a better representation and more public information.

This paper is organized as follow: In Section2, a literature re-view is performed on core competences of IC design service indus-try; introduction of new research methodology is proposed in Section 3; a case study of the core competences and its results are conducted in Section4, and the conclusions are provided in the ﬁnal section.

2. Deﬁning core competences for a successful IC design service industry and company

The core competences have been studied and discussed exten-sively, and the definition of the core competences has been verified and evolved along with abundant researches. The notion from the researches in the early stage has deemed that a core competence is a set of problem-defining and problem-solving capabilities that en-ables a firm to generate idiosyncratic strategic growth energy, gain competitive advantage, and create significant market power (Hitt & Ireland, 1985, 1986; Lei, Hitt, & Bettis, 1996; Snow & Hrebiniak, 1980). Extensive discussions in 1990s have further defined distinct concepts of core competences, which entail to provide possible ac-cess to new markets, satisfy specific customer needs and difficulty of being imitated (Prahalad & Hamel, 1990). A core competence is a set of fundamental strengths that allows a firm to do better than others, and consequently, lead to new products or new markets (Grant, 1991; Javidan, 1998).

Subsequent researches have summarized that the contents of a core competence embrace technologies, knowledge, skills and sys-tems that are possessed by a ﬁrm, which can act as catalysts in generating competitive assets and advantages (Hamel & Prahalad, 1994; Markides & Williamson, 1994; Petts, 1997). Attributes of the core competence include complexity, invisibility, durability, appropriative, non-substitutability and superiority (Aaker, 1989; Collis & Montgomery, 1995; Flood, Gannon, & Paauwe, 1996; Hall, 1992; Hamel & Prahalad, 1994; Petts, 1997). Hence, core compe-tence is a fundamental success factor for various end products and services today along with the upcoming future.

What are the core competences of a successful IC design com-pany?Chu, Shyu, and Khosla (2008)identified that the core com-petences include technical innovations, solid supply chains, total solutions, excellent technical specifications, flexibility in market-ing, as well as pricing strategies, and stability of partner relation-ships between customers and vendors. The core competences of Taiwan’s IC design companies specifically, attribute to the speed of design, speed of implementation, low cost but outstanding de-sign capability pool, quality of dede-sign and outsourcing manufactur-ing, flexibility in response to rapid change and various applications of market demand, integrated and superior supply chain and a

competitive overall cost (Chang & Tsai, 2002). The core competenc-es of a succcompetenc-essful IC dcompetenc-esign service company would have been sim-ilar to that of an IC design company as abovementioned (Shih et al., 2008). However, due to their different functionalities, the core competence between an IC design company and an IC service com-pany may vary, thus further identifications will be required. For this kind of emerging industry, academic studies suggest to con-duct an in-depth case study to obtain the insight (Brockhoff, 2003; Walsh & Linton, 2001). Based on the analyses above, this paper further applies the focus group research method to define the specific core competences for IC design service industry.

Focus group research is based on facilitating an organized dis-cussion with a selected group of individuals, for they were believed to be representatives of various classes. Discussions are used to reveal insights and provide understandings in ways that simple survey items may not be able to achieve. The focus group research has long been prominent in the marketing studies (Morgan, 1988), partially because the market researchers are seeking to achieve the emotional and unconscious motivations which are not amenable to the structured questions of conventional survey research. Addi-tionally, interaction is also the key to successful focus groups because participants often bring different perspectives through the verbal communications. This brainstorm process brings extra information to the existing issues as well as inspirations for new ideas. The research host has raised a number of issues, including the possible core competences that are recognized by participants, industrial analysts, academic researchers, and so on. Through the discussions together with the aid of answers to open-ended ques-tionnaires and recording equipment, opinions are integrated and summarized. Through the focus group research procedure based on the present studies of core competence, particularly in IC design ﬁled, seven core competences are deﬁned and will be furthered analyzed and discussed in Section4.

3. The DEMATEL method

The DEMATEL method has been developed initially to study the structural relations in a complex system (Liou, Yen, & Tzeng, 2007;

Wu, 2008). The mathematical concepts are then evolved and

adapted in many academic ﬁelds, such as industrial strategy anal-ysis, competence evaluation, solution analanal-ysis, selection, and etc.; it has been proven as a useful method to solve complicated prob-lems.Wu and Lee (2007)have combined DEMATEL and fuzzy the-ory to categorize the required competencies for better promoting the competency development of global managers.Tzeng, Chiang, and Li (2007)have brought together DEMATEL, Analytic Hierarchy Process (AHP) and fuzzy integral to build a selection model for evaluating intertwined effects in e-learning programs.Liou et al.

(2007) have utilized the fuzzy logic and DEMATEL to create an

effective safety management system for airlines. Huang, Shyu, and Tzeng (2007)have applied DEMATEL and gray relational anal-ysis in reconﬁguring the innovation policy portfolios as well as deﬁning the policy of the Taiwanese Government.

Further researches have reaffirmed the benefits of using DEMATEL method. Lin and Wu (2008) have suggested that DEMATEL is a powerful technique in causal analysis that enables the researchers to separate the involving criteria of a system into the cause and effect groups. This technique will allow the deci-sion-makers to acknowledge the criteria of greater influence.Tseng (2009)has also exploited this method in dealing with real estate agent service quality expectation ranking with uncertainty.Tsai

and Chou (2009)have integrated DEMATEL and Multiple Criteria

Decision Making (MCDM) techniques to establish a selection model for evaluating the management systems for sustainable development in small and medium enterprises. DEMATEL has been

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successfully applied to many research ﬁelds with the purpose to render sophisticated problems and transform complex systems into structurally causal and effect relationships. Therefore, DEMATEL can be extended in solving causal relationship issues of core competences of an industry or company, which in turn, provide improvement options.

The DEMATEL model construction process is described below: Step 1: Generating the direct-relation matrix

The measurement of the relationship between factors i and j requires that the comparison scale to be constructed according to the following four influential levels: No influ-ence (0), Low influinflu-ence (1), Medium influinflu-ence (2), High influence (3), and Very high influence (4). The integer score xk

ijis given by the kth expert and indicates the inﬂu-ential level that factor i has on factor j. The n n matrix A is calculated in Eq. (1) by averaging individual expert’s scores, aij¼ 1 H XH k¼1 xk ij ð1Þ

where H is the total number of experts. Step 2: Normalizing the direct-relation matrix

On the basis of the direct-relation matrix A, the normalized direct-relation matrix X can be obtained by the following: Let s ¼ max max 16i6n Xn j¼1 aij;max 16j6n Xn i¼1 aij ! ð2Þ then X ¼A s ð3Þ

The sum of each row j of matrix A represents the direct effects that factor i gives to the other factors; max max16i6nPnj¼1aij;max16j6nPni¼1aij

represents the di-rect effects on others.

Step 3: Attaining the total-relation matrix

Once the normalized direct-relation X is obtained, the total-relation matrix T can be calculated by

T ¼ XðI XÞ1 _ð4Þ

where I is denoted as the identity matrix. Step 4: Producing a causal diagram

The sum of rows and the sum of columns are separately denoted as vector D and vector R. The horizontal axis vec-tor (D + R), named ‘‘Prominence,’’ is made by adding D to R, which represents the importance of the criterion. Simi-larly, the vertical axis (D R), named ‘‘Relation,’’ is formed by subtracting D from R, which may divide criteria into a causal group and an effect group. Based on the above statements, the factor belongs to the causal group if (D R) is positive, and the factor belongs to the effect group when (D R) is negative. Therefore, the causal dia-gram can be acquired by mapping the dataset of (D + R, D R). T ¼ ½tijnn i; j ¼ 1; 2; . . . ; n ð5Þ D ¼ X n j¼1 tij " # ¼ ½tign1 ð6Þ R ¼ X n i¼1 tij " #t 1n ¼ ½tgjn1 ð7Þ

Step 5: Setting a threshold value and obtaining the inner dependence matrix

In order to explain the structural relation amongst factors while keeping the complexity of the whole system at a manageable level, it is necessary to set a threshold value p to ﬁlter out negligible effects in matrix T. Only the factors whose effect in matrix T is greater than the threshold value will be shown in an inner dependence matrix. In this step, the threshold value p has been chosen by the experts and the results of the literature review.

4. Empirical study

This section will identify the core competences of GUC and measure the relationships among them, as well as identify poten-tial tactics for GUC to reach the desired level of success. In order to do so, seven experts from different divisions of GUC were summoned and surveyed. These divisions include Design Service, Engineering, R&D, Business Operation and Marketing.

4.1. The case of Global Unichip Corporation (GUC)

GUC is a dedicated full IC design service foundry based in Taiwan, was founded in 1998. GUC is now available to public on the Taiwan Stock Exchange. GUC provides total solutions from sil-icon-proven IPs to complex time-to-market SOC turnkey services. These fully extended services include full steps SOC design, manu-facturing, multi-project wafers (MPW), IP design and other cus-tomization solutions. Combining the successful business model and their core competences, GUC started to perform signiﬁcant growth in revenue, increased of 108% YoY in 2006, up 36% YoY in 2007 and up 33% YoY in 2008 which the revenue was $278.8 mil-lion. This has turned GUC into the tear one fabless IC design service company in worldwide semiconductor industry.

4.2. Procedure and results

First, the goal of this study is identified and a committee is formed. It is believed that a panel of experts can further enhance the quality of the study. More specifically, an expert validity survey has been designed for the gathered experts to confirm their exper-tise. Then, the qualified experts are formed as a focus group and con-ducts in-depth discussions to evaluate more specific ideas about the core competences by providing their suggestions and revisions based on their expertise and the past studies in the literatures that we have reviewed. The significant viewpoints received from the dis-cussions provide confirmations to the results. Throughout the liter-ature reviews and focus group processes, seven core competences of GUC are identified. They are: IP design capability, integrated IP turn-key solution, customized design capability, integrated supply chain services for turnkey IC production, comprehensive design capability for various applications, effective reduction of new product devel-opment cost for customers, and integrated streamline manufactur-ing technologies for IC production.

4.2.1. IP design capability

IP is one of the key factors that enables the IC design implemen-tation, particularly in the SOC era. The ﬁgure of merit of an IP includes electrical performance, capability of design for manufactur-ing, circuit size and re-usable ﬂexibility that require sophisticated engineering techniques, as well as time and R&D investment. Therefore, development of success and widely adopted IPs is not only a core competence, but also a high entry barrier for competitors in the market.

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4.2.2. Integrated IP turnkey solution

IP reusability and integration of different IPs, such as processor, interface and coder/decoder for audio or video, are the core values in the SOC era. ICs’ complemented function requires various con-tents and a combination of several IPs, which have become severe pressures to traditional IC designers because of the higher invest-ments, longer time-to-market and lower successful rate. Therefore, the capability to provide integrated IP turnkey solution is crucial for the success.

4.2.3. Customized design capability

The demands and specifications of ASIC or IC customers are comprehensive. Consequently, the existing designs or IPs may not perfectly fulfill the various demands of customers’ designs. A successful IC design service company is required to provide various customization designs for the customer’s specific demand in both the products and the associated software. If the IC design service company does not possess a powerful customized design capabil-ity, then the market share and growth will be limited.

4.2.4. Integrated supply chain services for turnkey IC production IC production contains complicated steps, which include photo-mask generation, wafer process, testing, package, reliability quali-ﬁcation and logistic. It is a crucial factor for most of the traditional IC design companies in deﬁning ways to better integrate the sophisticated supply chain. Acting as a fabless turnkey, the IC ser-vice company needs to have the core competence to establish a complex but well managed semiconductor supply network for IC production and thus the end customers are able to relieve the pres-sure of production management and focus on their core business. 4.2.5. Comprehensive design capability for various applications

There is a variety of IC applications in the industry, including processors, drivers, coders/decoders, multi-media, mobile solution, communication, controller, display, etc. An IC design service com-pany needs to provide a comprehensive design capability for these applications, since it has no self-owned product and relies solely on the business from other IC design companies. The more extensive applications an IC design service company can provide, the more business the company will gain, with that more experiences will be accumulated. In addition, this positive growing cycle renders an IC design service company stronger competences and creates higher entry barrier to other competitors.

4.2.6. Effective reduction of new product development cost for customers

A large IC design service company releases far more design cases to its supply network than its customers do. This is because the customers are usually the traditional or small-to-medium scale fabless IC design companies which will not have numerous cases. By consolidating more design cases, the company will have a mas-sive purchasing power that effectively lowered its customers’ total cost in IC manufacturing. Furthermore, customers can utilize the resource and facility of a service provider to eliminate the need for duplicated investment. This core competence helps customers to reduce their NRE cost and entry barrier for new IC design projects.

4.2.7. Integrated streamline manufacturing technologies for IC production

As the IC manufacturing process has evolved into sub-wave-length technology nodes, such as 90 nm, 65 nm, 40 nm and beyond, the manufacturing technology has become very compli-cated and required detailed knowledge to integrate the complex process technologies in each IC production step along the entire supply chain. IC design companies in small or medium scales have

no sufﬁcient knowledge and resource to collaborate closely with all suppliers in the supply chain. On the other hand, suppliers are, without a doubt, willing to spend resources for selective enormous customers only and thus an aggregator will obtain a better service level.

Based the seven core competences stated above, this research has further employed the DEMATEL method to capture the com-plex relationships among these competences. The collected pair-wise comparison results have been obtained (the comparison mechanism has been described at step 1 of Section 3), and that the preliminary average direct-influence matrix is shown inTable 1. Based on the direct-influence matrix, these numbers are normal-ized continuously into the data shown in Table 2—the direct-relation matrix (calculated by formula(2) and (3)).Tables 3 and 4present ‘‘total-influence matrix’’ and ‘‘total effects and net effects for each factor,’’ respectively. Finally, formula(5)–(7)have been used as the normalized matrix to produce the causal diagram by mapping a dataset of (D + R, D R), as displayed inFig. 1.

4.3. Discussions

The results shown in the causal diagram have clearly and intu-itionally discovered the importance of the order of these core com-petences in driving GUC to success. It is clear that, by looking at this causal diagram, the seven core competences can be divided into a causal and an effect group. The causal group contains IP design capability (D1), integrated IP turnkey solution (D2), custom-ized design capability (D3), comprehensive design capability for various applications (D5) and integrated streamline manufacturing technologies for IC production (D7). The effect group includes Table 1 Direct-inﬂuence matrix. D1 D2 D3 D4 D5 D6 D7 D1 0.00 3.67 3.83 1.33 1.67 3.00 1.67 D2 2.00 0.00 3.17 2.17 2.33 2.83 1.67 D3 2.67 3.17 0.00 2.33 2.00 2.83 2.00 D4 0.33 1.67 1.17 0.00 1.33 3.67 3.00 D5 2.17 2.50 2.83 2.00 0.00 2.00 1.83 D6 0.33 1.17 1.00 2.33 1.17 0.00 1.67 D7 1.17 2.50 2.50 3.17 1.17 2.83 0.00 Table 2 Direct-relation matrix. D1 D2 D3 D4 D5 D6 D7 D1 0.00 0.24 0.25 0.09 0.11 0.20 0.11 D2 0.13 0.00 0.21 0.14 0.15 0.19 0.11 D3 0.18 0.21 0.00 0.15 0.13 0.19 0.13 D4 0.02 0.11 0.08 0.00 0.09 0.24 0.20 D5 0.14 0.16 0.19 0.13 0.00 0.13 0.12 D6 0.02 0.08 0.07 0.15 0.08 0.00 0.11 D7 0.08 0.16 0.16 0.21 0.08 0.19 0.00 Table 3 Total-inﬂuence matrix. D1 D2 D3 D4 D5 D6 D7 D1 0.49 0.97 0.96 0.83 0.65 1.08 0.76 D2 0.56 0.71 0.87 0.82 0.64 1.01 0.71 D3 0.62 0.92 0.73 0.86 0.65 1.06 0.76 D4 0.35 0.62 0.58 0.53 0.46 0.84 0.63 D5 0.56 0.83 0.83 0.78 0.49 0.94 0.70 D6 0.27 0.46 0.44 0.52 0.35 0.48 0.45 D7 0.48 0.79 0.77 0.82 0.54 0.95 0.57

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integrated supply chain services for turnkey IC production (D4) and effective reduction of new product development cost for customers (D6). The causal and effect structure implies that D1, D2, D3, D5and D7are the main core competences in supporting GUC to move to-ward the success. Subsequently, D4and D6are not possessed by GUC radically, instead, they are generated and affected by the other ﬁve core competences mentioned above. It also reveals that the IP design capability (D1) is the most important causal factor among the core competences and generates the competitive advantages, thus making it the most signiﬁcant core competence to the capa-bility of the IC design service company. These two guidelines of improvement direction will lead GUC toward a more successful level. The detailed discussion of GUC’s core competences which affect the effect group are listed below:

4.3.1. IP design capability (D1)

GUC has designed abundant IPs; the categories contain mixed signal (e.g. analog to digital controller, power management), bus interface (e.g. Receiver/Transmitter, USB controller), multimedia (e.g. JPEG/audio/video coder/decoder), peripheral core and proces-sor (ARM based). The company’s strong capability in IP designs prompts the customers to reconsider the idea of contributing their own investments in developing or purchasing the IPs. Instead,

customers are now more inclined to exploit GUC’s existing IPs, thus allowing GUC to gain more business from the market. Additionally, this capability creates a high entry barrier to other competitors. 4.3.2. Integrated IP turnkey solution (D2)

Many of SOC designs demand integrations of different IPs, such as processors, bus interface, mixed signal and multimedia func-tions. Besides the profound investment required for purchasing or licensing the IPs, the process of integrating them into a SOC IC is another crucial subject, for it requires professional knowledge, techniques, tools and experts. GUC is the leading company in pro-viding integrated IP turnkey solution to their customers, enabling the minimization of their R&D costs and shorten their time-to-market schedule.

4.3.3. Customized design capability (D3)

Despite the fact that there is a tendency in which IPs are now reusable, most of the chip designs still require a certain level mod-iﬁcation for those IPs. This is due to various concerns involving die size, performance, layout, power or package. Not only GUC has a relatively strong capability in making IP customization to fulﬁll dif-ferent requirements of customers, but it also reduces customers’ efforts.

Table 4

Total effects and net effects for each core competence.

Core competence D R D + R D R

IP design capability D1 5.75 3.33 9.08 2.42

Integrated IP turnkey solution D2 5.32 5.29 10.61 0.03

Customized design capability D3 5.61 5.18 10.79 0.42

Integrated supply chain services for turnkey IC production D4 4.02 5.16 9.18 1.14

Comprehensive design capability for various applications D5 5.14 3.80 8.94 1.34

Effective reduction of new product development cost for customers D6 2.96 6.35 9.32 3.39

Integrated streamline manufacturing technologies for IC production D7 4.91 4.59 9.50 0.32

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4.3.4. Comprehensive design capability for various applications (D5) In order to have a continuous growth in the design service market, GUC has made every effort to provide a wide range of IPs and design techniques for more customers’ applications. The comprehensive design for various applications has expanded GUC’s customer base and revenues through the years. In addition, accumu-lation of design cases of various applications have also enriched and strengthened GUC’s design capability. This positive growing cycle has fostered a core competence and competitive advantages for GUC.

4.3.5. Integrated streamline manufacturing technologies for IC production (D7)

The small or medium size IC design companies have difficulties in obtaining sufficient amount of support from suppliers. Through-out the years of learning from the increasingly successful projects, GUC has become experienced in the whole advance IC manufactur-ing flow and technologies. By close collaboratmanufactur-ing with its suppliers, GUC has been a perfect intermediary between IC designers and supply chain by providing an integrated streamline manufacturing technologies for IC production. Therefore, GUC customers can focus on their core business.

5. Conclusions

Core competences are essential to the business success. Con-ventional researches have concentrated mainly on understanding the core competences of an industry or a firm, but did not provide sufficient analysis of the interaction relation between them. IC de-sign service has newly emerged in the recent years and hence the core competences of its success remain unclear. Through the re-searches performed, this paper has made contributions in the fol-lowing areas: (1) defining the core competences of this emerging business from the tier one company – GUC as a case; (2) further investigating the interrelationship of the core competences of GUC; (3) demonstrating DEMATEL method as a powerful group decision making tool in supporting the exploration of the cause and effect relationship in a complex system, as well as implemen-tation for core competences analysis based on the generated casual diagram by the illustrated case study. Hence, researchers can make analysis and provide improvement strategies accordingly; (4) pro-viding management implications and improvement suggestions to this case study.

The seven core competences of IC design service industry have been identiﬁed through literature reviews and focus group inter-views. Subsequently, DEMATEL method is proposed and applied to the case study in exploring the causal and effect relationship amongst the core competences of GUC. Based on the casual dia-gram transformed by DEMATEL method, it has shown the seven core competences of GUC can be divided into a causal group and an effect group. The causal group includes the IP design capability, integrated IP turnkey solution, customized design capability, com-prehensive design capability for various applications and inte-grated streamline manufacturing technologies for IC production, whereas the effect group contains the integrated supply chain ser-vices for turnkey IC production and effective reduction of new product development cost for customers. The diagram further indi-cates that the two core competences in the effect group are af-fected by the ones in the causal group. The management implications are that GUC needs to concentrate on improving the ﬁve core competences in the causal group, and in turn, enhance the effect group and ultimately strengthen its overall competitive-ness. It has also revealed that the IP design capability is the most important cause factor of core competences for GUC. Consequently, GUC is recommended to input more resources for securing and

enhancing this core competence, which will have high inﬂuence to its overall competitive advantage.

In addition to the findings of the core competences of the IC de-sign service company, this research also has established a solution to deal with the causal relationship analysis of core competences. The proposed of the DEMATEL method and procedure of this case study have shown that it is possible to solve the determination of a complex and interactive core competence issue of a firm. There-fore, it can be generalized or modified as required for similar anal-ysis of other companies or industries. For future researches, surveys from customers may assist in confirming the main purposes and benefits of using IC design service, and that cross examination and analysis can be done afterward to render a more comprehen-sive, two-way perspective accordingly.

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