Virtual Factories and Dynamic Core Competency: a Case Study of Advanced semiconductor Engineering

Due to globalization, advanced information and communication technology has fuelled competition, and building and sustaining of competition advantages are major concerns of companies. Developing dynamic core competency has become a new competition strategy and an important way to help companies remain flexible and able to respond quickly to unpredicted changes in the environment. The development of dynamic core competences requires accumulation of technology and skill over time. In turn, companies can exploit these invisible assets to develop new products and new markets and to out-compete competitors. The Internet could provide value-added service to allow companies to communicate with each other. As such, the Internet-based virtual factory had been implemented to facilitate connections among partners. Taiwan based company Advanced Semiconductor Engineering (ASE), one of the world’s largest integrated circuit assembly and testing manufacturers, has constructed its virtual IC factory to strengthen bonds with upstream customers. Customers are able to directly access ASE’s information system and thereby receive immediate status reports of their orders or other types of feedback. In this paper, the framework of ASE’s virtual IC factory is introduced, and the competitive advantages resulted from this virtual factory are investigated. Implications of ASE’s experience are then discussed. Keyword: Virtual factory, Internet, Electronic commerce, Dynamic core competency