S-Space College of Business Administration/Business School (경영대학/대학원) Dept. of Business Administration (경영학과) Seoul Journal of Business Seoul Journal of Business Volume 21, Number 1/2 (2015)
The Chicken Game and the Amplified Semiconductor Cycle: The Evolution of the DRAM Industry from 2006 to 2014
- Lee, Jeho
- Issue Date
- Seoul Journal of Business, Vol.21 No.1, pp. 1-30
- Industry fluctuations in the supply of DRAM chips relative to demand have been characterized by what is called “the silicon cycle.” In the period between 2006 and 2008, the DRAM industry experienced an unusually sharp transition from a shortage of DRAM products to an extreme oversupply, culminating with the crash of DRAM prices in 2008. The industry’s overcapacity was preceded by a mad race to expand capacity; this race has been dubbed as the “chicken game” in the media. Even in the time of plunging DRAM prices, players preferred no to reduce their output. The amplified industry cycle accelerated the exit of financially vulnerable firms. I argue that the combination of the amplification of cycle and rising entry barriers fosters the transition of an industry to an oligopoly, in which cyclicality is curbed and the positions of market leaders are solidified.