The European semiconductor supplier ST Microelectronics provides a leading example of how to turn the weakness of begin born far away from the capital of semiconductors into a strength. ST achieved a global position is some segments with innovative products, in particular a diversified offering of “system-on-a-chip”.

ST Microelectronics assembled knowledge from several locations around the world by investing in local R&D units in various countries that were able to attract local “silicon talent”, and by actively engaging in new product development for a selected set of lead customers such as American-based Seagate (in the hard disk drive industry) which provided “application know how”. When needed, ST acquired technologies that were owned by other firms and even by competitors around the world. Consequently, ST was able to develop different levels of system-on-a-chip (s-o-c) solutions for different applications and preceded its major (American and Japanese) competitors in the global chip market.

As a result, ST’s chip set solution for HDD application replaced more than ten chips and over one hundred discrete components in hard disks, contributing to size reduction, quality improvements, and lower cost of manufacturing and usage.

Source: Santos, Doz and Williamson (2004)