Abstract
This study develops a system dynamics model for the IC foundry market. The proposed model simulates foundry “system” behaviour, and includes a demand sub-model, a supply or capacity sub-model, a technology sub-model, and a financial sub-model. The objective is to investigate the relationships among foundry strategies and financial performance, for example, R.O.E. (Return Of Equity). The proposed model is validated using different model structures by applying the past business data. Five scenarios are designed for strategy analysis. The relationships among foundry financial performance (R.O.E.) and the demand forecast, capacity strategy for fulfillment, capacity build up time lag and capacity unit cost are identified. According to the findings, the R.O.E. for foundry is also forecasted from 2004 to 2010 and discussed. The strategic implications of the scenario simulations are highlighted and summarized.