Modeling strategic semiconductor assembly outsourcing decisions based on empirical settings

In semiconductor supply chains, most chip makers focus on core competence of wafer fabrication and utilize assembly outsourcing to reduce operational costs, enhance capital-effectiveness of investments, and diversify the risks among the vendors. Assembly outsourcing decisions involve strategic partnerships with vendors and operational excellence for order allocations subject to production constraints, cost, delivery, and quality. This study aims to develop a decision framework in which preference over vendors at strategic level and order allocations at operational level can be integrated. Focusing on real setting in a semiconductor company, a decision support system embedded with proposed models was developed to evaluate vendor performance, allocate the orders, and generate the associated material requirement planning reports. The results showed practical viability of the proposed framework for modeling manufacturing strategy with the integration of optimized operational decisions.