KULICKE AND SOFFA 1

INDUSTRIES, INC.:
DESIGNING A SUPPLY
CHAIN NETWORK
GROUP 9
SIDDHARTH PAL
SUDHANSHI PARAKH
TANYA SAXENA
RITUPRIYA
SHAHNAZ BEGUM
Introduction 2

K&S Inc was founded by Fred Kulicke and Al Soffa in Fort Washington,
Pennsylvania in the year 1951

• K&S Inc is Supplier of Semiconductor equipment’s

Israeli site itself hold 50% global market share in semiconductor wire

• Primary Markets for K&S products and services included Asia, the United States
and Europe
Global sales Percentage 3

Country Percent of Sales

US 9
Taiwan 31
Malaysia 9
The Philippines 11
Singapore 10
Korea, China and other Asia Pacific 22
Other International 8
Factors leading to change 4

There was a shift in K& S’s customer base

• A higher demand in the south Asian market

Asia is offering larger growth opportunities that would reduce their supply
risk
• The opening of new markets & competitor’s new plants in Asia

Asia-Pacific spending in semiconductors overtook Europe

• It will lead to cost reduction as there is change in technology, material and

inventory management, lower salaries
 Factors to be considered while 5

redesigning
• Awareness of the occurrences of the natural disasters can affect the company’s
Environmental Factors capability performance in terms of logistics

Legal and Political Factors • Each country imposes different regulations and tariffs

• The presence and lack of infrastructures in target country affects the technological
Technological Factors development of the company

• The GDP, manufacturing wages, exchange rates, inflation and economic growth
Economic Factor must be considered

• The cost of investment in each country is different, thus it is important to consider

Cost of investment whether the investment made is worth

• Every country has its own different cultures, lifestyles, languages which affect the
Social Factors business operation
Advantages and disadvantages of the 6

different locations
LOCATION ADVANTAGES DISADVANTAGES

Yokneam, Israel •Presence in Israel for over 30 years •Heavy taxation (approx 43% of GDP in 2000)
•The history of K&S here was long and marked its reliability and
achievements
•Having one site would provide the flexibility to share overhead

Jordan •Proximity to Israel and lower labour costs •Diplomatic relations between Arab-Israel
•Duty-free transfer of goods to USA because of QIZs •Uncertainty regarding advancement of infrastructurel
•Ease of finding workforce

Singapore •Well trained workforce and excellent infrastructure • High cost of living
•Political, economic and social stability
•New initiative- I21
•Existing production site with machines and logistic centre

China •SEZs and tax incentives for foreign investors •High infrastructural investment
•Low production costs
•Low labour costs
•Low cost of living
New location based on financial 7

consideration
Location Investment cost (in Efficiencies (units/ Shipping cost to Asia   Shipping cost to
millions of U.S. worker/ hour)   United States and
dollars)   other int’l.  

Israel 2 10 1.00 0.75

China 6.5 7 0.50 1.50

Jordan  4.5 8 1.00 0.75

Singapore 6 8 0.50 1.50

New location based on financial 8

consideration

Location Investment cost Labour hours required Labour cost Total Total Total cost Total
(million dollars) (hours) (million dollars) shipping shipping for labour cost for
cost to cost to US and 3 years 
Asia and other shipment
countries

Israel 6.5 2,00,000 2.156 1.66 0.255 4.071 12.213

China 2.0 2,85,714 0.1428 0.83 0.510 1.482 4.448

Jordan  4.5 2,50,000  0.262 1.66 0.255 2.177 6.532

Singapore 6.0 2,50,000  2.297 0.83 0.510 3.637 10.91

Recommendation and implementation 9

challenges

K&S should not expand the current capacity in Israel

• Investment cost would be approximately $2 million dollars

The average manufacturing wage is $10.78 which is high

• Israel imposes a heavy taxation

Recommendation and implementation 10

challenges

The company would be close to the customers and suppliers in Asia

• The expenditure on labor, operations, property, raw materials would

be low

They will manage to have an edge over their competitors by providing

the best quality, price, performance and delivery

• Availability of Industrial parks in different foreign locations

 11

THANK YOU