Virtual factory and relationship marketing—a case study of a Taiwan semiconductor manufacturing company

As global competition grows, building and maintaining of long-term customer relations are major concerns of companies, such that relationship marketing becomes a new marketing paradigm. Customer service in addition to manufacturing capability is an important way to keep the customer commitment. The Internet is a powerful information technology used to provide value-added service to customers and to communicate with each other. As such, the Internet-based virtual factory has been proposed to facilitate connections among partners. Taiwan Semiconductor Manufacturing Company (TSMC), one of the world's largest dedicated integrated circuit foundries, constructed its virtual fabrication to strengthen bonds with customers. Customers are able to access directly to TSMC's and its strategic alliance partners’ information system and thereby receive immediate status reports of their orders or some other feedback. In this paper, the framework of TSMC's virtual fabrication is introduced, and the competitive advantages resulted from virtual fabrication are investigated. Implications of TSMC's experience are then discussed.