Partnership ecosystem of IC design service companies: The case of Taiwan

•The production network is localized based on the benefit of complete value chain.•Taiwanese foundries take a leader role for the change in production ecosystem.•The IP ecosystem is being internationalized.•International EDA and IP providers play leading roles in the IP ecosystem.•Summary of the alliance characteristics of the IC design service companies.

The continuously evolving IC industry has driven IC design service companies to become the niche players in the semiconductor value chain. These emerging companies, mostly SMEs, manage the entire chip development manufacturing process and apply third party's resources when and where its customers need them. To keep the customer as their main focus and deliver what the customer truly needs, a strong and committed partnership ecosystem is more important than ever.The objective of this paper is to provide a better understanding of the partnership ecosystem of Taiwan's IC design service companies. A co-evolutionary theory in the business ecosystem is used as a theoretical background to explain the relationship in the investigated partnership networks. The partnership networks of the IC design service companies were analyzed together with the corporate data such as revenues and milestones. The findings show that the firms have accumulated and created their competitive advantage by forming strategic alliances with various leading foundries, IP vendors, and EDA tool providers to leverage their technological capabilities. While the production ecosystem was localized in Taiwan based on the benefit of the complete value chain, the IP ecosystem was more internationalized.The existing networks provide a new insight into opportunities for new entrants even in the highly competitive environment like the semiconductor industry. This study contributes to the understanding of the characteristics of the niche players. It will be useful as policy implications for the industry stakeholders and governments to setup direction for further support and investment in the IC design service business.