Research On The Target Cost Management Models Of IC Design Companies And Its Application

IC(Integrated circuit) industry chain includes three key parts: IC design and its application development, the production of materials and semiconductor equipment, packaging and testing. According to the data released by the China Semiconductor Industry Association in 2014, the sales of domestic semiconductor increase over last year by 20.2% and the fastest growth belongs to the semiconductor design enterprises by 29.2%, whose total sales accounts for 34.7% in the whole industry. The number of design companies has witnessed steady growth every year. Although domestic semiconductor industry develops rapidly, it is a pity that none of them is in the list of Top 10 semiconductor companies in the world. There is a gap between domestic and foreign industries in technology, funds, talents, innovation and management concept. The scientific managing concept matters most since it cannot be copied while the technology can be learnt, the funds can be raised and the talents can be trained. As the cost management and developing cycle control is the core in company management, how to design a series of cost managing models of domestic IC design with scientific and efficient cost management and strict developing cycle control has been a hot topic.Presently, the main problems of the domestic semiconductor industry includes lack of focus, inefficient methods, the distortion of cost data, time wasting and market target deviation, budget control etc. Through comparison and analysis of the cost models of lean, operation, planning, strategy and quality, the target cost managing model is put forward in detail, and the application of IC design industry will also be analyzed in the paper.In the case analysis section, an IC design company G is chosen as the research object. The author will introduce the application of target cost management in IC design enterprises based on the existing problem in company cost management. First, G company should replace the traditional method by controlling the purchase price, reducing the labor costs with the improving the company’s overall value to establish target cost management model. Secondly, based on the operation cost, the reliability, timeliness and forward-looking decision-making of cost accounting information shall be improved. Thirdly, before the project, feasibility analysis shall be done to assess the gross profit the new product can reach. Finally, step by step and target cost management in company cost control can be achieved with the theory of constraints. In general, Target cost management plays an important role in high-tech companies whose quality cost control has a high standard and even the manufacturing companies with large fixed assets can benefit from it.