The “third-runner strategy”: entering SRAM where the majors had left (1989)

The strength, and the fragility, of avoiding the majors

The heart of this decision was that by deliberately avoiding an opponent it could not beat head-on, Rohm created a field in which it could fight at all. A mid-sized firm joining the volume race in leading-edge memory, which demands enormous investment, can only exhaust itself. Rohm instead aimed at the older generations the majors had let slide as they moved up in density, and cancelled the disadvantages of a late entrant by buying circuit designs and running mixed production lines. Re-choosing the ring in which to compete is a useful example for any company with limited resources asking where it should fight. The eye for the moment when the majors had eased off was the lifeblood of the strategy.

That said, a strategy of perpetually avoiding the majors carries its own fragility. Demand for older-generation parts eventually thins, and if a major decides to cut prices in earnest, the economics of marginal supply collapse at once. Sato himself warned against leaning too far into volume and tried to hold SRAM to under a tenth of total output, precisely because he foresaw that brittleness. Where to move the ground won by avoidance — that is the open question. Rohm’s “third-runner strategy” keeps demanding both the discipline of staying off the majors’ ring and the agility not to grow comfortable inside that discipline.