Challenge:

PRx Inc. began working with Applied Materials when it had annual revenues of less than $100 million and was an also-ran in the highly competitive field of semiconductor manufacturing equipment.  The company had just hired a new CEO, Jim Morgan, who was both brilliant and a risk-taker.  

 

Applied posed a unique challenge because it had, at most, twenty-five customers, all of them giant semiconductor chip makers, such as Intel and IBM.  Furthermore, Applied’s greatest competitive advantage was that it entered potential new international markets, most notably China, as much as a decade before any indigenous chip companies arose there.

 

The challenge, then, was to build Applied’s reputation – via PR, advertising and sponsorships – around its core business.  That is, to raise the company’s profile to help its image with investors, potential employees and surrounding communities – the goals being to raise stock value, improve the quality of new recruits and give the company a positive and sympathetic image to make it more resilient during the boom-bust cycles that characterized its industry.

 

Strategies & Tactics:

This was accomplished in multiple ways over the subsequent two decades:

• Education of the public, via press releases, in-house publications, and events, to the nature of Applied’s technology and business.

• Writing the AM annual report to reflect a larger potential audience than just hard-core chip companies.

• Extensive sponsorship of local community non-profits, from the ballet to TK

• Crisis management during downturns – creating the impression of Applied as a ‘good company in hard times’.

• Positioning of Morgan as a major figure in Silicon Valley and high tech.

 

Results:

1. A major national advertising campaign, targeted at a mainstream audience that positioned Applied Materials as “the company that makes the chips that run the world.”  This $25M campaign was so successful that, a decade later, this tagline still characterizes the company in the public’s eye.

2. Joint Venture Silicon Valley – Applied took the lead in creating, under PRx’s consultation, JVSV, a consortium of Silicon Valley companies working together in their long-term strategic interests.  The first of its kind in the world, JVSV still plays a key role in Silicon Valley business life.

3. When PRx ended its relationship with the company with the retirement of Jim Morgan, Applied Materials had annual revenues of more than $6 billion, a market value of nearly $100 billion, and – despite its small customer base – enjoyed one of the best.