Interviewer view · keep this screen to yourself

How utilization drives a foundry's profit

You run the case. Read the prompt, answer questions from the notes below, and share data only when the candidate asks for it or gets stuck. Score at the end.

Case timer

00:00

Target length:

1. Read the prompt aloud

Read it slowly, then pause. Let the candidate ask questions before they structure.

A foundry in Taiwan has capacity of 1 million wafers a year. Its fixed costs, mostly depreciation of equipment, are USD 3 billion a year. Each wafer sells for USD 6,000 and has variable costs of USD 1,500. What is the profit at 90 percent and at 70 percent utilization, and at what utilization does it break even? (Figures are illustrative.)

2. Answers to clarifying questions

This case has no scripted clarifying answers. Answer from the prompt, and say "assume what you think is reasonable" if the prompt does not cover it.

3. A model structure

Compare the candidate's structure with this one. A different split can be just as good if it is clean and fits the problem.

Profit = wafers x (price minus variable cost) minus fixed costs
- Wafers = capacity x utilization
- Contribution per wafer = price minus variable cost
- Break-even wafers = fixed costs / contribution per wafer

4. The working, step by step

Each step shows how a strong candidate works it out. Share a new fact from it only when the candidate asks or is stuck, and let them do the math: the result in the dark box is what they should reach.

Step 1: Contribution per wafer
What a strong candidate does: USD 6,000 minus USD 1,500.
Contribution per wafer (USD): 6,000 - 1,500 = 4,500
Step 2: Profit at 90 percent
What a strong candidate does: 900,000 wafers at USD 4,500, minus USD 3,000 million of fixed costs, in USD millions.
Profit at 90 percent utilization (USD millions): 900,000 × 4,500 ÷ 1,000,000 - 3,000 = 1,050
Step 3: Profit at 70 percent
What a strong candidate does: 700,000 wafers at USD 4,500, minus fixed costs.
Profit at 70 percent utilization (USD millions): 700,000 × 4,500 ÷ 1,000,000 - 3,000 = 150
Step 4: Break-even utilization
What a strong candidate does: Fixed costs divided by contribution per wafer, as a share of capacity.
Break-even utilization (percent): 3,000,000,000 ÷ 4,500 ÷ 1,000,000 × 100 = 66.67

The recommendation to listen for

At the end, say: "The CEO walks in. What is your recommendation?"

The foundry should protect utilization above all, because a fall from 90 to 70 percent cuts profit by about 86 percent, from USD 1,050 million to USD 150 million, while revenue falls only about 22 percent. First, each wafer contributes USD 4,500 against USD 3 billion of fixed costs, so the fab breaks even at about 67 percent. Second, this means long-term contracts and customer prepayments are worth more than a slightly higher price. The risk is that prices also fall in a downturn, making the profit drop even larger. As a next step, track the order book against the 67 percent line each quarter.

Risks a strong answer names: Prices usually fall in a downturn too, making the profit drop even larger; New capacity from rivals can push utilization down across the industry.

Score the candidate

Score each criterion from 1 to 5. A 2 or a 4 sits between the descriptions.

This case has no exhibit. Score Exhibit reading on how the candidate used the data you gave them: did they pick out the number that matters and say what it means?

Structuring

1: No clear structure, or a memorized framework that does not fit the problem.
3: A sensible structure, but with some overlap, a gap, or no clear priority.
5: A structure built for this problem, with no overlap and no gaps, a stated hypothesis, and a clear first step.

Math

1: Frequent errors, no units, or needed heavy help to finish.
3: Right answers but slow or messy working, or one error caught late.
5: Accurate and clearly narrated, with units, a sense check, and what the number means.

Exhibit reading

1: Read the chart aloud without finding the number that matters.
3: Found the key number but gave only part of the so-what.
5: Pulled the right number quickly and said what it means for the case.

Synthesis

1: Summarized what was done, with no clear answer.
3: Gave an answer, but with weak reasons or no next step.
5: Answer first, then two or three reasons with numbers, the main risk, and next steps.

Communication

1: Hard to follow: long silences, no signposting.
3: Clear most of the time, with some rambling.
5: Calm and concise, signposted each step, and checked in with the interviewer.

Total

0 out of 25

Score all five criteria to see the band and the feedback template.