the electronics industries springboard: transistor 1948 significance: provider of components
Post on 21-Dec-2015
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•The Electronics Industries
• springboard: transistor 1948• significance: provider of
components
•Electronic Production System
Dicken’s focus
Global trendsActive components
• production was initially dominated by USA
• 1980s: Japan overtook USA• 1990s: U.S. producers have
rebounded
World production of active components, 1996
26% 11%37%
9%
Trade balances in active components, 1994,
$billionsRegion Exports Imports balance
USA 18 27 -9
Japan 25 7 +18
W. Europe 19 29 -10
S. Korea 11 3 +8
Asian NIEs* 37 32 +5*Hong Kong, Taiwan, Thailand, Malaysia, Philippines, Singapore
World production of consumer electronics
• more dispersed • role of East and SE Asian NIEs is
more pronounced
World productionConsumer electronics
Trade balances in consumer electronics,
$billionsCountry Exports Imports Balance
USA 4 19 -15
Japan 17 3 +14
Asian NIEs 32 15 +17
The demand factor-semiconductors
• Demand is derived. Depends on demand growth for products in which they are embedded
• spectacular demand growth. Significance of personal computer
• role of spectacular price decline
• subject to fluctuation---> supply gluts and shortages
• segmentation of demand
The demand factor--consumer electronics
• Final demand products for which demand is income-elastic
• demand depends on life-cycle stage
Role of governments--semiconductors
• Rationale for intervention???
• How to gain access?– Build indigenous production capacity
– attract foreign firms
– buy on open market and concentrate on developing end uses
• U.S. – initially used defense/aerospace demand to
develop indigenous production– more recently has shifted to reducing Japanese
dumping
• Japan– encourage growth of industrial & consumer
applications– protect domestic industry– coordinate collaborative efforts
• Europe--collaborative efforts
Role of governments--consumer electronics
• Primarily defensive in response to import penetration
Production Costs, Technological Change &
Corporate Strategies--semiconductors--
I. Industrial concentration trends
• Initially fragmented. Entry was relatively easy
• Steep recent increases in cost of entry due to pressures to:– pack more circuits on a single chip
– improve yields
• result is industrial concentration
II. Trends in producer types
• Vertically integrated captive producers- manufacture for in-house use. IBM, GM
• merchant producers. For sale to other firms. Intel, Motorola
• hybrids. Most Japanese and European producers
• trend is toward greater vertical integration
III. Mergers and acquisitions
• 1970s and 1980s
• followed by international strategic alliances
• Why? Rapid pace of technological change & high costs of installing new capacity.
IV. Multiple stages to production process
Design of semiconductors
Prod’n of silicon crystal
Wafer fabrication
Testing
Assembly & packaging
Final testing & shipping
Requirements for
scientific, technical &
engineering personnel
Requirements for
cheap, low-skilled labor
Result: Offshore production
• Which stages? those most attracted by cheap labor.
• American firms pioneered. Hong Kong 1962.
• Japanese firms accelerate offshoring in 1980s. Why? Appreciation of value of yen.
Changing structure of East and SE Asian production
Semiconductor Imports into the U.S.
1. Geographic changes
Factors
• Labor cost increases in South Korea, Taiwan, Hong Kong, Singapore
• Gov’t policy changes in Malaysia and Philippines
2. Emergence of higher skill stages of production--factors
• Hong Kong--wafer fabrication with Chinese support
• Korea--backward integration of consumer electronics producers
• Taiwan--gov’t sponsored research organization
• U.S. plants add functions like testing with more local sales
Result--hierarchical organization within the region