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Offshoring in the Semiconductor Industry: Historical Perspectives

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  • Brown, Clair
  • Linden, Greg
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    Abstract

    Semiconductor design is a frequently-cited example of the new wave of offshoring and foreign-outsourcing of service sector jobs. It is certainly a concern to U.S. design engineers themselves. In addition to the current wave of white-collar outsourcing, the industry also has a rich experience with offshoring of manufacturing activity. Semiconductor companies were among the first to invest in offshore facilities to manufacture goods for imports back to the U.S. A brief review of these earlier manufacturing experiences and their impact on the fortunes of the domestic industry and its workers can help to illuminate the current debates over offshoring in services. Because meaningful data about the impact of the offshoring of chip design (and even manufacturing) are limited, we rely on a more qualitative analysis for our key points. We have conducted dozens of interviews with engineers and managers at numerous semiconductor and related companies in the United States, Asia, and Europe over the past six years. Our research also incorporates the rich store of publicly available information in trade journals and company reports. This paper describes the two previous stages of offshoring semiconductor assembly jobs and of outsourcing semiconductor manufacturing and the impact they had on the U.S. semiconductor industry. We argue that the initial concern about losing domestic jobs in both stages turned out to be unfounded as the industry used the situation to its competitive advantage by becoming cost competitive (assembly stage) and by developing the fabless sector (manufacturing stage). We then analyze the on-going stage of offshoring design jobs, and compare this stage to the two that came before in order to explore the possible impact on domestic jobs and the U.S. semiconductor industry. We begin in section one with a brief description of the stages of semiconductor production and our analytical framework. Section two looks at the offshoring of assembly jobs, and section three analyzes the foreign outsourcing of manufacturing. Section four explores the offshoring of design jobs, and concludes with a discussion of what this means for the U.S.

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    Bibliographic Info

    Paper provided by Institute of Industrial Relations, UC Berkeley in its series Institute for Research on Labor and Employment, Working Paper Series with number qt0wv0k78t.

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    Date of creation: 01 May 2005
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    Handle: RePEc:cdl:indrel:qt0wv0k78t

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    Keywords: Offshore Employment;

    References

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    1. Dieter Ernst, 2003. "Internationalisation of Innovation: Why Chip Design Moving to Asia," Economics Study Area Working Papers 64, East-West Center, Economics Study Area, revised Mar 2004.
    2. C. Alan Garner, 2004. "Offshoring in the service sector : economic impact and policy issues," Economic Review, Federal Reserve Bank of Kansas City, issue Q III, pages 5-37.
    3. Greg Linden & Deepak Somaya, 2003. "System-on-a-chip integration in the semiconductor industry: industry structure and firm strategies," Industrial and Corporate Change, Oxford University Press, vol. 12(3), pages 545-576, June.
    4. Clair Brown & Ben Campbell, 2001. "Technical change, wages, and employment in semiconductor manufacturing," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 54(2), pages 450-465, March.
    5. Annalee Saxenian, 2002. "Transnational Communities and the Evolution of Global Production Networks: The Cases of Taiwan, China and India," Industry and Innovation, Taylor & Francis Journals, vol. 9(3), pages 183-202.
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    Cited by:
    1. Prema-chandra Athukorala, 2009. "The Rise of China and East Asian Export Performance: Is the Crowding-Out Fear Warranted?," The World Economy, Wiley Blackwell, vol. 32(2), pages 234-266, 02.
    2. Xu, Su Xiu & Lu, Qiang & Huang, George Q. & Zhang, Ting, 2013. "Scope economies, market information, and make-or-buy decision under asymmetric information," International Journal of Production Economics, Elsevier, vol. 145(1), pages 339-348.
    3. Antelo, Manel & Bru, Lluis, 2010. "Outsourcing or restructuring: The dynamic choice," International Journal of Production Economics, Elsevier, vol. 123(1), pages 1-7, January.
    4. Nobuaki Yamashita, 2008. "The Impact of Production Fragmentation on Skill Upgrading: New Evidence from Japanese Manufacturing," Departmental Working Papers 2008-06, The Australian National University, Arndt-Corden Department of Economics.
    5. Prema-chandra Athukorala, 2008. "Trade and Investment Patterns in Asia : Regionalisation or Globalisation?," EABER Working Papers 21794, East Asian Bureau of Economic Research.

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