Industry Studies: Semiconductors Discussant Comments

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Industry Studies SemiconductorsDiscussant
Comments

• Jeffrey Macher
• Georgetown University

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Brown and Linden The Basics

• The Question What has been the impact and what
  are the implications of offshoring and
  outsourcing of product design to the U.S
  semiconductor industry.
• The Lens Qualitative analysis.
• The Method (1) Interviews with semiconductor
  firms and (2) Literature searches via industry
  trade journals and company reports.
• Findings (1) Offshoring outsourcing have
  occurred in assembly and production, and have
  strengthened U.S. competitiveness (2) Offshoring
  outsourcing are occurring in product design,
  but predictions on U.S. competitiveness are
  (currently) speculative.

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Brown and Linden Paper Strengths

• Solid setup and approach
• Offshoring and outsourcing first examined in
  semiconductor assembly and fabrication followed
  by product design.
• Provides a nice comparison/contrast.
• But somewhat under explored in the paper.
• Interesting research questions Why offshoring?
  Why outsourcing?
• Reasons offered (1) market development (2)
  location-specific resources and (3) cost
  reduction
• But somewhat uneven treatment in the value chain
  activities examined.
• Impressive data gathering
• Extensive literature reviews and company
  interviews.
• But some sentences read as factual, without
  reference or citation.
• Interesting findings
• Admittedly speculative, but grounded and
  believable.

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Brown and Linden Areas to revisit

• Slightly confusing beginning
• Abstract reads like an introduction introduction
  like something else.
• Rough estimates of engineering salaries by
  country
• Too rough?
• Global perspective or U.S.-centric?
• Mainly U.S.-centric, but paper sometimes
  vacillates.
• Incomplete wafer fabrication discussion
• Not just a story of foreign outsourcing without
  offshoring.
• See Tilton (1971) versus Henderson (1989).
• Own analysis (using Leachman and Leachman) shows
  29 of global capacity located in the U.S., but
  U.S. owns 40 of global capacity.
• Not strictly a shift of capacity to Asia.
• Growth in new capacity in Asia occurred
  simultaneously with retirement of mature
  capacity in Japan and North America.
• Significant investment remains outside of Asia.

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Fabrication Investment 1994-2003
Source Henisz and Macher (2004)
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Brown and Linden Thoughts to consider

• What determines whether a value chain activity
  will be offshored or outsourced? And to what
  extent?
• Product factors (e.g., memory vs. logic logic
  vs. physical design)?
• Technology factors (e.g., leading vs. trailing
  edge)?
• Firm-level (experience, technological
  capabilities).
• Country-level (competitive, institutional and
  technological environments).
• What are the underlying determinants that allow
  for offshoring and/or outsourcing?
• Within and between value chain activities
• Well-defined standards (e.g., CMOS) and/or
  technical interfaces (e.g., EDA)?
• Limited knowledge spillovers?
• Overall
• Intellectual property protection?
• Capable supplier base?
• What conditions suggest offshoring over
  outsourcing? And vice versa?
• Are there criteria where we see one without the
  other?

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Concluding Witty Slide