1. The Electronics Industries springboard: transistor 1948 significance: provider of components

2. Electronic Production System Dicken’s focus

3. Global trends Active components production was initially dominated by USA 1980s: Japan overtook USA 1990s: U.S. producers have rebounded

4. World production of active components, 1996 26% 11% 37% 9%

5. Trade balances in active components, 1994, $billions *Hong Kong, Taiwan, Thailand, Malaysia, Philippines, Singapore

6. World production of consumer electronics more dispersed role of East and SE Asian NIEs is more pronounced

7. World production Consumer electronics

8. Trade balances in consumer electronics, $billions

9. 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

10. The demand factor--consumer electronics Final demand products for which demand is income-elastic demand depends on life-cycle stage

11. 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

12. 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

13. Role of governments--consumer electronics Primarily defensive in response to import penetration

14. Production Costs, Technological Change & Corporate Strategies --semiconductors--

15. 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

16. 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

17. III. Mergers and acquisitions 1970s and 1980s followed by international strategic alliances Why? Rapid pace of technological change & high costs of installing new capacity.

18. 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

19. 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.

20. Changing structure of East and SE Asian production Semiconductor Imports into the U.S. 1. Geographic changes

21. Factors Labor cost increases in South Korea, Taiwan, Hong Kong, Singapore Gov’t policy changes in Malaysia and Philippines

22. 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

23. Result--hierarchical organization within the region