Chip Chumps Open Shop in China

• Report this Comment On October 18, 2010, at 10:24 PM, johnmlive wrote:

  I don't think that Intel has to hint at opening a chip shop in Dalian. Back in 2007 they announced it (Fab 68) and in this article give some info on the technology they'll be running.

  http://arstechnica.com/hardware/news/2009/06/intel-china-fab...

• Report this Comment On October 18, 2010, at 11:02 PM, none0such wrote:

  Mr. Bylund,

  A few points and a question:

  1) Building chip foundries nearby to where chips are consumed makes little sense as chip consumers can move readily to where labor is cheap whereas foundries stay put and rely on an enormous amount of technical know-how which must be constantly improved upon to remain competitive. Furthermore, Foxxconn was the first to move into south China and the first to begin leaving; their business in S. America and E. Europe have been expanding while their China operations have been shrinking due to land and labor expense increases as well as changes in the labor laws in China which occurred years ago.

  2) It is clear that the real intention of chip makers' continued move into China is to take advantage of the Chinese government's fantastic incentives on offer to foreign companies in it's desire to foster 'value added' industries within China. This is because the Chinese labor market along the coast is being hacked at and will be decimated by the yuan's impending rise in value. It is in the Chinese government's national interests to see that there is not a huge unemployed population milling about with disappointment on their minds.

  3) Countries that attempt to build a sustainable semiconductor industry are often disappointed too (see Economist, Aug. 5th, 2010, "The global revival of industrial policy - Picking winners, saving losers"). The Chinese education system has not provided the necessary engineering prowess to jump start this industry and compete (witness SMIC); if they did, AMD, TI and TSMC would be hiring this talent instead of importing it. However, China will be able to learn form this experience and make the necessary improvements in technology to create a sustainable industry if the government is willing to believe in a free market (government fettering and interference prevented Singapore, Japan, and Malaysia from developing sustainable semiconductor industries).

  Don’t you think that the salient restraints placed on what kinds of technology can be exported, i.e. from Taiwan or from the United States, to China will nullify the immediate benefits, in terms of government incentives, over the life of a foundry?

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