EL SEGUNDO, California - The
migration of electronics production to Asia,
particularly to China, has increased greatly in recent
years, sparking heated debate in the United States,
where the word "outsourcing" has become synonymous with
the word "downsizing" for many US high-technology
workers - and that sounds ominously like unemployment.
Outsourcing, however, does have an up side.
Despite this trend, however, newly released
semiconductor data from US market-research firm iSuppli
Corp reveals a more complex picture for Americans
employed in chip design and manufacturing jobs, with the
outsourcing trend presenting both an upside and a
downside.
Although much of the world's
electronic equipment production has migrated to Asia,
most of the semiconductors essential to building this
equipment are sold by companies based in the US. And
while some of these US-based semiconductor suppliers
have outsourced their chip production, assembly and
testing to Asia, many others continue to maintain
extensive manufacturing and design operations in the US,
keeping thousands of Americans employed in high-paying,
high-tech jobs.
The Asia-Pacific region,
including China, currently is the largest chip-consuming
region in the world, accounting for 39.9 percent of the
US$166.4 billion in global semiconductor sales in 2003,
up from 37.4 percent in 2002 and 29.9 percent in 2001,
according to data from iSuppli's Competitive Landscaping
Tool (CLT). In comparison, the share of semiconductor
consumption in the US has shrunk from near parity with
the Asia-Pacific in 2001, at 27.5 percent, to just 20.1
percent in 2003.
Yet, despite the shift in
semiconductor consumption to Asia, US-based companies
continue to dominate worldwide chip sales. Semiconductor
suppliers headquartered in the US accounted for 48.7
percent of worldwide chip revenue in 2002, said the
iSuppli analysis. The domination of US-based companies
is even more pronounced in the Asia-Pacific region,
where they accounted for 51.2 percent of semiconductor
sales in 2003.
As such, Asian demand for
semiconductors has been a major source of support for
certain key US businesses, particularly small
businesses, a significant driver of the US economy and
its employment figures. In the semiconductor industry,
new companies most frequently are fabless, firms that
outsource their production to chip manufacturers. An
estimated 75.1 percent of revenue in the worldwide
"fabless" industry in 2003 was generated by US-based
companies, and iSuppli estimates that last year 56.8
percent of global fabless semiconductor demand
originated from the Asia-Pacific region.
Strong chip sales to Asia keeps US workers
employed Thus, the outcry over outsourcing aside,
the rise of electronics production in the Asia-Pacific
region has greatly benefited US-based semiconductor
suppliers, and indeed, many American chip makers now
rely on demand from the Far East for their continued
success. Strong chip sales to Asia also are keeping
American workers employed in semiconductor manufacturing
and design jobs.
"The booming Asian economy has
been a positive factor in keeping semiconductor jobs in
the United States," said Dale Ford, vice president of
Market Intelligence Services for iSuppli. "With nearly
50 percent of semiconductor companies based in the
United States, this is providing a lot of high-level
jobs."
In regard to employment, Ford warned that
proposed legislation designed to protect American jobs
could have the unintended side effect of harming the US
semiconductor industry, as the need to locate important
design resources close to key markets like China and
India will result in those capabilities continuing to
shift to those countries, Ford said. For US-based
companies to remain competitive with overseas
competitors, they may have to conduct some design work
overseas.
However, Ford also cautioned that some
US semiconductor jobs could be in jeopardy as companies
consider outsourcing design work to other countries. "To
succeed, US semiconductor companies must keep certain
jobs in the United States, while others will have to be
outsourced overseas," Ford said. "Companies will need to
balance multiple factors, including labor costs, project
management, design efficiencies and other issues when
deciding where to conduct specific operations."
Some companies, such as Qualcomm Inc, Intel Corp
and Texas Instruments Inc, are balancing these factors
rather well, and, due to demand for certain technologies
and rapid production growth, have seen a boom in their
success in Asia as a result.
Last year
Qualcomm's sales in the region rose 31.8 percent due to
the ongoing growth in demand for the company's code
division multiple access (CDMA) technology for mobile
handsets and wireless infrastructure, while Micron
Technology Inc, whose sales in the region rose 29.6
percent in 2003, increased its Dynamic Random Access
Memory (DRAM) market share in China and throughout Asia.
Meanwhile, Texas Instruments recorded a 28
percent increase in sales on the strength of its leading
position in the wireless industry and the success if its
mobile handset chip set solutions in Asia. Intel Corp
followed closely behind, with a 27.5 percent increase in
sales due to the healthy production growth of its
desktop and notebook PCs using its microprocessors, and
the key role Asia plays in the manufacturing of
computers. Advanced Micro Devices Inc, saw its sales
rise by 23.8 percent, after acquiring Fujitsu Ltd's
flash-memory business and due to the creation of its
FASL business.
All of these companies managed to
exceed the 22 percent average growth in the Asia-Pacific
chip market in 2003. And while the US semiconductor
industry as whole has benefited from the rise of
electronics production in Asia, it seems specific
companies have performed particularly well in the
region.
