Chips and Change

Abstract

How the chip industry has responded to a series of crises over the past twenty-five years, often reinventing itself and shifting the basis for global competitive advantage. For decades the semiconductor industry has been a driver of global economic growth and social change. Semiconductors, particularly the microchips essential to most electronic devices, have transformed computing, communications, entertainment, and industry. In Chips and Change, Clair Brown and Greg Linden trace the industry over more than twenty years through eight technical and competitive crises that forced it to adapt in order to continue its exponential rate of improved chip performance. The industry's changes have in turn shifted the basis on which firms hold or gain global competitive advantage. These eight interrelated crises do not have tidy beginnings and ends. Most, in fact, are still ongoing, often in altered form. The U.S. semiconductor industry's fear that it would be overtaken by Japan in the 1980s, for example, foreshadows current concerns over the new global competitors China and India. The intersecting crises of rising costs for both design and manufacturing are compounded by consumer pressure for lower prices. Other crises discussed in the book include the industry's steady march toward the limits of physics, the fierce competition that keeps its profits modest even as development costs soar, and the global search for engineering talent. Other high-tech industries face crises of their own, and the semiconductor industry has much to teach about how industries are transformed in response to such powerful forces as technological change, shifting product markets, and globalization. Chips and Change also offers insights into how chip firms have developed, defended, and, in some cases, lost global competitive advantage.

Chip design in China and India: Multinationals, industry structure and development outcomes in the integrated circuit industry

“…The qualitative grounded theory approach provides opportunities to create new understandings rather than a method to provide rigorous, empirical testing of existing theories, an area where various quantitative methods may be more useful. While others have studied China and India in the context the globalization of R&D [33,35,39] and the globalization of the IC sector specifically [10], there has not been a comparative analysis of the evolution of Indian and Chinese IC design that incorporates opening up the "black box" of the firms to investigate how design is organized in the MNCs and domestic firms in order to conceptualize how each country's industry structure and skills have evolved over time.…”

“…In the IC design industry, the accumulated evidence is that both China and India have increased their global market share, activities and technical capabilities in this area [10,20,38,17,18]. 1 IC design has been a success in each country despite predictions of substantial differences in sectoral success and specialization of each country [5,8] assumed to be due to the generally acknowledged different development paths outlined above.…”

“…1 IC design has been a success in each country despite predictions of substantial differences in sectoral success and specialization of each country [5,8] assumed to be due to the generally acknowledged different development paths outlined above. One could argue that this success is not surprising in the context of the globalization of R&D [39] and the increasing allure of the pools of talent in China and India [35], especially if one accepts the argument that IC design is on the leading edge of offshoring of R&D [10]. One might reasonably expect sectoral isomorphism to make the two countries' development paths in this sector more similar if the two countries become active participants in IC design.…”

“…Both China and India have attracted R&D investments from multinationals as part of the globalization of R&D [39] and IC design is at the forefront of the globalization of R&D [10]. The two countries have taken quite different routes in this sector and these routes have been formed by co-evolution between the domestic institutional arrangements and the opportunities offered within the global IC design industry, particularly opportunities made available by multinationals.…”

Growth with time zone differences

“…2 It is increasingly recognized that the rapid growth of India's economy is attributable to this kind of business-service trade utilizing time zone differences. 3 Related to these phenomena, Marjit (2007) examined the role of international time zone differences in a vertically integrated Ricardian framework. It has been shown that time zone differences emerge as an independent driving force of international trade besides taste, technology and resource endowment.…”