So9
If a company can get more bang for the buck by going abroad it will do so. Our government will first and foremost protect the capital of investors and only after that is done will it seek to protect jobs of American workers.
Pitiful...So as long as the engineers stay here, all this means is that it's a little longer trek to the shop floor...
Most people don't hang out at FR so they just don't get it...This is the very beginning of a very large exodus to eliminate the US of the middle class...
And we're expected to be proud of the group that is behind it...
Technology jobs are all that we have left other than the service industry. Once tech is gone we are finished.
Read the book, The Creature From Jeykl Island if you want your eyes to be opened.
Jeez.
''The more we cut away at the incentives for people in the U.S. to take up engineering careers, the more we undermine out ability to innovate."
Yay! < Texas_Dawg_Mode>
IBM Challenges Taiwan's Chip Makers
Big Blue continues to increase its contract chip-making business.Sumner Lemon, IDG News Service
Thursday, April 17, 2003The competitive threat to Taiwan's contract chip makers was supposed to come from Shanghai, not East Fishkill, New York.
The rise of Chinese chip makers, like Semiconductor Manufacturing International (SMIC) and Grace Semiconductor Manufacturing, was expected by some observers to mark the beginning of a shift in the center of contract chip making from Taiwan to China. But that was before IBM began an aggressive expansion of its own contract chip-making business.
Contract chip makers, commonly called foundries, produce chips for companies, such as Via Technologies and Nvidia, among many others, that don't have their own chip fabrication plants (fabs).
The business is dominated today by two Taiwanese companies, Taiwan Semiconductor Manufacturing (TSMC) and United Microelectronics (UMC), which together are expected to account for 63 percent of the total foundry market in 2003, according to an estimate by Salomon Smith Barney. TSMC alone will account for 44 percent of the market, it said.
Changing Business Plan
IBM's push to expand its foundry business comes as the contract chip-making business is changing. The industry is showing signs of segmenting into two layers: one comprised of companies that produce chips in volume using older chip-making technologies and another consisting of companies able to produce high-end chips using cutting-edge processes and materials.
One reason for the change in the dynamics of the foundry industry is the increasing cost of designing chips for the latest generations of chip-making technology, said Morris Chang, the chairman of TSMC and an executive often credited with developing the foundry business model.
"The number of new customers has drastically decreased in each new generation [of chip-making technology]," Chang said, noting that chip designers want to be confident that the increased investments required to design chips for the latest process technologies will pay off.
"It's a new game," he said. "It's a situation that clearly favors the leaders."
Leading the Way
IBM is one of those leaders, having led the push into many high-end chip production technologies, and will increasingly compete against TSMC for high-end foundry business while Chinese foundries compete for business at the low end of the market, Chang said.
"IBM have always had the best [chip-making] processes," said Martin Kidgell , the Asia-Pacific managing director of National Semiconductor, which uses TSMC to manufacture digital processors. "They want to come out and play and be a much bigger fish in this pond. I see that as competition for TSMC and UMC."
IBM has already made inroads into the high-end foundry business, signing a deal with Nvidia to manufacture its next generation of
In addition to Nvidia, IBM has signed deals with Qualcomm and Xilinx, one of UMC's major customers, to manufacture chips under contract. IBM has also signed an agreement to jointly develop next-generation process technologies with Advanced Micro Devices. That deal ended a similar agreement between AMD and UMC and has raised questions about whether the two companies would move ahead with plans to build a joint-venture fab in Singapore.
Under Pressure<
IBM's stepped-up foundry efforts will put pressure on TSMC and UMC thanks to the company's manufacturing prowess with advanced chip-making technologies, but Big Blue isn't likely to threaten their dominance of the foundry business anytime soon.
"It's not automatic that you would necessarily leap to the lowest available geometry," Kidgell said, referring to process technologies that are used to make chips. "What we're all looking for is the most cost-effective manufacturers in the volume sweet spot. I can see that, like in any industry, there will be people leading with the technology but they won't necessarily be the volume manufacturers."
Moreover, IBM will have to adopt the shorter manufacturing lead times and increased flexibility that are required of contract chip makers.
"IBM, as a foundry, they've never been particularly easy to deal with in terms of the flexibility of the way you could place orders with them," Kidgell said. "They traditionally tended to have longer lead times and less ability to move around your schedules as the end customers demanded."
Challenges Ahead
IBM's push to grow its foundry business isn't the only challenge that Taiwan's foundries face. On the low end of the market, the Chinese foundries pose a cost-effective alternative to TSMC and UMC for chips that are sold into the Chinese market. Chinese foundries can reduce manufacturing costs by up to 30 percent, largely due to value-added tariffs that are placed on chips imported into China, Kidgell said.
Intent on making its presence felt in China, TSMC last year filed an application with the Taiwanese government to build a fab in Shanghai.
The lengthy approval process for TSMC's application, now in its eighth month, doesn't mean that the company is sitting on the sidelines while its Chinese rivals carve out an insurmountable lead in China's foundry market. "You've got to build up a few years of experience and trust with these companies because you're staking your future on them," Kidgell said.
But I guess it's RACIST to suggest this...