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  • Globalization of Semiconductor Manufacturing Industry

    The following is a brief summery of an article co authored by SemiWiki member Apek Mulay. It is definitely worth a read when you get a chance:

    Globalization of Semiconductor Manufacturing Industry: From Deception to Reformation Towards Recovering US Macro-Micro Economic Losses


    silicon ingot from SEMI.ORGDuring the recent recession (since 2007), many observers wrote the American Manufacturing Obituary, claiming that America could no longer be regarded as a world leader because of intense competition from low-cost competitors. Trade liberalization has increased the economic interdependence among nations. Multi-National Corporations (MNCs) in US have established operations in developing counties where labor is cheaper. One consequence of this increased Globalization of manufacturing industry has been movement of jobs and production from U.S. to Low Labor Cost (LLC) countries (which are often less developed countries) for higher corporate profits. This practice is called Offshoring, and is a direct consequence of Monopoly Capitalism, where the prime motive is corporate profits without consideration of job losses for people in the home regions. Globalization works to the detriment of American workers and reinforces unfair labor competition because of lower wages and inadequate working conditions existing in developing nations. In this article, we focus on electronics and semiconductor industry, its moving offshore and causing loss of jobs and R & D in it, and offer some insights into:

    • The causes of the loss of global dominance of US Electronics and Semiconductor industry over years;
    • How to fix this problem, that can contribute towards rejuvenating our economic growth;
    • How to revive the employment market associated with this industry.

    ‘Globalization’ was conceived to enable American companies to enter other countries’ markets and thereby enhance US economic dominance. However, this has resulted in a backlash and now found to be clearly a deceptively defective economic policy, which has resulted in loss of dominance of US economy and transferred the dominance to LLCs like China. The acute unemployment in US caused by ‘Globalization of Manufacturing Industry’ needs both (i) short term fix in order to rejuvenate its electronics and semiconductor industry, and (ii) long term fix to avoid such an economic blunder in future.

    Strategic government policies with respect to education, workforce training, tax reform, trade reform, economic reform and immigration reform can have considerable influential effect in attracting both domestic and international human capital to in turn promote innovation. Such policies can rejuvenate the industry by spurring innovation and world class R&D and also prepare the work force for future.

    By modifying Capitalism to work for 99% (along with 1%) would enable employees to become the primary share holders in US companies (instead of the Wall Street stock holders), the CEOs of companies would have to make decision jointly with the employee representatives on the Management Board in best interest of their employees and hence of the companies. Thus, the hard work of employees would bring higher incomes through profit sharing. This kind of a co-operative economic system based on Mass Capitalism would preserve incentive to growth, and avoid undue pressure from investors on Wall Street to ship jobs overseas for getting higher return on investments. This economic system would ensure prosperity to all Americans with a sustainable economic demand and minimize malpractices which lead to economic bubbles. This system would also ensure that wages of hard working Americans catch up with their productivity with minimal government interference.