3. What is a chip? Chip: A small piece of semiconducting material on which an integrated circuit is embedded. It contains millions of electronic components Integrated circuit design involves the creation of electronic components, such as transistors, resistors capacitors and the metallic interconnect of these components onto a piece of semiconductor, typically silicon.
4. Biggest producers and Consumers of Chip Producers United states South Korea Japan China France/Italy Consumers India China
5. Factors responsible for moving of chip Industry to Asian Countries Pull Factor Cost Demand Policies
6. Annual cost of employing a chip design engg.Location Annual costUS 300000Canada 150000Ireland 75000Republic of Korea <65000Taiwan Province of China <60000India 30000China – Shanghai 28000China - Suzhou 24000
7. Continue…… Push Factors- A number of factors in developed countries are also greatly contributing to pushing firms to expand chip design in Asia, these are: Changes in Design methodology and organization (miniaturization, PLC, convergence) More outsourcing and multiple design interfaces (Table) Changing skills requirements
8. Network comprising of following players: A Chinese system co. for the definition of the system architecture An electronic manufacturing supplier from the Taiwan Province of China A US integrated device manufacturer A European ‘silicon intellectual property’ firm Design houses from the US and Taiwan Province of China Foundries from Taiwan Province of China, Singapore, and China Chip packaging companies from China Tool vendors of design automation and testing from the US and India Design support service providers from various Asian locations
9. Continue…. Enabling Factor New ICTs – help vertical networks communicate Spread of transnational knowledge communities
10. Q. In your opinion which of the trade theory is most appropriate to explain the shift of chip designing to India and other Asian countries? Give reasons to justify your answer.
12. Factor conditions Skilled labour – Talent pool Demand conditions Market size China: world’s largest market for telecom equipment (wired & wireless) & critical test bed for 3G sophistication
13. Related & supporting industries A Chinese system co. for the definition of the system architecture An electronic manufacturing supplier from the Taiwan Province of China A US integrated device manufacturer A European ‘silicon intellectual property’ firm Design houses from the US and Taiwan Province of China Foundries from Taiwan Province of China, Singapore, and China Chip packaging companies from China Tool vendors of design automation and testing from the US and India Design support service providers from various Asian locations
14. Firm strategy, structure & rivalry Progress in manufacturing technology Convergence of digital computing, communication, and consumer devices Product life cycles have been reduced Vertical specialization: Disintegration in the design value chain & dispersing it geographically
15. Government A powerful tool in driving innovation Legal Tax rebates frameworkEducation Regulations Infrastructure IPR
16. QUESTION Evaluating the Emergence of the Chip design Industry to Indian and other Asian Countries on the basis of the following theories ?
17. INTERNATIONAL TRADE THEORIES Theory of Factor Country Internationalcomparative endowment similarity product life advantage theory theory cycle theory
18. Theory of comparative advantage David Ricardo: Principles of Political Economy, 1817. Country should specialize in the production of those goods in which it is relatively more productive... even if it has absolute advantage in all goods it produces. As per case : The production of chip design products were relatively good in US , Europe and Japan.
19. Factor endowment theory A country’s relative endowments of land, labor, and capital will determine the relative costs of these factors Factor costs will determine which goods the country can produce most efficiently. As per case: Since Asia was the fastest growing market for electronic design automation tools. Diverse range of functions From routine work to highly strategic tasks.
20. Country similarity theory Most trade today occurs among high-income countries because they share similar market segments and because they produce and consume so much more than emerging economies As per case, India and china As per World Investment report 2005 – Annual cost of employing a chip design engineer, 2002. was comparatively low in these two Asian countries
21. International product life cycle theory Companies will manufacture products first in the countries in which they were researched and developed, almost always developed countries Over the product’s life cycle, production will shift to foreign locations, especially to developing economies as the product reaches the stages of maturity and decline through FDI. As per case, Chip Design industry moved from US Europe and Japan towards the developing countries ( East Asia). Developed nation is now importing more from Chinese as it has become third
22. Recommendations Training & Education Incentives Infrastructure