Category Archives: The World I Know

Nothing To See Here Move Along

By the skin of your teeth.

An author’s listing on Amazon cites Lloyd as the one-time manager for the Warhead Lethality Group at Raytheon’s Electronic Systems Division and the author of the 2001 book “Physics of Direct Hit and Near Miss Warhead Technology.”

Chipping Away At National Defense With Carly Fiorina

The off shoring crazy of the US semi conductor industry impacts our national defense posture according to the Defense Science Board,

The rapid migration of semiconductor manufacturing plants to locations outside the United States is an “alarming” trend that must be addressed in a forthright, immediate manner, according to a long-anticipated report from the Pentagon’s Defense Science Board (DSB).

“Urgent action is recommended, as the industry is likely to continue moving in a deleterious direction, resulting in significant exposure if not remedied,” writes William Howard, chairman of the DSB task force looking into the issue. “We urge greater than usual speed in implementing the recommendations of our study. The nation’s security and economic well being demands it.”

How did a nation that once lead in the industry loose its’ edge?

In 2009, 16 fabs began construction throughout the world. One of them was in the United States, according to Daniel Tracy, senior director of industry research and statistics at Semiconductor Equipment Materials International. Seven of the fabs that began construction will produce light-emitting diodes, one of the most promising energy-saving technologies developed in 50 years. None of those fabs will be in the United States.
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The United States does lead the world in one category, however: closures. In 2009, 27 fabs closed worldwide, with 15 of them in the United States (followed by four in Europe, four in Japan, two in China, one in Korea and one in Southeast Asia). The number of closures last year almost doubled from the previous year, when 15 fabs were shut down worldwide, again, with the largest number in the United States (at four).

Why is the United States losing out on the next phase of the semiconductor boom? “It’s not direct labor,” says George Scalise, president of the Semiconductor Industry Association. “It’s not materials — they cost the same everywhere. If you go down the list of expenses, every-thing is the same, except for tax policies and subsidies.”

So what is going on in the market?

The U.S. government might chafe at the idea of providing incentives as being “corporate welfare,” but this attitude is not helping improve the fortunes of the high-tech industry or its hundreds of thousands of well-paid workers. In its annual jobs forecast released in December 2009, the Bureau of Labor Statistics said that semiconductor manufacturing will lose 146,000 jobs over the coming decade, from 432,000 in 2008 to 287,000 in 2018, a decline of 34 percent.

The challenge?

Until recently, most foundries were operating or planned for construction in Taiwan, where the government has aided the industry with a variety of measures that include generous tax breaks. just in the past few years, however, China has stepped forward, matching Taiwan’s incentives and trumping them with a rebate of most of the value-added tax (VAT) on chips designed or manufactured in China. In a major shift, the Chinese semiconductor industry is now drawing massively on Taiwanese capital and skilled management, as well as attracting investments from the United States and elsewhere.(Top of page two)

Off shoring to whom?

Taiwan Semiconductor (TSMC), with $30 billion market capitalization, is the current leader in the foundry chip industry, and currently boasts more than 44 per cent of the world market share of chip foundry business. TSMC was founded in 1987 as a joint venture of Philips (Netherlands), the government of Taiwan, and private investors. Morris Chang is the founder of TSMC, and continues to serve as the Chairman. Mr. Chang’s resume includes 25 years at Texas Instruments, leaving as a group vice president in charge of the company’s worldwide semiconductor business. TI-Acer merged with TSMC in 1999.

The world’s second largest foundry is also in Taiwan. UMC claims more than 14% of the foundry business worldwide. Taiwan, a country about the size of Vancouver, Canada, has the highest concentration of semiconductor manufacturing in the world.

It is interesting to note that two of the executives instrumental in recent events in the semiconductor industry are on the TSMC board of directors: Carly Fiorina and Thomas Engibous.

Carly Fiorina is now best known as John McCain’s Economic Advisor during the last election. She is the former CEO of Hewlett Packard where she oversaw HP’s exit from the chip manufacturing business. In addition, Ms. Fiorina spent nearly 20 years at AT&T and Lucent Technologies Inc. where she served as Executive Vice President, Computer Operations for Lucent and oversaw the exit of AT&T from chip manufacturing.

The United States is a bit player in a lot of things,

The United States led the world in solar photovoltaics technology all through the 1990s, but the country has quickly become a miniscule player in the global industry.

Worldwide production of PV increased by 80 percent in 2008 to 7.35 gigawatts of electrical generation capacity, according to the European Commission. China was by far the world’s largest producer of photovoltaics, at 2.4 gigawatts; followed by Europe at 1.9 gigawatts; Japan at 1.2 gigawatts; and Taiwan at 800 megawatts. The United States was a distant contender at 414 megawatts of production, representing only 17 percent of Chinese production and 5.6 percent of global output.

The rub.