Global Electronics Industry Research Articles

Why we are „Challenging the Chip“: The Challenges of Sustainability in Electronics

Ted Smith, co-founder of some of the first organizing efforts in the field of electronics activism, recounts the transformation of Silicon Valley from an agricultural center into the first hub of a global electronics industry and the rise of electronics activism in response to growing evidence of the industry's environmental and occupational health hazards. From their original focus on Silicon Valley, activists have broadened their effort to focus on end-of-life issues, especially through the demand for extended producer responsibility. They also address the globalization of production hazards, addressed through an „International Campaign for Responsible Technology? that links local actors and organizations in North America, Europe, and Asia in a global effort to advance a comprehensive agenda of labor rights and environmental justice.

R&D, Value Chain Location and Firm Performance in the Global Electronics Industry

In today's global electronics industry, innovation is carried out by various value chain participants, including brand-name manufacturers (sometimes called lead firms), contract manufacturers and component suppliers, but there is little understanding of who benefits most from innovation in such networks. This research examines empirically the relationship of R&D spending and location in the value chain (lead vs. non-lead firms) to firm performance in the global electronics industry by using the Electronic Business 300 data set for 2000–2005. Our results show that firms spending more on R&D have higher gross profits, but do not have higher return on equity (ROE) and return on assets (ROA). There is a strong positive relationship between lead firms and performance as measured by gross profit, ROE and ROA, but the relationship between lead firms and gross profit becomes insignificant when the interaction term of R&D and lead firm is included in the analysis. Finally, lead firm status has a positive interaction effect on the relationship between R&D and gross profit. These findings suggest that the relationship of R&D to performance is mixed, but that lead firms can capture higher value (gross profit) from R&D than contract manufacturers and component suppliers.

Revealed Comparative Advantage of Malaysian Exports: The Case for Changing Export Composition

Since 2000, Malaysian-manufactured exports performance has been declining. The downturn of the global electronic industry and the rise of China's economy are the two major causes of this decline. To improve export performance, Malaysia participates in multilateral, regional, and bilateral trade liberalization. The competitiveness of Malaysian manufactured exports can be improved by examining the pattern of revealed comparative advantage (RCA). Within the non-resource-based manufactured exports, Malaysia still has comparative advantage for electrical and electronic goods and machinery (its largest export item), even though it has been on a decline. Malaysia's export strength has also gradually shifted from non-resource-based to resource-based manufactured exports. The RCA estimates also suggest that trade liberalization must not only lower or eliminate tariffs on final products, but also reduce import duties if exports were to increase their competitiveness.

Review: Challenging the Chip: Labor Rights and Environmental Justice in the Global Electronics Industry

Review: Challenging the Chip: Labor Rights and Environmental Justice in the Global Electronics Industry Ted Smith, David A. Sonnenfeld, and David Naguib Pellow (Eds.) Reviewed by Peter Little Oregon State University, Department of Anthropology, Corvallis, OR Smith, Ted, David A. Sonnenfeld, and David Naguib Pellow, (Eds.) Challenging the Chip: Labor Rights and Environmental Justice in the Global Electronics Industry. Philadelphia: Temple University Press, 2006. 357 pp. ISBN: 1-59213- 330-4 (paperback). The influence of electronic technology on the lives of humans today is profound and the economic successes of the global electronics industry are no doubt impressive. The global capitalist system has for the last century become almost entirely dependent on information and data processing technologies, adding to the powerful position this industry has in the broader global economy. But, despite the industry’s economic prowess, high-tech comes at a high-cost. This book sets in relief the “industry’s overall footprint,” showing how personal computers, cell phones, iPods, and calculators are gadgets of high-tech modernity with social and environmental consequences. The high-tech industry is in fact polluting the environment, it is guilty of numerous environmental injustices, and workers in the industry are speaking out about labor rights and health concerns. Challenging the Chip explores not only “the globalization of the electronics supply chain (from components to subassembly, to final assembly and testing, etc.) and product life cycle (from manufacturing, to sales and marketing, to consumption, to obsolescence and waste recycling/disposal/processing)” (p.9), but also the globalization of advocacy networks and the broader contentious politics emerging as a result of electronics. Moreover, the book brings political debate to the chip industry. As contentious politics multiply over the environmental and health consequences of electronics, there is an increasing need to understand the relationship between high-tech and environmental and labor politics. In this timely and wide-ranging volume, the contributing authors—33 in total—provide insightful case studies showing how the politics of the risk society, corporate power, social movements, labor rights, health, and environmental justice are topics to engage in order to make electronics an industry built on commitments to sustainability and justice. Electronic Green Journal , Issue 26, Spring 2008 ISSN: 1076-7975

Review: Challenging the Chip: Labor Rights and Environmental Justice in the Global Electronics Industry, by Ted Smith, David A. Sonnenfeld, and David Naguib Pellow (eds.)

Review: Challenging the Chip: Labor Rights and Environmental Justice in the Global Electronics Industry Ted Smith, David A. Sonnenfeld, and David Naguib Pellow (Eds.) Reviewed by Peter Little Oregon State University, Department of Anthropology, Corvallis, OR Smith, Ted, David A. Sonnenfeld, and David Naguib Pellow, (Eds.) Challenging the Chip: Labor Rights and Environmental Justice in the Global Electronics Industry. Philadelphia: Temple University Press, 2006. 357 pp. ISBN: 1-59213- 330-4 (paperback). The influence of electronic technology on the lives of humans today is profound and the economic successes of the global electronics industry are no doubt impressive. The global capitalist system has for the last century become almost entirely dependent on information and data processing technologies, adding to the powerful position this industry has in the broader global economy. But, despite the industry’s economic prowess, high-tech comes at a high-cost. This book sets in relief the “industry’s overall footprint,” showing how personal computers, cell phones, iPods, and calculators are gadgets of high-tech modernity with social and environmental consequences. The high-tech industry is in fact polluting the environment, it is guilty of numerous environmental injustices, and workers in the industry are speaking out about labor rights and health concerns. Challenging the Chip explores not only “the globalization of the electronics supply chain (from components to subassembly, to final assembly and testing, etc.) and product life cycle (from manufacturing, to sales and marketing, to consumption, to obsolescence and waste recycling/disposal/processing)” (p.9), but also the globalization of advocacy networks and the broader contentious politics emerging as a result of electronics. Moreover, the book brings political debate to the chip industry. As contentious politics multiply over the environmental and health consequences of electronics, there is an increasing need to understand the relationship between high-tech and environmental and labor politics. In this timely and wide-ranging volume, the contributing authors—33 in total—provide insightful case studies showing how the politics of the risk society, corporate power, social movements, labor rights, health, and environmental justice are topics to engage in order to make electronics an industry built on commitments to sustainability and justice. Electronic Green Journal , Issue 26, Spring 2008 ISSN: 1076-7975

Book Review: Challenging the Chip: Labor Rights and Environmental Justice in the Global Electronics Industry. Edited by Ted Smith, David A. Sonnenfeld, and David Naguib Pellow. Philadelphia: Temple University Press, 2006. 357 pp. $25.95 paper

Book Review: Challenging the Chip: Labor Rights and Environmental Justice in the Global Electronics Industry. Edited by Ted Smith, David A. Sonnenfeld, and David Naguib Pellow. Philadelphia: Temple University Press, 2006. 357 pp. $25.95 paper

China and the Future of Asian Electronics Trade

China's emergence as a key player in the global electronics industry has ignited concerns among its East Asian neighbors. Upper and middle-income economies fear that China's rise is hollowing out their electronics industrial base. Lower-income economies worry that they cannot compete with China's seemingly endless supply of cheap labor. In this chapter, we describe the forces behind China's rise in electronics, and we consider the implications for regional electronics trade and production patterns. Using a unique world electronics production data set, we investigate the upgrading trajectories of East Asian economies within the industry. Consistent with the theory of international production fragmentation, we find that Japan and the NIEs have a more sophisticated production mix than their lower-income neighbors. These latter economies, however, are upgrading their electronics industries more rapidly.

CO‐EVOLUTION OF THE ELECTRONICS INDUSTRY: POLICY INTERACTIONS ACROSS THE PACIFIC

Abstract. This study highlights the cross‐border co‐evolution of the global electronics industry, under international policy interactions. From the world distribution of the major IT producing and using firms, and the fabrication and trading network, the prominence of the Pacific Rim nexus stands out. The comparative advantages and trade gains of individual economies are decided by the impact of the institutional and policy matrix. In turn, their competing yet complementary relations give policy analysis a historical perspective. The policy performance interplay yields new insight into both how the world stands, and what the national policy should be, other things being given.

Challenging the Chip- Labor Rights and Environmental Justice in the Global Electronics Industry

Challenging the Chip- Labor Rights and Environmental Justice in the Global Electronics Industry

Challenging the Chip: Labor Rights and Environmental Justice in the Global Electronics Industry

Challenging the Chip: Labor Rights and Environmental Justice in the Global Electronics Industry

How Globalization Drives Institutional Diversity: The Japanese Electronics Industry's Response to Value Chain Modularity

The failure of Japanese electronics firms to participate fully in the Internet-fueled growth of the global electronics industry during the late 1990s triggered a period of questioning among top executives. This article examines Japanese managerial responses to the organizational model “value chain modularity,” which was deployed by the US electronics firms driving the creation of the Internet. While there were partial but significant steps taken in the direction of this new US model—increased specialization, outsourcing of low-end products, and shared factory investments in Japan—wholesale restructuring was resisted. This evidence is consistent with larger patterns of gradual institutional change in Japan. I argue that the result of this process will likely be increased, not diminished, institutional diversity over time. While globalization has accelerated the pace of change by opening new avenues for organizational experimentation and institutional layering, the drag on organizational change exerted by existing institutions slows the process enough to allow institutional and organizational innovations to develop into coherent systems with distinct characteristics. The result, inevitably, will be a uniquely Japanese approach to the challenges posed by globalization.

Modularity and the organization of international production

In recent decades, the global electronics industry has experienced a large reorganization. U.S. electronics firms have on a large scale off-shored and outsourced their manufacturing activities. Japanese electronics firms have offshored a large portion of their manufacturing, but have remained vertically integrated. To account for these industry trends, we build an two-country industry-equilibrium model in which firms concurrently choose (i) a product architecture, (ii) an ownership structure and (iii) a location for production. We demonstrate that technological advances that allow firms to more easily modularize their products can explain the co-evolving trends of offshoring and outsourcing. We also assess the role of technology on the different patterns of reorganization between Japanese and U.S. firms.

The Co-Evolution of the Electronics Industry: Policy Interactions Across the Pacific

In this exploratory note, development of the global electronics industry is viewed by accounting for cross-border co-evolution under policy interactions. A sketch is made from novel angles of the world distribution of major firms in the production and utilization of information technology, the fabrication, outsourcing and trading network, and the institutional and policy matrix that shapes observed comparative advantages and trade gains. The current prominence of the Circa-Pacific nexus in the world and the competing yet complementary relations among these economies are examined to give policy analysis its historical perspective. Hopefully, this will stimulate further studies into various open questions.

Forecasting the global electronics cycle with leading indicators: A Bayesian VAR approach

Developments in the global electronics industry are typically monitored by tracking indicators that span a whole spectrum of activities in the sector. However, these indicators invariably give mixed signals at each point in time, thereby hampering attempts at prediction. In this paper, we propose a unified framework for forecasting the global electronics cycle by constructing a VAR model that captures the economic interactions between putative leading indicators representing expectations, orders, inventories and prices. The ability of the indicators to presage world semiconductor sales is first examined by Granger causality tests. Subsequently, an impulse response analysis confirms the leading qualities of the selected indicators. Finally, out-of-sample forecasts of global chip sales are generated from two parsimonious variants of the VAR model, viz., the Bayesian VAR (BVAR) and Bayesian ECM (BECM), and compared with predictions from a bivariate model which uses a composite index of the leading indicators and a univariate autoregressive model. An evaluation of their relative accuracy suggests that the BVAR's forecasting performance is superior to the other models. The BVAR is also able to predict the turning points of the recent IT boom-and-bust cycle.

Is the Yen/Dollar Exchange Rate Really Responsible for East Asia's Export and Business Cycles? A Commentary on McKinnon and Schnabl (2003)

In a paper published in The World Economy, Ronald McKinnon and Gunther Schnabl claim that fluctuations in the nominal yen/dollar exchange rate are the principal causal factor behind the export and business cycles in East Asian countries (McKinnon and Schnabl, 2003). Their econometric work, however, suffers from at least two important difficulties. First, while McKinnon and Schnabl preclude industry shocks as an explanation for the East Asian countries’ macroeconomic fluctuations, cyclical fluctuations in the global electronics industry have a significant impact on their short-run export and output dynamics. Second, although McKinnon and Schnabl assume that the relative industrial competitiveness of Japan and other East Asian countries moves in tandem with fluctuations in the nominal yen/dollar exchange rate, the empirical validity of this assumption is not indisputable. Once these two issues are taken into account properly, it becomes very difficult to make a convincing case for the yen/dollar exchange rate being the main driver of East Asia's macroeconomic instability. A brief critique will also be made of another paper that has appeared recently in The World Economy (Doraisami, 2004), which models Malaysia's pre-crisis export dynamics using the nominal yen/dollar exchange rate as a proxy for the country's export competitiveness.

Assessing Singapore´ s Export Competitiveness through Dynamic Shift‑ Share Analysis

I. Introduction Singapore has enjoyed robust trade growth over the past two decades, with domestic exports (1) expanding by an average of 8 per cent per annum between 1985 and 2001. However, the external landscape has changed significantly over this period as globalization of the world economy has led to intense competition and significant changes in export competitiveness in the East Asian region. (2) Against the backdrop of these changes, this paper uses dynamic shift-share analysis to reassess Singapore's export performance in electronics and chemicals to the United Sates, the European Union (EU), and Japan in relation to a group of reference economies: China, Hong Kong, Korea, Malaysia, and Taiwan, which are close competitors in these markets. In the absence of easily obtainable and internationally comparable trade data at a more disaggregated level, previous studies on the East and Southeast Asian economies have tended to be restricted to the one- or two-digit SITC level. Whilst this gives us the general picture within very broad categories, this needs to be supplemented by further decomposition to narrow down the range of product categories, which constitute a significant proportion of each country's exports as well as for the group as a whole, and to allow sufficient disaggregation within those categories to capture areas of specialization and unwrap the pattern of concentration or diversification within the product groups themselves. For example, SITC category 75, which covers office and data processing machines, incorporates a wide range of electronics and related items, not all of which will be relevant to all competitors. By contrast, the present paper looks at 5 three-digit level electronics categories, as well as total electronics and chemicals. This is especially pertinent for identifying Singapore's current and future export strengths and weaknesses since electronics now accounts for a substantial proportion of Singapore's exports and, in more recent years, chemical exports have gained in importance in line with the rise in pharmaceutical exports and new growth strategies introduced to encourage the development of the life sciences. We begin with some background on Singapore's export performance since the mid-1980s. This is followed by a discussion of the shift-share methodology used in this paper and our empirical results. We complete the analysis with some concluding remarks and qualifications. II. Export Growth in Singapore 1985-2001 Figure 1 shows three phases in the growth profile of Singapore's domestic exports between 1985 and 2001. The post-recession years of 1987-90 saw domestic exports expanding at double-digit rates, coinciding with a surge in Japanese foreign direct investment (FDI) into Singapore. Singapore's domestic exports also enjoyed fairly decent growth between 1991 and 1995 (averaging 10 per cent), helped by an increase in trade flows within ASEAN following the formation of the ASEAN Free Trade Area (AFTA) in 1992. (3) Export growth slowed dramatically in the most recent phase (1996-2001) to an annual average of 3.6 per cent on the back of three external shocks. Exports of electronics moderated sharply in 1996 due to a serious supply glut in the global electronics industry. Before the economy could fully recover, trade was further disrupted by the Asian financial crisis of 1997-98. After a year of exuberant growth in the information technology sector and the world economy in 2000, Singapore was again hard hit by a major correction in the global information technology market, precipitated by a synchronized slowdown in the United States, the EU, and Japan. [FIGURE 1 OMITTED] A striking feature of Singapore's exports is the change in product-mix over the years due, in part, to the changing composition of the manufacturing sector, especially after the economic recession of 1985-86. In 1985, mineral fuels accounted for almost half of Singapore's domestic exports mirroring the country's status as a major oil-refining centre (Table 1). …

Global Production, Company Codes of Conduct, and Labor Conditions in China: A Case Study of Two Factories

An attempt is made to understand the corporate ethical codes movement in China by drawing on case studies of two factories that had to respond to the corporate social responsibility programs. The process of implementation of corporate codes is examined at the company level along with the implication of code practices for labour rights.

Road to recovery [SARS and effect on the electronics sector

How quickly can the electronics sector expect to get over the effects of SARS? The author investigates the impact of SARS (Severe Acute Respiratory Syndrome) on the global electronics industry with particular emphasis on the electronics sector's Asian manufacturing heartlands, where China, Hong Kong, Singapore and Taiwan are the worst affected countries. He states that the World Bank remains confident that the combination of SARS and the conflict in the Gulf will cause only a temporary blip in East Asia's economic growth rate.

Globalisation of US, European and Japanese production networks and the growth of Singapore's electronics industry

Over the last 15 years, Singapore has emerged as a major regional production hub for the global electronics industry, accounting for over 4% of global production and ranking within the top five countries in the world in terms of electronics manufacturing output. This paper traces the growth and transformation of electronics manufacturing activities by foreign multinational corporations (MNCs) in Singapore, and highlights significant differences in the nature of the production networks among global US, Japanese and European MNCs. The paper argues that the success of Singapore owes largely to her ability to leverage the competing but overlapping production networks of these major US, European and Japanese electronics firms to achieve rapid technological learning and industry upgrading.

Globalisation of US, European and Japanese production networks and the growth of Singapore's electronics industry

Over the last 15 years, Singapore has emerged as a major regional production hub for the global electronics industry, accounting for over 4% of global production and ranking within the top five countries in the world in terms of electronics manufacturing output. This paper traces the growth and transformation of electronics manufacturing activities by foreign multinational corporations (MNCs) in Singapore, and highlights significant differences in the nature of the production networks among global US, Japanese and European MNCs. The paper argues that the success of Singapore owes largely to her ability to leverage the competing but overlapping production networks of these major US, European and Japanese electronics firms to achieve rapid technological learning and industry upgrading.