mannerisms

Ruminations on the electronics industry from David Manners, Senior Components Editor on Electronics Weekly.

Manufacturing Is Good, says Harvard Business School.

“There has almost been a whole generation of MBA students and managers who have been brought up on a false idea that manufacturing is kind of the brawn and not the brain, and that the country should focus on the brain.”

 

Who said this? Some maverick Dodo? Some controversialist?

 

It was none other than Professor Gary Pisano, Professor of Business Administration at HarvardBusinessSchool where he has taught for 23 years.

 

Pisano added: “One of our key messages is to get students to appreciate that manufacturing involves a lot of knowledge work.”

 

When did the IC industry ever doubt that?

 

Unfortunately, the consensus view among the financial community is that semiconductor companies should go fab-lite or even fabless and put out their manufacturing to foundries.

 

 H

ow many semiconductor CEOs have been persuaded by the financial community to give up manufacturing on the assumption that any foundry can make advanced CMOS structures so why bother doing it yourself?

 

Now HarvardBusinessSchool – the fount of conventional business thinking – is suggesting that manufacturing requires brain-power and brain-power needs to be nurtured at home.

 

The off-shoring of Western semiconductor manufacturing gave the accountants a short-term boost to the bottom line, but it has had long-term  detrimental effects. 

 

For instance, as semiconductor manufacturing moved to Asia, so the LCD manufacturing industry – derived from semiconductor manufacturing technology – set up in Asia. 

 

And the example of the LCD industry is being followed by the emerging LED industry - which uses manufacturing technologies derived from the semiconductor and LCD industries - and is being mostly done in Asia.

So a whole string of bad consequences follows from the initial move off-shore.

 

And not the least of these bad consequences is the increased reliance of the West on the financial services industry of whose fragility we are only too aware.

Tags: detrimental effects, false idea, led industry, semiconductor companies, semiconductor manufacturing technology

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12 Comments

  1. El Rupester
    May 10, 2011 19:02

    Just to point out to Capt Sam rather misses a point in his EU bashing – Germany has just had its best exports ever: mostly high value manufactured items.
    Last time I checked, Germany was in the EU…
    No, the culprits are closer to home. Westminster, The City – not to mention Sir Arnold and his ilk.
    (But Cisco mostly makes stuff via Gemtek, Foxconn. I don’t know it is SA make in USA, but I wonder if bit is significant?)

  2. David Manners
    April 19, 2011 23:14

    Thanks Capt Sam, that’s immensely encouraging. There are signs that Cameoron and Osborne think that way, and I have little doubt of their contempt for European red tape – so there might be a chance of UK companies being encouraged to do a Cisco. Once it is seen as the right thing to do it will become a flood. I hope you are showing us the way ahead here.

  3. Capt Sam
    April 19, 2011 19:47

    Someone should of told Herr Blair this when he and his merry storm troppers smashed up the economic zones Maggy had set up to induce mnft companies (esp foreign ones) to set-up and employ people in the UK….same model as they copied in HK, TWN, SNG, etc, etc, But NO says Fuhrer Blair “we don’t need mnft in the UK, financial services is the way to go”. Just one reason I fled to the good ole Red, White & Blue. The future isn’t looking much better for mnft yet, but at least over here in the colonies I am seeing a resurgence in local mnft. Even giants like Cisco who bought SA have kept SA’s mnft in the US. Using brian power to automate cost down to the same levels of China! fancy that! As costs in China increase over the next 5 years I believe we “could” see this trend continue, not just because of cost (but that is a major factor as long as the bean counters continue to control the direction of most businesses) but also in terms on Western Brian power….as the financial incentive reduces the extended communication lines (conf calls at midnight and later) and trips to CEM’s in Asia which burn out the Western Brians who these companies need to grow their business will make less and less sense. Then add the ever increasing shipping costs from Asia to the West and….fingers crossed….we have all the right factors for a resugance in mnft in the West. With some Govt incentives and tax brakes it’s even possible to speed up the 5 year out look….but of course I have not considered the EU who I’m sure will stick their nose in to say the UK can’t offer such incentives due to some EU law Herr Blair signed witout reading. Of course France and Italy will nob their heads and agree the EU laws also don’t allow them to offer similar incentives and then they’ll do it anyway!!!!

  4. David Manners
    April 19, 2011 10:54

    I know, greg, it takes academia a long time to catch up on common sense.

  5. greg
    April 18, 2011 18:00

    He’s just said what engineering and labour groups have been predicting for 40 odd years. Just took us a while to get to the bottom.

  6. IanD
    April 14, 2011 14:10

    Going fab-lite or fabless for advanced technologies is simple economics — are you (or you and your best mates) big enough to spend $10b or more on a fab, and keep it full?
    The issue of where these mega-fabs should be is a different matter, and it seems crazy that both Europe and the USA have pretty given up on this so the world is 100% reliant on the Far East.
    (excluding Intel who don’t let other people play with their expensive toys)
    And you can really blame government strategy for this — the big advantage places like Taiwan have is not labour costs (because these are tiny compared to equipment costs) but land, water, electricity, finance, building costs, tax breaks — many of which are subsidised in Taiwan, either openly or with hidden subsidies.

  7. David Manners
    April 14, 2011 11:49

    Yes indeed, Terry, what an excellent analogy – though Foot wasn’t right about much. In fundamental manufacturing, as opposed to assembly, people are becoming to realise that there’s a lot of IP, knowledge and experience all bound up which is acquired through painstaking effort and that handing all that over to foreigners for a short-term financial gain to please the bean-counters is long-term stupidity.

  8. Terry
    April 14, 2011 11:41

    So Micheal Foot (RIP) was right.
    He compared Keith Joseph’s destruction of the UK’s manufacturing industry to a conjuror who borrows an expensive watch from a member of the audience, smashes it with a hammer and then has to admit he’s forgotten the rest of the trick.

  9. David Manners
    April 13, 2011 15:52

    Yes there were people like you, George, well spoken. But you won’t hear apologies – only the sound of roosting chickens.

  10. georgegrimes
    April 13, 2011 15:20

    Some of us in the semiconductor industry looked at the long term and warned of (at least some of) these eventual consequences. We were patted on our heads and told that we just didn’t understand. Perhaps those condescending people would like to revise their opinions of our intelligence.

  11. David Manners
    April 13, 2011 15:18

    That sounds about right, Dr Bob, Paul, Damascus that sort of thing.

  12. Dr Bob
    April 13, 2011 15:16

    Presumably for 22 of those 23 years he was teaching that manufacturing was not necessary and that financial services were the powerhouse (brain) and now having seen the results he has had vision of biblical proportions, claims to have seen the light and converted (too late).
    A bit like remodeling the ground floor of a house by demolishing the downstairs whilst still residing in the upstairs.