Ruminations on the electronics industry from David Manners, Senior Components Editor on Electronics Weekly.
The IP Dilemma
China’s dilemma over IP as it industrialises was explained nearly a decade ago to Doug Dunn, CEO of Plessey Semiconductors, Philips Semiconductors and ASML.
“I was in China as a member of a delegation and we met the Minister of Justice and we complained about the IP issue,” recalls Dunn, “the Minister replied: “Take an audio CD, we know it costs 50 US cents to make, and it sells for $19.99. When there’s that kind of difference between cost and price there’s room for Chinese guys to come into that market and sell for $10. You’ve allowed price fixing to take place. If it wasn’t there, there wouldn’t be a place for Chinese entrepreneurs’.”
The issue is as fresh now as it was then. China is putting bureaucratic obstacles in the way of high-charging Western companies in a bid, presumably, to get them to reduce these charges.
If the US companies don’t reduce the charges then the implied threat is clear – China will let its entrepreneurs loose to steal the IP and the Western companies will get zilch.
With extortionate IP trolls becoming an ever-increasing drain on manufacturers, China’s thinking may not be that far adrift from the public good.
In the early days of the IC industry patenting IP was seen as less of a priority than using new technology to get ahead in the market.
For consumers generally, this is not a bad model to return to.