Intel breaks ground on Fab 68 in Dalian, China

Brian Ambrozy 8 Sep, 2007 at 12:52am ET Article published in Tech

Comments

1. 
   8 Sep 2007 ~ 1:36am jhenry Woohoo! Made in China stickers on processors now... great!
2. 
   8 Sep 2007 ~ 1:40am RWB And why can't they stick around in America and boost our economy instead of China's?
3. 
   8 Sep 2007 ~ 9:01am yagga AMD is fully in America right?
4. 
   8 Sep 2007 ~ 10:02am BlackHawk

   yagga wrote:

   AMD is fully in America right?

   I do believe AMD has fabs in Germany.
5. 
   8 Sep 2007 ~ 10:04am Qeldroma

   yagga wrote:

   AMD is fully in America right?

   
   No- they also have assets in Dresden, Germany (Fab 36). However, they are building another key fab in New York.
   
   Intel also has huge fab facilities in both Oregon and Arizona- they give them an edge because they could turn some of them over for retooling as obselesence deactivates them.
   
   EDIT: Oops- Black Hawk got there b4 me- sorry.
6. 
   8 Sep 2007 ~ 11:17am mmonnin

   RWB wrote:

   And why can't they stick around in America and boost our economy instead of China's?

   
   Because Americans cost a ****load of money. Americans get paid more comparatively than other nations' people. Plus Asian country's give HUGE tax breaks to technology companies. In America we get taxed more. Dresden helps AMD pay for new fabs.
   
   Plus Asians work harder and more diligently. The scrap rate in Japan is much better than any american fab we have. There is a wider pool of talent in Asia to begin with.
   
   I work for Micron and I still don't see why we have fabs in America, especially the one I work at in Manassas, Va where we get paid like 20-30% more than the same job in Boise I believe. Sure we have fabs in Singapore, Japan, and Italy but most of our bits come from Manassas, Boise and Lehi.
   
   If I were a CEO of a semiconductor company I sure would want to build fabs in Asia as well.
7. 
   8 Sep 2007 ~ 12:29pm Qeldroma

   mmonnin wrote:

   Because Americans cost a ****load of money. Americans get paid more comparatively than other nations' people. Plus Asian country's give HUGE tax breaks to technology companies. In America we get taxed more. Dresden helps AMD pay for new fabs.
   
   Plus Asians work harder and more diligently. The scrap rate in Japan is much better than any american fab we have. There is a wider pool of talent in Asia to begin with.
   
   I work for Micron and I still don't see why we have fabs in America, especially the one I work at in Manassas, Va where we get paid like 20-30% more than the same job in Boise I believe. Sure we have fabs in Singapore, Japan, and Italy but most of our bits come from Manassas, Boise and Lehi.
   
   If I were a CEO of a semiconductor company I sure would want to build fabs in Asia as well.

   
   There is quite a debate concerning out-sourcing jobs. On paper- it would seem that there is a great cost savings; however, the companies involved also realize (or are beginning to) the huge mistake it would be to close down American operations.
   
   Despite what you may read, I've seen first-hand that asian workers are not all they are cracked up to be and (if you've been reading the news magazines) there are huge amounts of money that is NOT put directly towards industry (call it graft and corruption- payoffs and bribes) or into the real workers. While Americans may seem "lazier", Americans SO FAR are still among the best engineers & techs in the world because of their experience, adaptability, and overall "working smarter instead of harder" ability. I would also dare to add honesty.
   
   Businesses also assume huge risk because of cultural mores and political instabilities of the regions they deal with. For example, one job quoted in country X was 50,000 man-hours, while the same job in America was quoted at 5,000. The country involved based it's estimate partially on the hidden truth that 1. They don't have the experience and 2. largely because they have a nepotism agenda going on. However, the burdened rate ratio is only 5:1. Which SHOULD you pick? Also, what are the chances of a revolution or war occurring in some of these regions- or even a blatant nationalization of assets? Some predict that many of these countries will learn what they need to from us, then abandon the American holdings and start their own. Nothing in OUR culture to say they can't- but ....
   
   In fairness to our industry, there was a time in the 90s when we had more jobs than qualified Americans to fill them. Where do you go? We also can't afford to let the rest of the world starve either- world stability is vital to business and going hungry does not equal stability. So how do we try to change that ... handouts? Doesn't putting them to work help rather than hurt?
   
   Regardless, there is a lot of big and political money on the line, and some parties are determined to make it happen no matter what the cost- even if it means that it costs more for a while and exacerbates their risk.
8. 
   8 Sep 2007 ~ 12:50pm Kwitko Agreeed, Qeldroma. There is going to be a huge shakeout of manufacturing companies in Asia. Our company has been researching manufacturing our product in China. With high tooling costs, long lead times, loss of quality control, it's not the no-brainer people think it is. It makes sense for companies who can afford to have a full-time manager in China, not for us. Contract manufacturing is Motorola, not Mom & Pop.
   
   So far, of our major competitors, we're the only ones manufacturing in the US, yet we're still the industry leader. When the shakeout occurs and manufacturing moves back here, we'll be the only ones equipped to make the transition.
   
   
   About 15 years ago I bought a Trek mountain bike. The frame was made in the US. I went to the bike shop the other day and the mechanic told me that the Trek frames built in Taiwan are nowhere near the quality of the frames built years ago in the US. He told me their frames are good for maybe 5 years tops, while mine should last 20 or more.
9. 
   8 Sep 2007 ~ 1:28pm primesuspect Interesting - I just read an article in CFO magazine about the hidden costs of outsourcing:
   
   http://www.cfomagazine.com/article.cfm/9678408/c_2984406/?f=archives
   
   Especially timely considering what Mattel is going through. Quality in China is highly suspect right about now.
10. 
    8 Sep 2007 ~ 7:12pm Leonardo

    In fairness to our industry, there was a time in the 90s when we had more jobs than qualified Americans to fill them.

    1. Right now the US is at about 4.3% unemployment. By academic economic standards, that is almost considered "full employement," considering that the number reflects those who have quit a job and are looking for another and those who will not work no matter what. (not getting political, just citing economic theory)
    
    2. Outsourcing (offshoring) - we lose high paying manufacturing jobs? Hmm. Well, then, what about the many hundreds of thousands of HIGH paying manufacturing jobs in the US courtesy of foreign companies. Just for starters, assembly plants: Toyota, Nissan, Honda, Mazda, Mercedes-Benz (still Daimler-Chrysler?), BMW. I could go on and on. People tend to forget it's a two-way street. I'm very pleased those foreign firms are off-shoring production over here.
    
    3) India has started outsourcing jobs. What goes around comes around. We Americans seem to want everything available inexpensive, but at the same time we cry about economic success stories in other countries whenever that success is due in part to keen competition with our industries/work force.
    
    4) Much of the "American" automobile manufacturing takes place in Canada. By law, those vehicles are still considered "US" origin. Hmm. I'm sure the Canadians don't mind.
    
    
    Opinion follows:
    
    1. It all comes out in the wash. Don't worry.
    2. I wish Toyota/Nissan/Honda would purchase Ford and GM. I've no doubt quality and efficiency improvements (at least strategic vision!) improvements would be such that both manufacturers would gain back much of the market share they threw away starting in the early 1970's.
    3. We Americans can compete very well in any endeavor in which we engage when we set our mind to it and when are not looking for excuses.
    4. It's a global economy. That is here to stay!
    5. I am optimistic.
    
    By the way, I am not trying to be political at all. I'm merely trying to point out some facts.
    
    Now, let's see, what was the original topic? Ah yes, Intel will build a fab in China. Smart move. Given the huge success of AMD in China and China's enormous and ever growing market, Intel is prudent to step up cultivation of that market. It's only a matter of time before AMD starts fabrication there, or contracted fabrication such as they do in Taiwan (TSMC).
    
    AMD holds 50%+ of China consumer market
11. 
    8 Sep 2007 ~ 9:48pm QCH In a grad class we analyzed how India is the 90's version of Taiwan. We outsourced many areas of manufacturing to Taiwan in the 80's and 90's. That caused their economy and cost of living to increase. They received raises and then Taiwan wasn't the cheapest place anymore... Next was China. While China is huge and could take a long time see a similar raise of the cost of manufacturing, it is already visible by the increased use of Indians (India).
    
    This outsourcing may be killing the manual manufacturing for items that can be made overseas, the world economy slowly equalizes. The US will eventually become a specialist workforce. We have, as stated by others, become very good at managing and leading development.
    
    There will always be things that must be produced close to where it is sold so there will always be manufacturing jobs in the US.
12. 
    9 Sep 2007 ~ 4:32am Leonardo Q, very well put!
    
    People tend to forget that this 'outsourcing' and 'off-shoring' business has been going on for many decades. I remember as a small kid in the 1960's looking on the bottom of some stamped metal toy cars of mine. It read "Made in Japan." My dad told me that Japan could make those toys a lot cheaper than Americans could. Guess what? Japan isn't making those cheap little toys anymore. It's gone to China. In 30 years it will be Bangladesh or Uruguay or Congo (or whatever it's name will be then).
    
    The high-paying assembly line jobs are disappearing, but that doesn't mean Americans and others from developed countries are locked out of good incomes. The mid-20th Century couldn't last forever. The world changes and so do economies. It's that simple.
    
    What we Americans do need to be concerned about is education! If we don't fix that problem, then yes, we probably are in for significant economic decline. BUT THAT'S ANOTHER SUBJECT.
    
    Now, back to the real topic: Intel fabrication plant in China. It's a win-win: China gets technology, good paying jobs, and economically priced processors for their tech industries, and Intel gets increased production and sales; Intel stockholders (including me through mutual fund holdings) get better returns, improving our economy here. You can't escape it - it's a global economy.
13. 
    9 Sep 2007 ~ 5:20am RWB I didn't want to say it in my original post, but it's not Japan, Germany or most of these other countries I have a problem with outsourcing to. It's China and only China. I fear for our future with China possibly becoming a super power greater than America. But I want to stay away from a bit huge debate which is why I didn't say it at first, but I just felt I need to put that out there. I'll bet how I feel sounds silly to most of you, but not to me.
    
    Sorry if this strays from what this topic was originally meant to be, but I think it kind of sticks to it.
14. 
    9 Sep 2007 ~ 12:12pm Qeldroma Everyone is stuck on manufacturing- the key word people are missing is Engineering
    
    We’re not talking blue collar, production-line labor anymore. Now we’re talking development, experience and intellectual property.
    
    I’m going to add one more variable to the equation being discussed here- mainly because it’s MY field: Aerospace. Simply put, parts of aerospace engineering are being outsourced.
    
    Now do the math:
    
    Countries(X, Y, Z) + silicon + aerospace + engineering = ?
    
    Even though we are only talking the technical equation, (ex. the state of Arizona’s finances are done overseas) we are not going solve the issue in this thread- it’s even outside of the scope of this forum. But this thread just brings up another variable of a bigger equation that people like RWB are going to voice.
    
    I will say this. We outsourced most manufacturing decades ago (70’s). This is so yesterday’s news that major industries ASSUME it into their plans. Americans moved to engineering and medicine, etc. By the time the middle of the 90’s hit, we had more high-paying jobs than we had qualified Americans to fill them. But now higher education, engineering and other higher education positions are being moved and generated as possible overseas.
    
    So now I’m thinking about what honest living my kids can do in the 2010’s … and a few other things. And Leo's words are wise here: Think- yes, panic- no.