The project explores why chip design is moving to Asia, despite its high knowledge-intensity. Trade economists search for an answer by looking at differences in the cost of employing a chip design engineer and comparative factor and resource endowments. However, an analysis of Asia’s comparative cost and resource advantages can only explain what attracts chip design to particular locations (“pull factors”). It cannot explain what forces are behind the growing mobility of IC design, pushing for and enabling geographic dispersion.
A central proposition is that chip design is moving to Asia in response to radical changes in design methodology (“system-level integration” through “modular design”) and organization (automated “design factory”). Both changes have dramatically increased the cognitive and organizational complexity of design. This makes it less likely that a single company will exclusively handle all stages of design for a specific chip. Instead, many companies are contributing, based upon their specific areas of expertise. As a result, integrated forms of design organization, where (almost) entire ICs are designed within a single firm, are giving way to vertical specialization where stages of IC design are outsourced to other firms (dis-integration of firm organization) and relocated across national boundaries (geographic dispersion).
The project focuses on three major end-user industries:
- Telecommunications and computer networking infrastructure (representing infrastructure-based types of technology development, focused on complex technology systems, undertaken mostly by industry consortia with strong government participation)
- Mobile communications and handset devices (representing new types of consumer electronics goods in highly cyclical markets with ever shorter technology cycles)
- Automotive electronics (representing older mass-production industries with strong tradition in “Fordism” or “Toyotism” and a partial transition to vertically specialized production models)
Building on established research contacts with relevant firms, research institutes and public policy agencies in the US, Asia and Europe, the project will conduct interviews with experts from industry players in chip design and manufacturing, electronics design automation, and electronics contract manufacturers, industrial policy makers from Asian high-tech locations, and experts from labor unions and professional organizations. The project is being undertaken in collaboration with the Institut fuer Sozialforschung (IfS) Frankfurt, Germany and is supported by a grant from the Volkswagen Foundation.
Related Publications
Ernst, Dieter. May 2006. "Can Chinese IT Firms Develop Innovative Capabilities Within Global Knowledge Networks?," paper prepared for international workshop on Greater China's Innovative Capacities: Progress and Challenges. Beijing, China, May 20-21
Ernst, Dieter. May 2006. "The Offshoring of Innovation," in Far Eastern Economic Review 169(4): 29-33.
Ernst, Dieter. 2005. “Complexity and Internationalisation of Innovation: Why is Chip Design Moving to Asia?,” in International Journal of Innovation Management 9(1, special issue in honour of Keith Pavitt): 47-73.
Ernst, D. 2005. “Limits to Modularity - Reflections on Recent Developments in Chip Design, Industry and Innovation 12(3): 303-335.
Ernst, D. 2005. The New Mobility of Knowledge: Digital Information Systems and Global Flagship Networks. In R. Latham and S. Sassen (eds). Digital Formations. IT and New Architectures in the Global Realm. Published for the U.S. Social Science Research Council. Princeton: Princeton University Press.
Ernst, D. 2005. Searching for a New Role in East Asian Regionalization - Japanese Production Networks in the Electronics Industry. Chapter 7 in: Peter J. Katzenstein and Takashi Shiraishi (eds). Beyond Japan: The Dynamics of East Asian Regionalism. Ithaca: Cornell University Press
Ernst, D. 2005. Pathways to innovation in Asia’s leading electronics-exporting countries - a framework for exploring drivers and policy implications. International Journal of Technology Management 29(1/2, special issue on Competitive Strategies of Asian High-Tech Firms): 6-20.
Ernst, D. and B. Naughton. 2005. China’s Emerging Industrial Economy - Insights from the IT Industry . Paper prepared for the East-West Center Conference on China’s Emerging Capitalist System, Honolulu, Hawaii, August 10-12.
Ernst, D. 2004. Global Production Networks in East Asia's Electronics Industry and Upgrading Perspectives in Malaysia. Chapter 3 in Shahid Yusuf, M. Anjum Altaf and Kaoru Nabeshima (eds.). Global Production Networking and Technological Change in East Asia. The World Bank and Oxford University Press
Ernst, D. and Bengt-Ake Lundvall. 2004. Information technology in the learning economy: challenges for developing countries. Chapter 9 in Erik S. Reinert (ed.). Globalization, Economic Development and Inequality: An Alternative Perspective. Edward Elgar Publishing
Ernst, D. 2003. Digital Information Systems and Global Flagship Networks: How Mobile is Knowledge in the Global Network Economy? Chapter 6 in Jens Froslev Christensen and Peter Maskell (eds.). The Industrial Dynamics of the New Digital Economy. Edward Elgar Publishing.
Ernst, D. 2002. Electronics Industry. In William Lazonick (ed.). The IEBM [International Encyclopedia of Business and Management] Handbook of Economics.. Thomson Learning
Ernst, D. and Linsu Kim. 2002. Global production networks, knowledge diffusion, and local capability formation. Research Policy 31:1417-1429.
Ernst, D. 2001. Global Production Networks and the Changing Geography of Innovation Systems. Implications for Developing Countries. Journal of the Economics of Innovation and New Technologies 11(6): 497-523.
Ernst, D. 2001. Small Firms Competing in Globalized High-tech Industries: The Co-evolution of Domestic and International Knowledge Linkages in Taiwan's Computer Industry. Chapter 5 in Paolo Guerrier, Simona Iammarino and Carlo Pietrobelli (eds.). The Global Challenge to Industrial Districts. Edward Elgar Publishing
Ernst, D. 2001. New Challenges for Industrial Clusters and Districts: Global Production Networks and Knowledge Diffusion. Chapter 6 in Paolo Guerrier, Simona Iammarino and Carlo Pietrobelli (eds.). The Global Challenge to Industrial Districts. Edward Elgar Publishing.
