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Chips and ChangeHow Crisis Reshapes the Semiconductor Industry$
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Clair Brown and Greg Linden

Print publication date: 2009

Print ISBN-13: 9780262013468

Published to MIT Press Scholarship Online: August 2013

DOI: 10.7551/mitpress/9780262013468.001.0001

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New Global Competition

New Global Competition

(p.165) Crisis 8 New Global Competition
Chips and Change

Clair Brown

Greg Linden

The MIT Press

This chapter examines two popular theories on the shift in competitive advantage, the first of which states that R&D will shift to Asia, just as chip manufacturing has. This is called the “manufacturing-pull” hypothesis. The second theory, or the “large-market pull,” states that China and India, with their rapidly growing economies, will produce national champions primed to becoming world leaders. The first theory is based on the assumption that R&D follows manufacturing, and although engineers in China and India are reportedly less experienced than engineers in the United States, the quality of their university programs continues to improve. The large-market pull theory, on the other hand, assumes that growing markets such as China and India will bring their domestic suppliers competitive advantages. This theory is not very sound, however, when close inspection is made of the steps these countries are taking within the semiconductor industry. In conclusion, it is argued that the threats to today’s leaders lie within their own organizations and national economies.

Keywords:   manufacturing-pull, large-market pull, R&D, chip manufacturing, semiconductor industry, competitive advantage

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