Emergence of Chip Design Industry in Asia

Group Members
Neha Gupta
67
Sandhya Shrivastava
Nikita Jain
70
Ankita Singh
83
Krishna Rana
Jay gandhi
66
Manisha Bharadwaj

58

79
35

Presented by:
Neha Gupta 67
Sandhya Shrivastava 58

What is a chip?
Chip: A small piece of semiconducting material on

which an integrated circuit is embedded. It contains

millions of electronic components
Integrated circuit design involves the creation of

electronic components, such as transistors, resistors

capacitors and the metallic interconnect of these
components onto a piece of semiconductor,
typically silicon.

Biggest producers and Consumers of Chip

Producers

United states
South Korea
Japan
China
France/Italy

Consumers

India
China

Factors responsible for moving of chip Industry

to Asian Countries
Pull Factor

Cost

Demand

Policies

Annual cost of employing a chip design engg.

Location

Annual cost

US

300000

Canada

150000

Ireland

75000

Republic of Korea

<65000

Taiwan Province of China

<60000

India

30000

China Shanghai

28000

China - Suzhou

24000

Continue
Push Factors- A number of factors in developed

countries are also greatly contributing to pushing

firms to expand chip design in Asia, these are:

Changes in Design methodology

(miniaturization, PLC, convergence)

and

organization

More outsourcing and multiple design interfaces (Table)

Changing skills requirements

Network comprising of following players:

A Chinese system co. for the definition of the system

architecture
An electronic manufacturing supplier from the Taiwan
Province of China
A US integrated device manufacturer
A European silicon intellectual property firm
Design houses from the US and Taiwan Province of China
Foundries from Taiwan Province of China, Singapore, and China
Chip packaging companies from China
Tool vendors of design automation and testing from the US
and India
Design support service providers from various Asian locations

Continue.

Enabling Factor

New ICTs help vertical networks communicate

Spread of transnational knowledge communities

Q. In your opinion which of the trade theory is most

appropriate to explain the shift of chip designing to

India and other Asian countries? Give reasons to
justify your answer.

Porters Diamond Theory

Governm
ent

Chance

Factor conditions
Skilled labour Talent pool

Demand conditions
Market size
China: worlds largest market for telecom equipment

(wired & wireless) & critical test bed for 3G

sophistication

Related & supporting industries

A Chinese system co. for the definition of the system

architecture
An electronic manufacturing supplier from the Taiwan
Province of China
A US integrated device manufacturer
A European silicon intellectual property firm
Design houses from the US and Taiwan Province of China
Foundries from Taiwan Province of China, Singapore, and China
Chip packaging companies from China
Tool vendors of design automation and testing from the US
and India
Design support service providers from various Asian locations

Firm strategy, structure & rivalry

Progress in manufacturing technology
Convergence of digital computing, communication,

and consumer devices

Product life cycles have been reduced
Vertical specialization: Disintegration in the design
value chain & dispersing it geographically

Government

QUESTION
Evaluating the Emergence of the Chip design

Industry to Indian and other Asian Countries on the

basis of the following theories ?

INTERNATIONAL TRADE THEORIES

Theory of comparative advantage

David Ricardo: Principles of Political Economy, 1817.
Country should specialize in the production of those

goods in which it is relatively more productive... even if it

has absolute advantage in all goods it produces.

As per case :

The production of chip design products were relatively

good in US , Europe and Japan.

Factor endowment theory

A countrys relative endowments of land, labor, and capital
will determine the relative costs of these factors
Factor costs will determine which goods the country can
produce most efficiently.
As per case:

Since Asia was the fastest growing market for electronic

design automation tools.
Diverse range of functions From routine work to highly
strategic tasks.

Country similarity theory

Most trade today occurs among high-income countries

because they share similar market segments and because

they produce and consume so much more than emerging
economies
As per case,

India and china

As per World Investment report 2005 Annual cost of
employing a chip design engineer, 2002. was
comparatively low in these two Asian countries

International product life cycle theory

Companies will manufacture products first in the countries in
which they were researched and developed, almost always
developed countries
Over the products life cycle, production will shift to foreign
locations, especially to developing economies as the product
reaches the stages of maturity and decline through FDI.
As per case,
Chip Design industry moved from US Europe and Japan
towards the developing countries ( East Asia).
Developed nation is now importing more from Chinese as it
has become third

Recommendations

Training & Education

Incentives
Infrastructure

Thank You!!