LONDON It came to me as I was talking to Maria Marced, European president of chip foundry Taiwan Semiconductor Manufacturing Co. Ltd.
The conversation took place at the IMEC Technology Forum. And in many ways that was appropriate, because I came to realize that the economic crisis has something in common with electronic circuit behavior. Indeed students of electronics might have done better at predicting the likelihood of the recent economic crisis than the economists did although in the economists' defense the system carries many of the hallmarks of chaotic behavior, which would make any prediction of timing difficult.
One thing that was clear at the IMEC event in Brussels was that the depth of the supply-chain stall one of the primary manifestations of the global economic crisis in the electronics sector has impacted thinking at TSMC deeply. One might even say the culture has been changed. Manufacturing capacity utilization rates that dipped way below 50 percent and extended periods of short-time working do that to a company.
TSMC came to the IMEC event quite prepared to be a new cheerleader for industry-wide collaboration on process and devices, so that costs can be reduced and profit margins widened. Although this would be done primarily for TSMC's benefit and for the benefit of its shareholders, it would also produce similar margin-widening benefits across the industry, Marced argued. And clearly the cheerleading for collaboration by TSMC was much to IMEC's delight.
Marced tried to put TSMC's recent problems and those of the industry in context. She said the depth of the economic collapse is unprecedented in the history of the electronics industry. "This is likely to produce the first negative global GDP figure since the Second World War and it is synchronized." Thus Marced made the point that in previous slumps one region would tend to be up while another was down softening the blow and allowing one or more regions to lead the others back into the economic light.
This time, with all regions suffering together, it is going to be necessary to invest and innovate our way out of the recession, Marced argued.
And then it hit me. It is not that we have had an economic crash and it is the worse because of synchronization. Instead it is that we have had a crash BECAUSE we are synchronized; because of globalization.