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Japanese components vendors in the iPhone 4

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VincePG
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re: Japanese components vendors in the iPhone 4
VincePG   10/19/2010 6:31:29 AM
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About retaining manufacturing capability, unless someone(government) is going to subsidize a losing proposition, I don't know how you do that. We can't even get government to properly support the schools. Businesses would rather loan money and provide high margin services than do capital intensive things like build products. If the US wants to preserve it’s manufacturing base then we need to change our policies around movement of goods, capital and jobs across borders, meaning barriers to protect domestic margins. The capital intensive nature and poor returns of the semi-business as a whole has most large companies divesting themselves of their semi business. How are you going to beat TSMC with it’s growing share and 38% net margin? Intel is at 27% and they have a monopoly. IBM is at 14.5%. How much longer do you think IBM is going to stay in the Semi business? The Japanese in particular, Mitsubishi and Hitachi with Renesas is most notable large scale divestiture. Also at $1Billion a shot to build a fab, unless you are Intel with sure thing returns, you are Fabless or going that way soon. Regarding Apple’s motivations, I think Apple fears Chinese competition more than it fears Japanese competition, which may account for the high Japan content. The Japanese are less likely to borrow their designs and not to play games with delivery, and even if they do, they are less likely to be harmful of Apple’s business. It’s all about priorities. Right or wrong, the US values rates of return over jobs, technological capabilities and maintaining itself as a world leader, and that’s the society model we’ve chosen to live or die by.

t.alex
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re: Japanese components vendors in the iPhone 4
t.alex   10/19/2010 2:32:11 PM
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I wonder if the parts supplied by Japanese vendors above will be replaced by Chinese vendors soon?

Brian Fuller2
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re: Japanese components vendors in the iPhone 4
Brian Fuller2   10/19/2010 4:02:02 PM
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Vince, I think you hit the nail on the head: Some form of government subsidy (better depreciation rates or something) would help immensely. This is a big policy decision: Do we believe that manufacturing not only is a crucial differentiator for U.S. businesses but also a vital national interest? You could make both those arguments. While I'm not big proponent of government aid, we'd have dirt roads across much of the country without government subsidies of one form or another. I don't think there's an elegant answer to be found in an era of government gridlock.

lcovey
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re: Japanese components vendors in the iPhone 4
lcovey   10/19/2010 4:48:10 PM
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We're talking about cultures with highly developed senses of nationalism competing against a culture (us) that abhors nationalism. Americans have a huge fascination with playing fair and that attitude is encouraged throughout the world by countries who do not. Whenever we start moving inward there is a hue and cry worldwide that we are being selfish. None of that is going to change anytime soon... even if the Republicans win in November. Being fair is part of our national psyche and as the old adage goes, nice guys finish last.

Stew
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re: Japanese components vendors in the iPhone 4
Stew   10/19/2010 9:52:06 PM
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Brian, like you I am not a big fan of government subsidies. In this instance the government doesn't have to overreach with boatloads of dollars or any other form of subsidy. Just doing a better job to create a better and fairer environment for U.S. firms would be a good starting point. Enforce the WTO rules of the game rather than let nations slide to the detriment of others (US). That would be major progress for the USA and U.S. component companies. Lack of enforcement costs U.S. firms greatly. That's where I would start. If nations don't follow the so-called legally binding rules they collaborated on then withdraw. Enforce what's on the books. We are an open society and an extremely open market that welcomes all – even unruly Scottish people! Others need to be a little more open as well. Comes down to the govt better representing us at the US Trade Rep. office. I couldn’t agree more with the comment that we in America like to play by the rules, fair play and so on. We just need to do a better job making sure everybody plays by the rules.

Code Monkey
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re: Japanese components vendors in the iPhone 4
Code Monkey   10/19/2010 10:02:39 PM
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Government could decide to get into the business of propping up the bedrock of innovation (common good, anyone?) instead of propping up, well, rackets. $1T came out of nowhere when the housing bubble popped. Germany is proving that you can provide free education, free health care, and still beat capitalists at their own game.

Brian Fuller2
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re: Japanese components vendors in the iPhone 4
Brian Fuller2   10/19/2010 10:06:20 PM
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Stew, good to see you hale, hearty and cantankerous as ever! Play by the rules indeed. I think that's going to be a very contentious battleground in the next decade as we slog our way out of this mess!

riventree
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re: Japanese components vendors in the iPhone 4
riventree   10/20/2010 9:31:52 AM
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Perhaps we are solving the wrong problem? It appears to my eye, that the R and D component - especially the research component - is a cost center in accounting circles. This is madness. Yes, you spend money for a future return, but it is one of the two activities that generate real wealth. The other being manufacturing. Service industries depend on that generated wealth to survive - forget this factor, and even Walmart will feel the pinch. I think that we should re-think our ideas of money. Money is a symbol for barter - value for value. But I could well be wrong ... maybe.

kallsop
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re: Japanese components vendors in the iPhone 4
kallsop   10/20/2010 1:44:20 PM
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With almost the highest business taxes among the developed nations, globalization will have every large US corporation off our shores sooner or later. Approximately 50% of wage earners are paying no income taxes, so they have no motivation to vote for anything but more freebies from the diminishing productive class. We need to make radical changes to our tax structure and voteg for politicians that use the tax code as a way to efficiently generate revenue and not as their personal playground to beat up on todays bogeyman e.g. the unworthy top 2%.

Brian Fuller2
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re: Japanese components vendors in the iPhone 4
Brian Fuller2   10/20/2010 4:20:39 PM
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I think Riventree is preaching to the choir (at least my choir!)... the pendulum needs to swing back on research investment. not everything needs to have a 2-year ROI.

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