Moreover, U.S. cost cutting is forcing American-trained Indian engineers to return home, where they are expected to help India's design industry become a world-class competitor. Adds the report: "U.S. companies in India are training recent Indian graduates in chip design who work for lower wages."
With most chip manufacturing moving offshore and the number of new U.S. design centers in India growing every month, some observers also worry that U.S. companies will eventually shift research and development overseas. The Commerce report quoted one semiconductor executive as concluding: "Industry is pretty well agreed that it will."
But for the most part, the report downplayed concerns about the offshoring of R&D, saying, "There is no past evidence to suggest [the offshoring of R&D] is the case for the semiconductor industry." It noted that no R&D or design work shifted to Asia in the wake of chip assembly and test operations in the late 1970s and early 1980s. Taiwan foundries have been manufacturing chips for U.S. customers since the mid-1980s, but the report stressed that U.S. companies did not shift their R&D centers to Taiwan.
Industry groups last week either played down or dismissed the report's conclusions, claiming that it included nothing "alarming" or that hadn't already been stated elsewhere. "We cannot assume that semiconductor leadership is a birthright because the industry was developed here," said an SIA spokesman. "We have to continue to work to keep it here."
The migration of manufacturing, design and R&D offshore can be reversed, the SIA spokesman added. "If we do nothing and the competitive challenge of other countries increases, then this continuing migration offshore is inevitable. But if we continue to address the things we need to do long term and short term, we can continue to compete."
Offshoring has in fact benefited U.S. semiconductor companies, said Jeff Lande, ITAA's senior vice president. Advanced Micro Devices and Intel have built microprocessor-manufacturing facilities in Europe, and Texas Instruments has factories in Japan. "It's allowed them to gain access to some of the best and brightest minds in the world. It's also enabled them to leverage local markets, gain market access and increase their share of the marketplace globally," Lande argued.
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