Rule #3: Chip makers must survive on lower gross margins. Many local
chip companies can live with a 35 percent gross margin in order to achieve a
20 percent operating margin, said Tai. But for most multinational chip
companies to achieve the same 20 percent operating margin, they need a
50 to 55 percent gross margin. “That’s no match with the locals.”
#4: System vendors in China are less technical. Hence, they require
more hand-holding. The success of Taiwan’s MediaTek here can be
attributed to the turnkey solutions it offers Chinese system companies.
said multinational companies retain a model that requires100 engineers
to develop a new system every six months. “We are seeing Chinese system
guys pump out a new product every three months with just five to 10
people.” Tai said, “That’s very disruptive.”
are not only slow to upgrade their products but also are slow to respond
to customer complaints. “I can send someone to my customer’s site right
away and do quick diagnostics,” he said. “A multinational’s core
R&D team is still in the United States, and it takes more than a few
e-mails back and forth to solve problems.”
Many in the West
focus on the cost advantages of Chinese companies. Instead, they should
be focusing on the agility of Chinese chip vendors and system companies
in their domestic market. As Tai noted, “I am local. I have a core
R&D team here, and I have field application engineers here. I have a
huge advantage” over multinationals.
RDA increased its annual
revenue in 2011 by 51.1 percent to a record $288.9 million, compared to
$191.2 million in the previous year. The company’s gross margin was 34.5
percent compared to 29.8 percent in 2010. In the first quarter in
2012, RDA’s revenues totaled $72 million, with a gross margin of at 35.9
percent and a 20 percent operating margin. The company has $143 million
in cash and no debt. It currently employs 320 workers.
I am not sure what to make of your position - to cede power/money and such to a country that "could" develop personal liberty? They are a great country - there are many great countries - Germany is one of my favorites, but look what happened in the 30's and 40's (unfair perhaps, but illlustritive). It is up to the "world" to decide where to put their business and their power. We have to get away from this "great" nation business - yes, the west must share as should the east in how it treats it's people (including the muslim countries).
It was VERY short sighted of the west to give so much economic power to China specifically just to make a dollar - very predictable as the west is now more concerned with quick money, and not sustained growth and manufacturing - something that governments and business groups need to support more.
As you state it is "way" too late, but don't pull any of the "the west had it good" - so what they should abdicate? To live with the Chinese government making more world decisions? The west is NOT perfect - and perhaps not the better. I am sorry, but I can't trust any monocultural country with too much power, especially with a centralized all powerful government and a propensity to dismiss, cover up, or try to obliterate any problems rather then embracing the opportunity to make better decisions and a future for it's poeople (The West does try...) - is the EETimes, or the Huffington Post ;)
Again, many good posts - my only issue with comparison is that China has a 1.3 billion people and a socialist government (in name) with plenty of corruption and absolute control. If there is one rule of business it is that you only pay employees what you have to.... America, Japan, they both ran out of skilled employees and had to compete against each other for them - thus wages increased. I don't believe this will happen as well for the Chinese people for many reasons - they will have modest improvements (they started so low), but not to what we would call a world standard. And the middle class laborer - forget it as we can't even provide that in America and it exists in Europe only with heavy government subsidies. Not sure of the answer, but direct comparisons don't work.
I think it is just a matter of time that the same will happen in China, the same as it happens in Japan: Our youth don't want this anymore. Their youth will profit from the results of their parents in -say- 25 years. So we are going ahead into rough economic times. I don't know what it will bring for our profession, I really have no clue if we are capable to do proper engineering here in Europe. But fortunately we are very creative. So I think that with our creativity and with good innovative engineering we probably will hold on for these 25 years, let us just hope. The baddest thing to do is to be arrogant (in person and also as a company). Watch out for people 'knowing it all well' who are not directly involved in our industry. They certainly will lead us in destruction - while they fill their pockets. I have my own very small company. I am always very careful for my customers and serve them the best I can. That's my 2 cents and all I can do...
I think protectionism would not help us. But we should give not away our knowledge just to make university professors happy to have enough people in class ( happens here in The Netherlands! ). China indeed copies (and steals) a lot of our designs. This has been proven in very many ways. But I think it is a mind setting problem: Reverse engineering brings you back to the past: I do not believe in it. The only thing that we -as engineers- can do is progressive engineering and innovation. Create useful high quality new things. This can only be done inside small companies. No bothering managers, legal, and lots of other annoying the engineer. And as stated before: Regulations are too tight. We see here that the industry regulate themselves to keep others out of their business (= protectionism) I think this is a bad thing.
Things are changing in our society: Nobody here wants to study for 10-12 years to get an underpaid engineering job in comparison with lawyers, management, and others. For electronics engineering university we have a result of approx. 250 people finishing their study each year out of 16 million folks in our little country.... And I can tell you that not even 1/4 goes into engineering... And this 250 means for all diversities in our profession. (part1)
This is my main concern as the "world" economy used to have diverse supply and manufacturing channels which would eventually balance supply over different sources - in today's economy they seem to push manufacturing into fewer places which reduces competition - and the ability to generate competition. Having China with it's protectionist government pulling the strings of a VERY large portion of the world production and supply channels will make it hard for competitors (ie solyndra) to compete as "The Goverment" can push money around to reduce global competitors in a way that not other company/government can. Either other Governments need to compete in like with China or we have to change the game in some other way to even allow for some level of competition.
This is mostly correct, but I don't believe quality engineers are cheap in China any longer. Can someone comments on how much does a hardware/software engineer with 10 years experience get in China these days? These are the types of engineers you need to make the "quality" "innovative" products.
You need a history lesson, dude. While correct that China has played a very important role in Korean history (some good, some bad), there are distinct ethnic and cultural differences. No doubt the Koreans were at times in their history in awe of China, especially early in the Choson Dynasty. Still, there are many distinct cultural differences between Korea and China - language, ethnicity...
David Patterson, known for his pioneering research that led to RAID, clusters and more, is part of a team at UC Berkeley that recently made its RISC-V processor architecture an open source hardware offering. We talk with Patterson and one of his colleagues behind the effort about the opportunities they see, what new kinds of designs they hope to enable and what it means for today’s commercial processor giants such as Intel, ARM and Imagination Technologies.