"The problem started out as that of vertical integration" - That may be so, but it doesn't seem to have hurt the likes of Samsung, to the point where Apple has seen value in their own silicon design. Rather than vertical integration, I would say that what has hurt Japan's consumer OEMs (and with that their captive silicon houses) is their lack of creativity and commoditization of their products. They could have created their own economies of scale, just as Samsung and Apple did.
I agree that vertical integration still exists at Samsung and Toshiba, but not really at Apple. I don't see Apple paying R&D for process technology or enormous capex to build and equip a wafer fab.
But Samsung is big enough to create "its own weather" around its vertical integration, but it still may put others off when it comes to using Samsung as a foundry.
Toshiba may not be big enough to create its own weather, but remains a significant chip maker. But one that is feeling the pressure.
Since when is Apple vertically integrated? What products do they manufacture in-house as opposed to contracting out production? What components do they design, as opposed to buying off the shelf products?
All the tear-downs of Apple gear I recall seeing currently have off the shelf ICs, and manufacture is contracted out. Apple designs the complete systems using those parts, but that's not vertical integration.
I understand that plan is for the FujiPanaRene manufacturing operation to buy Elpida's Hiroshima wafer fab. Which would leave Elpida as a fabless memory company that obtains chips from a suppliers in Taiwan.
So Renesas is NEC+Hitachi+Mitsubishi. Panasonic is well Panasonic and Fujitsu is Fujitsu. Together all these have quite a lucrative business and I think that they can harvest the profits of having an integrated manufacturing (such as those enjoyed by Samsung and to a certain degree Intel).
In the end, changing fabs is not an easy task and if the tsunami and the floods in Thai and the rest of the recent physical (or not physical) disasters is proving it is bad business to rely on a single source. So, if all those companies with their high volumes go to TSMC, it is bad. Samsung is not an option as it is a direct competitor and well I'm not convinced that GlobalFoundries has the capacity to serve all those big players.
The Japanese are getting old and comfortable but mega catastrophe like last years Tsunami still brings out the old Bushido spirit.
Just look at how after some initial fumbling they have undertaken a massive clean up & rebuilding that would have daunted any other "mature/western" societies.
They can do the same for semiconductor as well and triumph over the combination of US Fabless wonders - TSMC / Samsung. With whatever system / OEM business Japan has left they can afford at least 2 state of the art 28 nm 300/450 mm Fabs / Foundries and keep them loaded.
What Japan cannot afford anymore is to repeat disastrous decisions like Sony's over the last few years - when led by a typically work - averse Anglo - Irish CEO they outsourced the manufacture of even LCD TVs etc. to Samsung and gave away IP to boot. Sony has finally realized the folly of appointing Anglophones at the top in the hope that their growing PR / cultural dominance in N. America, rather than any tech. / mgmt. cred will win market share. Sony has at last replaced this dude with a true - blue Nihon-jin who developed games.
Japan has double the population of Germany so cannot follow the strategy of the latter of exporting just BMWs and machine tools. Japan has to continue exporting mid-range consumer products as well.
So Japan can ill afford to abdicate the cost-driven but still enormous US consumer electronics / auto market to the So. Koreans as even low margins generate huge profit which is then inevitably recycled into new technologies that ultimately drive established but smaller competitors out of the market.
I agree to the opinion that Sony had the wrong CEO of the last few years, in particular the latter years. Without the deep understandings of technologies like you and me, Sony failed to rally its troups together to offer "connected" products which can break most consumers' (except us) imagination. But, I believe that outsource is one of tools that can help Sony, and everyone else, to achieve prosperity. It should be a matter of how and when and to what extent.
By and large, Japan has a reasonable size of population. Its domestic economy may be able to sustain Sony alike. With the aging population and less-than-ideal birth rate, Japanese companies like Sony and Renesas have to reach out of Japan. One thing working in their favour is "IP". Though US and Europe was used to accuse Japanese stealing IPs many years ago, they have gradually produced their own IPs over the years. For Renesas and other Japanese semiconductor companies to save themselves, they must take a step back, lay down a sure-win strategies as the core without fooling themselves, then they must execute ruthlessly for the next few years. To out-run the competition is a more sure bet than to wait for the competition to slow down or be hit by disasters. The aging leaders must be replaced by those who are willing to sacrifice themselves in terms of time and moeny, yet new thinkings must be injected from outside of Japan. I am sure that there are both good guns to be hired, or there are people who are willing to take challenges. If Japanese semiconductor companies keep on doing what they did in the past 30 years, keep treating non-Japaneses as outsiders, the end will only be a matter of time, a short one.
Intellectually and strategically, it makes sense for Japan to combine Renessas, Panasonic and Fujitsu chip manufacturing into one entity. After all, it is difficult for individual companies (except Intel) to keep up with fab innovations due to costs. Organizationally, it seems it will be difficult...perhaps that is why they brought in Global Foundries into the deal. At best, it will take time to merge these manufacturing units effectively. I think this will make Japan IC chips more of a captive market within its own systems divisions. Steve Szirom, InsideChips.com
The plan is risky but they clearly have to try something. Aligning with Abu Dhabi makes sense for me. Part of the problem is that companies in Japan are too much inward looking, they have to become truly international...Kris
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