Known for its pragmatic engineering traditions, Scotland is where Burroughs did early mainframe computer work in the 1950s. The region then came to host the manufacturing plants of many mainstream computer companies, including Digital Equipment, IBM and Sun Microsystems. With the big foreign companies came jobs in PC manufacturing as well as integrated-circuit production.

By the 1980s, Scotland was a European powerhouse of PC production, as "70 percent of PCs sold in Europe were manufactured [there]," said Neil Francis, director of Scottish Enterprise. By the early 1990s, it was a center of European IC manufacturing, as investors such as Motorola, NEC, National Semiconductor, Nikon and Shinetsu set up modern plants there.

But within the same decade, it became apparent that many system and chip companies were hurriedly moving production to Eastern Europe and to Asia. With the most recent shutdown at NEC's Livingston fab, Scottish chip making now boils down to one trailing-edge National Semiconductor plant at in Greenock and one Motorola plant in East Kilbride.

Scottish Enterprise's Francis stressed that productivity wasn't the reason for the closings. "Fabs at both National and Motorola still maintain a very high standard of productivity." But he acknowledged that the lower cost of investment and the size of China's internal market make China an attractive site for new manufacturing facilities. "Global companies make decisions on a global level," said Francis. "Scotland cannot be insulated from the global trend."

In recent years, Scotland has launched a number of design-oriented initiatives, such as Alba, on which it is betting its high-tech survival. "We still believe that manufacturing is fundamentally important. But we are also pursuing a number of design companies," said Francis. Project Alba's goal was to create more than 1,000 system-on-chip design jobs within a few years, thus generating multiple spin-offs and startups. But then the downturn struck. Today there are a few small design groups on the Livingston campus, but nothing like the numbers once foretold. Motorola, Cadence, Epson and SpectraTek are among the tenants.

Scotland, however, is still hopeful its design initiatives will blossom. "Design is all about people," Francis said. Arguing that Scotland has more to offer than China, he added, "China has a number of things going against them, especially in the area of IP [intellectual-property] protection and undertaking of complex design projects for mission-critical functions."