GARTHWILSON wrote:
fastgear wrote:
Sorry for sounding off topic, but do anyone know if CSG ever opened a plant in a low labour cost country in order to try staying competive price wise?
I don't know the answer, but I read years ago in one of the industry magazines about a new plant set up in Texas IIRC to make memories, and there was heavy criticism for not doing it in another country where the labor rates were lower. The answer that came back was that labor was a very small part of the cost of making the memories, regardless of where you do it.
I recall that as well. I also seem to recall that back in the 1980s, labor was only 8-10 percent of the "transfer cost" (cost to make the product, which does not including engineering, marketing, sales and service) of a typical chip design. Most of the cost was, and continues to be, in the physical plant, the machinery, processing of raw materials and disposal of the hazardous wastes that are part of chip-making. Much of the chip-making process these days is automated, mostly relegating human labor to non-manufacturing tasks. If anything, the cost of labor as a percentage of transfer cost is even lower now, at least outside of North America.
That main reason chip-making has all but disappeared from North America is the unfavorable regulatory climate, more-so in the USA than in Canada. In most other parts of the world, regulations are looser, hence the economics of a production scenario that uses a lot of hazardous materials are more favorable. It's an unfortunate reality and a constantly-shifting environment. Twenty-five years ago, quite a bit of this stuff was produced in the Republic of China (Taiwan). Taiwan subsequently tightened up their laws to head off emerging environmental problems, which drove up the investment and operating costs of chip-making plants, as well as the costs of industries that use chips. The "solution" was to move chip-making elsewhere, such as to Communist China.
This sort of geographical manufacturing chess game has gone on for a long time, beginning in the 1950s when the cost of union labor started to become an issue. It will continue for the foreseeable future.