The Internationalization of Industry. Annex B. Offshore Production in the International Semiconductor Industry,
DEPARTMENT OF STATE WASHINGTON DC OFFICE OF EXTERNAL RESEARCH
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The success of U.S. SCD firms in dealing with foreign low-wage competition through the use of offshore production arrangements was imitated by the European electronics firms who made up the other major force in the international electronics market. European trade policy, however, unlike U.S. trade policy in semiconductors veered toward a highly protectionist stand, which prevented the offshore strategy from being a terribly effective means of supplying semiconductors to the European market. As a result, European and American plants producing for the European market were forced to site most of their assembly operations within the European tariff walls. The exceptions to this rule were the relatively minor amounts of assembled semiconductors permitted entry under the quotas for outward processing and generalized preference tariff-sparing arrangements, and the very simplest sorts of devices, whose very large labor content, relative to the total value of the assembled product, made it economically worthwhile to assemble offshore in spite of high tariffs. When the Japanese entered the European semiconductor market in the late 1970s in a big way, they too were forced by the economic logic of hig tariffs to set up European plants to penetrate the market.
- Economics and Cost Analysis
- Manufacturing and Industrial Engineering and Control of Production Systems