The Laptop Supply Chain

Carl Bialik from the WSJ writes "When a U.S. consumer orders a laptop from HP or other big sellers, how does the machine get made? Often via a complex supply chain in Taiwan and China, shaped by rocky cross-Strait relations, according to the Wall Street Journal: 'Outsourcing to low-cost, high-quality Taiwanese manufacturers has helped make Dell and H-P the world's top two PC companies in terms of sales...But the relationship between U.S. computer firms and their third-party manufacturers can be tricky. In the struggle to retain an element of control over their suppliers, H-P, Dell and others play contract manufacturers against each other to keep prices falling and ensure no supplier gains too much leverage.'"

Comments

Lower price...

[ID000001]

means at least the saving are pass onto the consumer. Admittedly though, there are not a whole lot of choices when you buy a laptop. More often then not you will not be told where the laptop are made unless you can see the underside of it.
Since customer perfers price over quality in general, it is not really the companies fault to find the cheapest supplier.

Imagine the effects of a Chinese attack on Taiwan.

[Infinite Entropy]

I always worried about the effect that any Taiwan-China conflict could have on the supply of computers. It seems almost all motherboards are made in Taiwan and a whole lotta RAM.

Taiwan: Laptops are just the tip...

[Nova Express]

...of Taiwan's importance to the Gloval High tech economy. Even more important are the roles of Taiwan semiconductor foundry houses like TSMC and UMC. Taiwan dominates the foundry business (IBM and Singapore's Chartered have significantly lower volumes), and with more and more chip design firms going fabless, an ever-greater percentage of cutting-edge chip designs flow through Taiwan. Indeed, it would be hard to find a computer or MP3 player sold today which didn't have a part fabbed in Taiwan.

Now, imagine what would happen to America's high tech industry if Communist China invaded...

The big picture: American industrial/tech decline

[intnsred]

Having our laptops and PCs made this way may seem great -- for as long as the Chinese keep funding our ever-increasing trade deficit by taking our declining dollars and purchasing our treasury bonds.

Dell and HP are at least keeping some design and marketing jobs in the US. :-/

But if they follow the lead of many other American companies (e.g. GE), that design will be out-sourced overseas. American corporations are being destroyed by their own greed and shortsightedness. Many American companies are now only shells -- they're a brand name with a US-based sales and marketing force and everything else done overseas.

Fool yourself if you want, this is not a sustainable way of doing business. Consumers may think they've got it great now, with prices going down. But those same consumers are transferring wealth overseas and we're only able to do it now because the rest of the world allows the US to get into debt that no developing country could -- we can do it only because of the dollar's dominance.

Eventually that dollar dominance will evaporate and we'll realize that we transferred huge amounts of wealth and industrial power to foreign countries, all based on an ideology of greed and "free" trade.

Now, none of these are my own ideas; this is seen clearly by those on the political left and also by "traditional" conservatives. People like Reagan's Asst. Sec. of the Treasury and former Wall St. Journal editor Paul Craig Roberts have written extensively on this foolish but deliberate economic suicide. The mainstream corporate mass media avoids this -- it may upset people, cause them to question the conventional wisdom, or, worse in their view, impact their short-term profits.

Laugh and enjoy it while we can; things that can't go on forever don't.