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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.'"
I build my own. This way I can play, too.
As a consumer, if you want your products nice and cheap, then these sorts of negotiations are par for the course. If they didn't do it, you'd take your money elsewhere.
Avantslash - View Slashdot cleanly on your mobile phone.
"... shaped by rocky cross-Strait relations"
Who knew that laptop technology was influenced so much by country music. And, why is he so cross anyhow?
Beauty is in the eye of the beerholder.
In a few years, no one on continental America will know how to put a laptop together :-/ But they'll be great at tracking DHL/AirBorne and of course flipping burgers ;-)
Where's my free iPod!? Until then, I'll settle for a kiss...
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.
From TFA:
So, IBM used to keep most of it's own laptop production in-house. Which may partially explain why the ThinkPad's are, by far, the best laptops around. Let's see what happens to the ThinkPad now that Lenovo runs the show.
"High Quality Manufacturers?" Seriously, has anyone ever used a HP laptop before... If hospital equipment functioned at the same "High Quality" that HP laptops do then we wouldn't have to worry about pulling the plug on our loved ones. The machines would work for two weeks, start getting really slow, the screen would break, and then it would fail and kill the patient.
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.
Now, imagine what would happen to America's high tech industry if Communist China invaded...
Lawrence Person (lawrencepersonh@gmailh.com (remove all "h"s to mail)
http://www.lawrenceperson.com/
<insert any type of product here> manufacturers seek to produce their products at the lowest possible cost. They outsource to overseas contractors who in-turn outsource to even lower cost labor in the emerging manufacturing economies of Asia.
I don't know about anyone else, but I have a problem buying the cheaper Laptops.
I inevitabley run into hardware problems on the sub $1000 laptops.
I would rather pay a little more and not have the down time for my users. Strahd
In cases like the above, the channel leader can leverage CMs against one another to drive down price. That's your day-to-day negotiation strategy . Your choices become much more limited when you're not the company leveraging the supply chain. The customer isn't always right, sometimes it's the customer that has to grin and bear it.
I don't know how on-topic any of this is, but I'm tired and don't want to write my weekly status report.
You better watch out, there may be dogs about . .
[1] Lionel Menchaca, a Dell spokesman, says the Round Rock, Texas, company obtains partly built laptops from contract manufacturers, but does final assembly at its own factories in Ireland, Malaysia or China, where microprocessors, software and other key components are added.
[2]When a customer in the U.S. clicks on Hewlett-Packard Co.'s Web site to purchase one of its Pavilion zd8000 laptop computers, the order quickly arrives thousands of miles away at a factory in China run by a less-familiar name, Quanta Computer Inc.
Where have you been the last 30 years?
I think you'll find that China could cripple pretty much all of the American economy should it choose to, and without bothering to invade Taiwan.
Deleted
I wonder if there will ever be an "Organization of the Computer Exporting Countries" cartel?
of this story.
"Little does he know, but there is no 'I' in 'Idiot'!"
What I found interesting was the move to manufacturering the more expensive components in China - that is the next place to look for cost reductions. It'll take a while, but it will happen - leaving Tiawan to do higher end engineering and component fab, with the commodity stuff outsourced (much like we do today).
China's also developing the engineering talent to do the design work - Siemen's already does cell phone work their; China certainly has the talent to develop into a major player. Of course, political challenges - how do you keep such diverse country in one piece if you lessen the central control.
If I were India, I'd be worrying about the Chinese developing enough English speakers to capture the call center business.
I'm a consultant - I convert gibberish into cash-flow.
Magic elves.
I'm more concerned about the lapdance supply chain.
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.
While large manufacturers build machines on exclusive designs from resellers like Dell, IBM, HP, Sony, etc., many of these same manufacturers have thier own branded designs available through smaller resellers.
These manufacturer designs are cheaper because they are often sold unbranded. They also experience shorter timespans between hardware revisions because they don't have to wait for those exclusive design specs from resellers, and thus often have the latest components in their models months ahead of those from the major resellers.
ASUS, one of the largest manufacturers in Asia, supplies Apple with Powerbooks, iPod shuffle & minis, Sony with many of their laptops, and have been an on-and-off builder for IBM in the past (there was a report in March of ASUS in major talks with Lenovo to be their supplier in the future), among other famous names. This is one of the many well-kept secrets in the laptop industry.
ASUS has seen their own laptop line more than double in sales since last year, mainly due to word of mouth between computer enthusiasts venturing into the laptop market.
Major manufacturers who supply brand name resellers as well as popular specialty shops:
ASUS
Mitac
Uniwill
Clevo
Compal
Some resellers (VoodooPC, Falcon Northwest, Hypersonic, ABS, and Alienware among others) add some paint and a label (and, like good captalists, at least $500 to the pricetag) to these machines to come up with their own specialty models. Many other less visible resellers (MWave, Discountlaptops, ISTNC, Proportable, and others) sell the exact same machines unbranded in customizable barebone configurations for incredibly low prices.
As computer enthusiasts ditch their unwieldy desktops for portable solutions, we will find manufacturer brands becoming more and more visible to the general public, and large brands will have even more competition.
your thin skin doesn't make me a troll
That's because companies are only looking as far ahead as the next quarterly report, or maybe the next annual report. That's all the shareholders care about so that's all the companies care about.
China, Inc. and others are looking much farther down range. China is working on 50-year plans, which currently involve them taking over the world in many different areas of commerce if not military.
Shortsighted American and Japanese companies worried about short-term profit and loss can't compete against something willing to take losses for decades. Eventually the US companies die or get bought out by China on the cheap.
If there's ever a war between the US and China -and I think there will be one within the next 100 years- we're going to have a difficult time sourcing parts. China will be sure to ban trade with the US so nobody else will sell to us, and meanwhile the US will have totally gotten out of the R&D, chipfab and assembly business. Nobody will know how to make anything and it will take years to get going again.
Sig for hire.
The division of labor is a good thing, but we're talking about something completely different here. The US built its industry based on high tariffs and high labor costs. The original EU was such a success because they implemented policies which aimed to slowly raise up poor EU countries' wages in combination with a slow lowering of the tariffs in wealthy EU countries.
Now the voters in two wealthy countries shot down the EU constitution. The opposition was overwhelmingly from the working classes. They're not stupid, they knew that constitution would force them to compete against Turks and other poor countries and their wages would go down the tubes along with the social benefits it took them decades to win.
I'd urge you to read some independent views on the subject of outsourcing. As I mentioned, Paul Craig Roberts writes extensively on the topic. Hell, even mainstream types like Lou Dobbs have begun to question the "free" trade gospel. Look at the type of jobs which are created now in the US -- they're overwhelmingly in low-paying service industries. Those service jobs do not generate anywhere near the amount of wealth as manufacturing jobs do; as the dollar plummets, those service jobs won't pay for our imported oil, let alone our other import demands.
On a consumer level, take a look at the PBS Frontline documentary "Is Wal-Mart Good for America?"; it's viewable freely online in Real video format.
When you see the part where Wal-Mart literally tells a mid-western hosiery company to shut down its US plants and move to China, ask yourself: Is that really good for America? Yes, we get cheaper socks. But hundreds of Americans get thrown out of good paying jobs and are tossed into the unemployment line.
With unfettered "free" trade, we're in a race to the bottom. American workers are literally forced to compete against the poorest workers in the world, workers who, in China's and many others' case, have no labor rights and work under appalling conditions.
Do you honestly think we can maintain our standard of living in such a situation? We're selling off and mortgaging our economic industrial power to produce things that we could easily produce here. We're in a race to the bottom forcing Americans to compete against the poorest laborers in the world. Who do you think is going to win that competition?
'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
Wrong. Dell and HP only outsource about 1/5 of their stuff to Taiwan. 2/5 ends up in India, the other 2/5 is in Guadalajara, Mexico.
Still waiting on Serviscope_minor to wake up to fucking reality and realize that Jessica Price isn't going to fuck him.
You don't know much about economics, do you?
First, the American military is impressing nobody. The swelled head bubble about the US being so militarily invincible has been popped by brave Iraqis defending their country with little more than assault rifles and light arms. The weakness of the US military is shining clear for all to see. While the US is dangerous, the world is no longer in awe.
Second, the US economy can also be easily popped. If China were to dump the 600-800 billion dollars its central bank holds into the international currency market, the US economy would implode and we'd be pushing around wheelbarrows full of currency to buy groceries just like they did in Weimar Germany. Sound extreme? Not if you read the mainstream economic journals. They all readily admit that such a move would quickly put the US into a deep economic depression.
Don't believe it? When, a few months ago, South Korea's central bank announced they were "diversifying" their currency holdings to lessen the amount of depreciating dollars they hold, Wall Street responded by dropping more than 200 points in 1 day. The US quickly talked to South Korea and they announced that they were not going to diversify their holdings (only later to do it slowly and privately).
But fortunately, it would not be in China's interests to dump their dollars, since it would also ruin the Chinese export market to the US. Hell, China's getting rich off from the US, why mess up a good thing? The only way China would do this would be if we were to mess about with Taiwan or something very serious.
Another weak point is the fact that the US pays for its oil imports in what can only be termed a shell game. We arm-twist oil producing countries to only price their oil in dollars. So Saudi Arabia prices their oil in dollars, we can print all the dollars we want (and we do!), and the Saudis have to take them. In the 80s we forced the Saudis (and similar puppet regimes, e.g. Kuwait) to invest those dollars into the US stock market or in US Treasury Bonds (because if the Saudis were to do anything else with them, it would illuminate how weak the dollar is). It's a shell game, but the end result is that it's another way we're selling off the country.
This oil scam can be easily popped. It will only take a group of oil producing countries to price their oil in currencies other than the US dollar. If this were to happen the US banking industry would lose huge transaction fees and we'd have to pay "real" money for oil.
And what do you know, Iran is in the process of setting up an oil market which would use multiple currencies to buy oil. Gee, you think that might explain a bit of the US hostility towards Iran?
And what do you know, Russia has talked about just that -- pricing its oil in Euros. Even though it's only talk, the US response has been harsh and explains a lot of the recent rhetoric about Russia's undemocratic policies (we had no problem with non-democracy under Yeltsin).
Of course there was one oil producing country who did break these rules and dared to price its oil in a currency (the Euro) other than the US dollar.
That country was Iraq.
But if you think the economic rules of empire don't apply to the "invincible" US military and economy, just ask the British about those rules.
Yes, I'm aware that the Yuan is pegged to the dollar. But in the case of a dollar collapse, the Yuan could easily be detached and allowed to float like any other currency.
As to the Chinese Yuan devaluing if the Chinese stop it from being pegged to the dollar, that just doesn't make sense. Are you sure you don't have that backwards?
The US gov't is trying to get the Chinese to allow the Yuan to float freely like other currencies. The Chinese refuse, primarily for two reasons:
(1) The Yuan would rise and thus make Chinese exports more expensive on world markets (which is the public reason why the US gov't wants the Chinese to float the Yuan; this is 180 degrees opposite of what you claim).
(2) It would open the Yuan up to currency manipulation by wealthy capitalists, int'l banks, and currency traders, such as we saw in the East Asian financial collapse during the 1990s. The Chinese saw what happened to their neighbors, and, well, they aren't stupid.
If outsourcing is bad for America, then isn't outsourcing bad for your state, your hometown and for your family?
Whether outsourcing -- in this case meaning outsourcing jobs overseas -- is bad for your hometown/family, etc., depends on a number of factors. Obviously, if my work is in a company reliant on exports, I'm going to think it's good.
But overall, stats from both the US gov't and labor organizations reflect that we're losing more jobs overseas than we're gaining jobs from exports or from other job creation. (Bush *still* has a net job loss record during his presidency.)
things i suspect aren't true:
- the US built its industry based on high tariffs and high labor costs.
Check any decent history of the 1800s. You'll find that tariffs were a huge source of gov't revenue and was -- decade in and decade out -- the perennial political issue. Working classes, in general, wanted low tariffs to have access to cheap goods, and capitalists wanted high tariffs to protect their industry (the capitalists typically controlled gov't and politics).
As for high labor costs, again, any good history of the 19th century will cover that. Though not recorded in typical US history books, there was a huge "push-pull" dynamic going on with European labor. Many Europeans came to America for free land and opportunity and became immigrants. But there were also many who were "pulled" to the US attracted by the high wages, and then were "pushed" back home during times of depression. Good economic texts will also document the labor costs as a driving force for US industrial automation and innovation.
- jobs being created in the US are overwhelmingly in low-paying service industries
I've mentioned Paul Craig Roberts repeatedly, so I'll quote a part of one of his articles, The US Labor Force: One Foot in the Third World: "In May the Bush economy eked out a paltry 73,000 private sector jobs: 20,000 jobs in construction (primarily for Mexican immigrants), 21,000 jobs in wholesale and retail trade, and 32,500 jobs in health care and social assistance. Local government added 5,000 for a grand total of 78,000. Not a single one of these jobs produces an exportable good or service. With Americans increasingly divorced from the production of the goods and services that they consume, Americans have no way to pay for their consumption except by handing over to foreigners more of their accumulated stock of wealth. The country continues to eat its seed corn."
"Only 10 million Americans are classified as 'production workers' in the Bureau of Labor Statistics nonfarm payroll tables. Think about that. The US with a population approaching 300 million has only 10 million production workers. That means Americans are consuming the products of other countries labor."
So that's the May 2005 stats. And I'll refrain from adding that it takes about 150,000 jobs per month to be created just to break even (the number of people turning 18, increases in population, etc.).
Erm, no, that is the point. You can't. I think you need to reevaluate what you think constitutes a legitimate argument. Do you understand the concept of a logical fallacy?
:
You are stating that
Division of labour is good for everyone everywhere at any scale
OR
Division of labour is NOT good for everyone everywhere at any scale
SO
As division of labour is clearly good at some scales, the first statement must be true.
Clearly you have excluded the middle : that it can be good at one scale and bad at another, or good for some people and bad for others. Therefore your argument is fallacious. If your response is to attempt to reinvent or argue against logic itself rather than modify your premises, then there is no hope for you.