Comment by tuyguntn | Hacker News Reader

Comment by tuyguntn | Hacker News Reader

Bunch of MBAs come up with idea of how to increase profits, aha! let's outsource some parts to China.

next batch of MBAs, hey we are having too much expenses and issues with assembly and logistics, let's outsource more parts to China so we can assemble there cheaply and ship ready product to warehouses globally directly from China!

next batch of MBAs, hey why do we need those bunch of old grumpy engineers? let's decrease salaries and get rid half of them, we operate as a franchise/brand operator now.

next batch of MBAs, hey we are having high employee attrition rate of engineers in our Chinese facilities, let's increase their salary or outsource to Urumqi, doesn't matter if they are having human right issues, its cheap anyway.

CEO, Hey government we need bailout, we need your money, we are creating jobs (not here), we can't innovate fast enough (yeah sure, we don't have hands on talent anymore), China is leading now (yeah of course)

I wonder will China make same mistake in the future when outsourcing jobs to USA, thinking it has cheap labor?

> Bunch of MBAs come up with idea of how to increase profits, aha! let's outsource some parts to China.

This wasn't my understanding of what started the Phyisical Tech -> China exodus.

Growing up in the 90's, my understanding was we started outsourcing manufacturing to other countries to side-step export controls. In the U.S., you could export a research paper on encryption but couldn't export the implementation. So chip manufactures were faced with a decision: create two chips, one w/ encryption for domestic and one w/o encryption for foreign markets OR produce a single product overseas. I think they made the right decision, when faced with the crypto wars, but it knee-capped our domestic manufacturing and contributed to China's dominance in manufacturing.

An article going into the incentives created during this era by EFF founder John Perry: https://www.eff.org/pages/decrypting-puzzle-palace

I think you are vastly overestimating the impact of crypto export limitations. People in the 90s couldn't spell cryptography.

I think you’re underestimating the cost of manufacturing two separate devices. It wasn’t the crypto itself, it was that manufactures had to solve for export controls and they chose to manufacture a single product overseas instead of two domestically.

I don’t think “crypto” was front of mind. Suspect it was “let’s build a computer” and the lawyers said “you can’t sell that in x market if you make it in the U.S.” so they didn’t.

Almost correct, but crypto isn't the real focus. It's whatever export controls prevent someone from easily shipping a computer outside of the US; I remember buying a CPU years ago and the retailer being extremely specific about not then shipping it out of the country.

Yeah, I agree.

Fair to say that second and third order effects of the legislation were the real focus for manufacturers?

I don't think anything you describe has to do with semi-conductor issues. MBAs didn't outsource semiconductor manufacturing to China to save money. First, most isn't done in China anyway, second, the price of Fabs became prohibitive and the US govt lacked any strategic plan for semiconductors. Companies had no choice but to go fabless. When IBM, AMD and others started divesting themselves of their fabs, it would have been a great time for a national conversation on the future of that industry. Finally, the cost overhead of the US is just huge, so it isn't just trying to save money it is about being in business or being out of business. You just can't compete in almost any industry if you don't take advantage of cost savings available in other areas of the world.

It is going to get worse with the new stimulus bill as companies now must compete against the government for resources more than ever. You need manual labor? So do all the contractors doing govt jobs. You need engineers? So do all the companies with billion dollar energy contracts. Nothing wrong with this long term, it is going to be the sudden jolt that causes a lot of issues.

My understanding is that investors have been moving our companies more and more to nikefication. Because any thing that actually involves hiring people or operating a factory, buying materials etc. is more risky than simply licensing out patents and branding.

Someone pointing out the truth.

Yeah, somewhere along the line, we decided in America we can have profits without risks. As well, we believe you can make money with nothing more than money itself.

That’s not what happened with chip making, the major foundries are Taiwanese (TSMC, UMC) and it wasn’t due to labor costs but rather the extreme capital cost of fabs.

With all due respect, you don’t know what you’re talking about regarding this industry.

I honestly cannot tell if this is a parody comment. Not only is it completely false, it’s ignorant and unhinged.

Reply on news.ycombinator.com