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Businesses Hardware

Japanese Chip Makers to Unite 131

Posted by ScuttleMonkey from the the-march-of-forward-progress dept.
Doctor Memory writes "The Register reports that several Japanese semiconductor manufacturers (Toshiba, Hitachi and Renesas, and possibly NEC and Matsushita) are in talks to create a "semiconductor superpower" to counter rivals in Taiwan, the US and China. The firms are in talks to create a shared foundry, which might set the stage for the creation of a 45-nanometer process well in advance of the competition."
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Japanese Chip Makers to Unite More

Japanese Chip Makers to Unite

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  • The summary neglects to mention the fact (Score:5, Funny)

    by Anonymous Coward on Wednesday December 28, 2005 @05:12PM (#14354011)
    That the chip makers will also physically unit to form the mighty robot Chiptron.
    • Another nail in the US economy coffin.

      • Hardly (Score:4, Interesting)

        by jgardn ( 539054 ) <jgardn@alumni.washington.edu> on Wednesday December 28, 2005 @06:38PM (#14354444) Homepage Journal
        This is hardly a nail in our coffin. The US knows that monopolies are bad because they become lazy and charge high prices for crap. If anything, this will ruin the semiconducter economy in Japan as they become equated with bloated prices and shoddy work.

        How would you feel if you heard that all the top semiconductor companies in the US were going to merge? Wouldn't your next reaction be something about monopolies and anti-trust? Wouldn't you expect to see higher prices for shoddier work? That's exactly what's going to happen in Japan. I assume the next step is to start using the Japanese government to enforce favorable trade controls to keep the conglomerate alive.

        It's competition that keeps U.S. companies honest. If they can't compete, they go out of business, to be replaced by companies that can compete. In Japan (and to a large extend, Korea) mama government will start passing out welfare checks when national corporation X stops being profitable. (We'll see if China is going to behave the same. All predictions say "yes".)
        • It's competition that keeps U.S. companies honest.

          Aparently you've missed the recent headlines about the ex-Qwest executive's wire fraud charges and the current state of the Enron fraud case. U.S. companies are dishonest slime, just like companies everywhere else. There's a reason why the term "business ethics" gets used as a classic oxymoron - they have none!

          In fact, it seems like competition makes companies less honest. Competition seems to get the credit quite often for IBM covertly outsourcing jo

          • Where is Enron today? GONE! The second--yes, the very second--word got out that they were dishonest, their stock prices tanked and people began leaving. Here today, gone tomorrow. These sick kids that thought they could play a joke on the market are learning really fast that we don't take this kind of crap. Where are they now? Having nightmares of serving long sentences for fraud. Do you think they will ever see their salaries and stock options again? Do you think they will ever get a job working within 3 m
        • You make one significant error in your logic.

          People in the US are generally lazy, people in Japan are generally extremely productive. Its not a matter of race, but culture. Americans are just brought up differently from the Japanese, who have the strongest work ethic of anywhere afaik, and have a totally different attitude to buisness.
          • Have you ever lived and worked in Japan?

            Japanese do not work harder than Americans. Yes, if you work there you spend more time in the office, but more time doesn't equal productivity. When I was working there, you were expected to stay until like 800pm at night, and then we usually went out drinking. But, the number of smoke breaks and meetings and things during the day certainly didn't equate to more work done. Lots of meetings here, too, but overall I think the work done is the same.
        • "It's competition that keeps U.S. companies honest." Wow... just wow.

        • If they can't compete, they go out of business, to be replaced by companies that can compete.

          OK, so these aren't companies in the strictest sense, but... have you recently looked at how much money is spent on subsidising cotton farmers in the USA, for example? If not, please do, and then try to come back and say that the USA aren't subsidising anyone with a straight face. I predict you won't be able to.

          Also, the idea that there are no monopolies in the USA is so far out there that I'm not really sure

        • It's competition that keeps U.S. companies honest.

          You should be in showbusiness, hahahahahahaha.

  • humm (Score:2, Insightful)

    by Amouth ( 879122 )
    I have mixed feelings about this.. would be greate for tech but what will happen to the consumer once they kill the competition?
    • You mean like Microsoft did? And we know what great quality products they put out right????

    • Japan's companies have realised that to remain in contention in the new global (eyes towards China and India) economy, they must take a radical approach.

      I was on a lean manufacturing course which teaches what the Japanese componies do to perfect their manufacturing processes. If a small improvement will not suffice you need to implement radical change.

      This is an article describing the radical change in thinking that is now being considered. At times like we have today where the rules have changed very rapid

  • Unite? (Score:4, Funny)

    by Pentultimate Aeon ( 741155 ) on Wednesday December 28, 2005 @05:14PM (#14354017)
    "I'll form the head!" -Sorry, couldn't resist.

  • Concerning chip makers (Score:5, Funny)

    by fionbio ( 799217 ) on Wednesday December 28, 2005 @05:14PM (#14354020)
    Just got this from my /usr/bin/fortune: LETTERS TO THE EDITOR (The Times of London) Dear Sir, I am firmly opposed to the spread of microchips either to the home or to the office. We have more than enough of them foisted upon us in public places. They are a disgusting Americanism, and can only result in the farmers being forced to grow smaller potatoes, which in turn will cause massive unemployment in the already severely depressed agricultural industry. Yours faithfully, Capt. Quinton D'Arcy, J. P. Sevenoaks

  • Well (Score:1, Funny)

    by Soporific ( 595477 )
    I, for one welcome our new semiconducting overlords!

    ~S

  • I for one welcomeourJapanese chip making overlords (Score:3, Interesting)

    by digitaldc ( 879047 ) * on Wednesday December 28, 2005 @05:17PM (#14354042)
    "Hitachi, Toshiba and Renesas today announced that they have initiated a joint study on the feasibility of an independent semiconductor foundry business offering advanced fabrication processes to which each of the companies could outsource fabrication."

    If you create a company to make a product for you, shouldn't it be called insourcing ?

  • Price Fixing (Score:4, Insightful)

    by nurb432 ( 527695 ) on Wednesday December 28, 2005 @05:18PM (#14354044) Homepage Journal
    So much the eaiser to fix prices if you 'collaborate' your R&D and production.

    • Re:Price Fixing (Score:4, Informative)

      by LWATCDR ( 28044 ) on Wednesday December 28, 2005 @05:21PM (#14354060) Homepage Journal
      Well there is still companies US, Taiwan, and the EU competing with these manufactures. If they "fix" the price too high then companies in these other countries can undercut them.

      • Re:Price Fixing (Score:4, Interesting)

        by twiddlingbits ( 707452 ) on Wednesday December 28, 2005 @06:00PM (#14354261)
        Japan is a signee to GATT. If the other nations see Japan price fixing and/or dumping (they can do both at the same time) the GATT says they can sue them in The World Court for damages and to abolish the anti-competitive action. Of course that takes years, in the meantime the other nations will erect tariffs/subsidies to protect thier own makers of such chips. This is NOT a smart move by the Japanese, sure it's radical but radical the wrong way.
        • If and only If they do fix prices. Sharing RD costs and developing a 45nm foundry makes a lot of sense. I doubt that they would ever want to risk price fixing. Even if they did I think it would fail. Now dumping is another story.
          • foundry!=fab.
            The foundry produces the siicon ingot and wafers but does not process them. Owning your own foundry lets you more tightly control the quality of the silicon going into your fabs.
            Going in together on foundry capacity is more of a testing the waters approach before diving into a fab (or 5)
            -nB
            • foundry!=fab

              Huh? Sir, are you sure you know what you are talking about? ;-) Yes, your inequality is correct, but in much weaker sense than you assume: since the dawn of modern CMOS (you know, Mead-Convay [amazon.com] time, circa 1980) people referred to foundry as an outside place to make your chips.

              Foundries [wikipedia.org] have fabs, Intel also has fabs but (AFAIK) does not provide foundry services; IBM provides, e.g., SiGe foundry services, MOSIS [mosis.com] is a foundry, etc.

              Places where you get wafers are just "wafer suppliers", places whic
              • Fairly sure, yes.

                When I worked at a comm silicon company we were fabless. We always referred to TSMC and UMC as fab houses, not foundries. Similarly when we contracted with IBM for an ASIC design we used the Burlington FAB (as opposed to foundry).

                Now maybe other geos or corporate cultures refer to this differently, but for both companies I've worked for it was foundry, fab && || fab house, mask house, sort, etc.
                One company had ~1200 employees the current one has many times that.
                Cheers,
                -nB
                • Well, I guess it is indeed a case of slight difference in corporate culture/lingo, and maybe time -- I've revealed my timeframe by referring to Mead-Convay's book! ;-)

                  Yes, you obvously would "used the Burlington FAB (as opposed to foundry)" -- you as a designer (I assume) need to know where chips will be made and deal with the right "_fab_ people". But your contracts people would, I think, deal with what IBM would refer to as "foundry services department".

                  Anyway...

                  Paul B.
          • THere has got to be more to it than just R&D costs. You don't build a foundry to do R&D you build it to make chips. If everyone investor owns equal share of production then they should be able to produce chips for pretty much the same price. And I don't see one firm willing to take a market share hit by pricing higher than the others. So you don't have a formal price fixing but you have it informally. It's a backdoor (Loophole?) . Of course they could each take the technology, build a 45nm fab and c
            • But this just one country. There are still chip houses in the US, EU, and Asia that will compete with these Japanese companies.
              • No doubt. BUT the big deal is the possibilty these guys try to run everyone else out of the market by selling at low costs, grabbing market share until everyone else who wants to compete cannot afford to compete. These guys could become a market cartel for these chips, much like OPEC is for oil. I'm not sure the Japanese Gov't would let that happen these days as they are not nearly as much bought and paid for by business as they used to be 20 yrs ago. We just need to keep our eyes open to what is going on s
        • The GATT says that? I thought the GATT was based entirely on reciprocity. I would imagine the WTO would be the one that has other countries going to the World Court.
          • WTO is the parent organization that enforces the GATT is how I recall it. WTO has the power to make nations "conform" to the agreements. Trade is really never based on reciprocity as some countries don't have a lot to offer someone in return for goods. If by reciprocity you mean if you tarriff my stuff X, I'll tarriff your stuff Y that can happen, but the GATT was setup to prevent such "trade wars" and instead have "fair" trade agreements.

    • Antitrust law still applies when companies fix prices during a joint ventures. Warner and some other labels had a joint venture to make a Three Tenors album. They fixed prices and got busted [ftc.gov]. The FTC later said that all price-fixing with relation to a joint venture will get the per se illegality treatment, which means no excuses. The parties can only set the prices of the new products of their joint ventures, and only when it is necessary to the success of the venture. (Firms cannot dump all their assets to
    • As they have competition elsewhere in Asia, the US and Europe, I don't see how it would make a difference. To do price fixing, they would have to cooperate with every other company in any particular chip industry.
  • The chipmakers will unite into a giant chipmaker who will protect the world from evil and fight many giant monsters.
    --Toho Pictures

  • Ship Has Already Sailed to China (Score:5, Informative)

    by mpapet ( 761907 ) on Wednesday December 28, 2005 @05:19PM (#14354052) Homepage
    Most of this stuff is moving to China as fast as humanly possible.

    R&D and (b)leading-edge manufacturing is still in Taiwan, but moving at lightning speed to China ASAP.

    As I recall:
    Employees cost roughly 1/3 the price of an American worker. Employees in China cost roughly 1/4 the price of a Taiwanese worker.

    Is my recollection still true?

    • Re:Do Over (Score:3, Informative)

      by mpapet ( 761907 )
      As I recall:
      Taiwanese employees cost roughly 1/3 the price of an American worker. Employees in China cost roughly 1/4 the price of a Taiwanese worker.

      • Re:Do Over (Score:3, Insightful)

        by Halfbaked Plan ( 769830 )
        Believe me, I do a lot of R&D Testing of products whose manufacture recently was 'shifted' from the US to China. The Chinese who I have encountered (Shenzen region) have zero concept of proactive quality engineering. They will do exactly what they think you told them to do without thinking. Any time there is a problem, they become defensive and opaque, and it becomes very difficult to do anything about the issue.

        My feeling is that this comes from years of socalism and group-think within a very regime
      • There's no doubt about the lower wages, but I think the difference is negated in other ways.

        This is an anecdotal example, but Canon moved it's high-end manufacturing back to Japan after attempting to set up in Malaysia. Malaysian wages were lower, but employee turnover was significantly higher than what it was in Japan. This led to increased training expenses, and lower productivity over the long term.

        My impression is the the lower-cost countries can be a great way to save money on manufacturing relatively

        • My impression is the the lower-cost countries can be a great way to save money on manufacturing relatively simple items with well-established production techniques, but for newer technologies and R&D, a more highly skilled workforce is necessary.


          Yes quite, like us for instance. I often remind my clients of this, a good lecture often makes them forget what they came to ask me to do too.
      • In North Korea, workers are a tenth of the price of a Chinese worker, and that's to *buy*. None of this capitalist renting nonsense.

    • Seems that the cost of living is much greater in Japan than in the USA. They can beat the USA by their manufacturing effeciency. I don't see how Japan can hope to compete with Taiwan and China though, unless they out research Taiwan. If they come up with even sharper, leading-edge manufacturing, maybe.

    • Re:Ship Has Already Sailed to China (Score:2, Insightful)

      by Anonymous Coward
      This is true in the electronics industry, but not for semiconductors. You don't need very many employees to run a semiconductor fab, and they can't be taken in from the street. The big expense is equipment and the facilities, and these prices do not vary that much (but they are huge - several billion dollars for a cutting-edge facility). My impression is that one of the biggest factors in where fabs are located is where companies can get the biggest tax cuts and/or government subsidies. BTW, there are cutti
      • the limited labor working in the plant is still cheaper in China.
        Labor to build the fab is cheaper in China.
        Materials to build the fab are also cheaper.
        Office costs and other costs are also cheaper.

        Everything else being equal, China still wins.

        And China already manufacturers just about everything else.
        Go ahead, pick up a random object in your house/apartment/basement/etc
        see the little sticker? yeah "Made in China"...

        And that goes for electronics and computer goods too. (the majority anyhow)
        • yeah, but the japanese tend to leave the high end stuff on their home turf because the chinese have a tendency to "borrow" (as in copy exactly and sell under a chinese brand name) whatever is being made on their turf at the time. In automotive manufacturing, the chinese have "developed" a honda passport clone. There are also mercedes C class clones.

          Your LCD panel may be stamped "Made in China" but the electronics running that panel are stamped "Made in Japan".
    • Most of this stuff is moving to China as fast as humanly possible.

      R&D and (b)leading-edge manufacturing is still in Taiwan, but moving at lightning speed to China ASAP.

      As I recall:
      Employees cost roughly 1/3 the price of an American worker. Employees in China cost roughly 1/4 the price of a Taiwanese worker.

      Is my recollection still true?

      I believe that is the case, but remember that these companies still want to be able to still sell their product to U.S. companies (like the big three auto manufacturers
  • Either we have small companies with no money for R&D, and few if any industry wide standards, or we have a few big companies which can effectively pricefix and control the market with ease, preventing further companies from joining.

    This seems to be the big dilemma these days, so, honestly, I have no idea if this is a good or a bad thing...

  • All this will do is force Taiwan and the US to stay honest and innovate to stay ahead. A side benefit of course will be lower prices for the consumer. Of course this only works because there are other major players. Competition = good.

    http://religiousfreaks.com/ [religiousfreaks.com]

  • Nothing New Here (Score:3, Interesting)

    by FSM ( 922740 ) on Wednesday December 28, 2005 @05:22PM (#14354072)
    Not exactly unusual. Japanese have long been doing this. It is called Keiretsu [wikipedia.org].

    • Re:Nothing New Here (Score:1)

      by Anonymous Coward
      Not exactly unusual. Japanese have long been doing this. It is called Keiretsu.


      I'm sorry, but this is not a keiretsu. A keiretsu is marked by mutual company ownership and strong social ties. Unless Hitachi is buying a portion of Toshiba and the top executive is marrying one of the Renesas' executive's daughter and no one is mentioning it, this is just a western style joint venture.

    • A Keiretsu is a loose grouping of companies working in disparate fields but keeping the same name. An example would be Mitsubishi or, in the West, Virgin Group. What the article talks about is just a normal business partnership between different companies, not a Keiretsu.
    • +5? Does anyone here actually know Japanese? Two others posted before me, so they deserve the mod points.

      But, a keiretsu is quite a bit different (see Mitsubishi or other companies for an example). This seems like a much less cohesive venture, and a single one at that. They are just discussing a 'shared foundry' as TFA states. This is nothing like Mitsubishi or the Virgin Group.

      Granted, I suppose it is possible for it to eventually turn into a keiretsu, but I don't think so. These are MUCH larger, ind
  • Actually it's too coherent to be in anime. There are no dwarfs or unicorns.

  • American chip manufacturers aren't worried . .. (Score:4, Funny)

    by mmell ( 832646 ) on Wednesday December 28, 2005 @05:25PM (#14354090)
    What, with all the atomic weapons testing happening off the shore of Okinawa every year, Godzilla, Gamora or Mothra will certaily level the Japanese chip makers, leaving Intel and AMD, er, Pinky and the Brain to take over the world!

    What? There's no such thing as Godzilla? Has anybody told Johnny Socko about this?

  • now which company will be the Head?

  • As long as... (Score:3, Funny)

    by greysky ( 136732 ) on Wednesday December 28, 2005 @05:39PM (#14354163)
    Hey, I'm cool with it as long as they aren't teaming up with the Germans...
  • You can probably add Nicon to that mix as well. Because I don't think they will be using wafer steppers from outside of Japan.

  • Brook's Law (Score:2, Interesting)

    by SporkLand ( 225979 )
    "The firms are in talks to create a shared foundry, which might set the stage for the creation of a 45-nanometer process well in advance of the competition."

    Does Brook's Law:
    "Adding manpower to a late software project makes it later"

    not apply in the least bit to semiconductor shrinking?

    That is an actual question, I'm not trying to make a point.
    • Manpower != investment

    • Does Brook's Law: "Adding manpower to a late software project makes it later" not apply in the least bit to semiconductor shrinking?

      Brook's Law doesn't even apply to software all the time. Consider a project with a single person working on writing a full featured OS. Adding another person should reduce the time needed to get the thing done even if it's late.

      Part of the work needed is actually building the fab and getting the physical stuff done. Adding more people would speed things up there up to a

  • Violates Principles of Free Market (Score:5, Insightful)

    by jgardn ( 539054 ) <jgardn@alumni.washington.edu> on Wednesday December 28, 2005 @06:31PM (#14354421) Homepage Journal
    One of the reasons Japan isn't doing so hot is that they can't compete as well as they used to now that their labor wages are so high. I find it amazing that any business leader would think by eliminating all competition in their own country they are going to be more competitive on the world market. Since when has IBM or Sun decided that buying out Intel, AMD, and all the other chip makers is going to make them sell more chips in Asia? No, we in America do precisely the opposite. We stab our own domestic companies in the back unless they can do it for cheaper and better. We would happily see IBM, Sun, Intel, and AMD bite the dust if they bit the dust due to a leaner, more aggressive, and better producer.

    What Japan should look at instead of conglomeration is lowering the cost of entrepeneuring, and encouraging young people to start companies. Rather than forcing on the youth the ideal of getting into a good college so you can get hired by a good company, they should push on the youth the concept of rebelling against conventional wisdom and inventing new businesses and technology to slay the dragons. This would keep the existing companies competetive because they would have to compete just to keep their domestic revenue. Instead, they are forming a cartel of sorts that will discourage innovation and competition, and the Japanese people are looking the other way. They don't have a culture of entrepeneurship, and they haven't worked to create one. Now they will get screwed by higher prices and crappier products thanks to an unrestricted monopoly. (Phase 2 of the plan, if it isn't obvious, is tariffs or restrictions on imported electronics.)

    Maybe the US system of education is doing well for our country precisely because it is so incredibly broken compared to Japan's. People have a much better chance of succeeding economically by entrepeneurship than education and employment in our country. That's why your local independent plumber and painter are making more money than you are and they haven't even seen the inside of a college campus. And the net result is that people in our country know that the only way to be truly fabulously wealthy is to quit your job and go form your own company.
    • my understanding of hte us economy is that ~ 40% of workers (the lower two quintiles on the income distribution scale) have seen virtually no real increase in income in 20+ years

      therefore, by any reasonable definition, the us economy does not work well, and has not worked well for 20 years, and most of what we call working well is a small number of people getting rich

      so much for the free market
    • I would think if uniting means they'll make better processors than the American ones then they've got a chance.
    • The cost of next gen fabrication plants is so high that most of these companies cannot risk building one on thier own. Even intel would be remarkably weary of the risk. So if they get together they can share the cost of construction and development and share the risk. Nobody is sure how good the yields are for .45 nm in volume production environments as there are no volume production facilities for the technology at the moment. Building the foundary is very very very expensive. It will take time and researc
      • You have an excellent point.

        I do have a friend in the hardware business. He says that because the cost of building a fab plant are skyrocketing, that the fab plants are becoming independent. His own company makes a deal with a fab plant that has the right setup for their particular chip. They send off the design, get 5 or 6 back, and test them. Then when they are satisfied, they put an order up for several million of them.

        This is the way of the future. The fab plants will be an entirely separate business, c
  • This could be good because getting to cheaper fabrication means allowing more fabless design houses in the US. Perhaps this could slow the gravitational shift of engineering to Asia. Fabless chip houses can be small units funded only by a few million dollars.

    on the other hand...

    By decreasing the importance of TSMC and UMC, that decreases Taiwan's economic power, allowing China to more easily establish military/political control of the island. Currently, most US presidents honor the economic power of

  • The firms are in talks to create a shared foundry, which might set the stage for the creation of a 45-nanometer process well in advance of the competition.

    Think bigger still. Why not one world-wide corporation to develop 45nm, 32nm, and whatever-comes-next-after-that-nm processes that are made available to everyone on an equal basis? Better than money spent (wasted) on parallel development and patent fights.

    Then you can start competing on the value of your circuit designs.

    • Corporation: no. But consortium: yep, it's coming, because development costs for 45 and beyond are so horrendous that nobody can/wants afford them on his own anymore.

      Things will start with a few consortia (of which this Japanese one is an example) because governments still want to push their local economies (esp. the Japanese one does so very much), but over time even those few consortia will either merge or die.

      The thing that is really going to surprise a few people (though not the insiders), is that t

  • for is "Cartel". What we're going to have here is the RIAA of the semiconductor industry. Call it the CMAN - Chip Maker's Association of Nippon.
  • ToHiRe

    Or...

    ToHiReNeMa...

    Butt, I am sure the US-based chip makers will not only have a CHIP on their SHOULDER, they'll have a new... (ToHiR)-eNeMa... Or, a Pentuple Eneme

    (image word: triple...)

  • The cost of FAB has been growing and will grow all the time. At same time production capacity of a FAB has gone up even faster.
    DEC died because its management though they couldn't afford the increasing cost of fab in long run.
    IBM:s semiconductor business makes losses, just because its TOO SMALL.
    [In IBM:s case the profits come from consulting for systems build from the components that semiconductor business unit makes.]
    Its all about capability of filling the minimum unit size with products, that bring the ca
  • I, for one, welcome our new 45 nanometer overlords.
    All your 45nm base belong to us!!! mwah ha haa

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