The globalization of R&D's implications for technological capabilities in MNC home countries: Semiconductor design offshoring to China and India

Abstract

This paper addresses the empirical question of the impact of the offshoring of semiconductor design to India and China on the generation of semiconductor design skills in the offshoring multinational corporations' (MNCs) home countries. There are four main findings. First, there is a specific technology skill ladder for training “design leads” or design managers within this industry that entails direct exposure to a wide range of design activities. Thus, offshoring has potentially serious implications for development of further design leads. Second, the paper also finds that the impact on skills activities and thus potential skills generation at home from offshoring to India has been limited and gradual and from offshoring to China has been even more limited although the activities done in each country by MNCs have risen over time. Third, the fuzzy set qualitative comparative analysis pinpoints that the operations with design leads and large design teams in 2003–2007 in conjunction with other attributes are generally the ones that pursued the most extensive expansion of semiconductor design offshoring during the subsequent 2009–2013 period. Finally, the evidence for a gradual process of offshoring from the second and third points suggests that offshoring in semiconductor design will most likely not displace the large amount of design activities in the home countries of the MNCs in the near future.