The boom in the Chinese microchip industry has Americans worrying about lost jobs and national security. We should be praising it as a model of how globalization is supposed to work.
Aug. 3, 2005 | In 2004, more than 40 tech companies staged public offerings of their stock on Wall Street. Ten were domestic Chinese firms. A microchip company led the way; in one of the largest initial public offerings of the year, China’s Semiconductor Manufacturing International Corp. raised $1.8 billion.
If chip industry experts across the globe weren’t already obsessed with China, SMIC’s IPO riveted the attention of the remaining holdouts. Five years ago, China hardly had a chip industry to speak of. Each year since then, led by SMIC, production has exploded. Today, China makes about 8 percent of the world’s chips; by 2010, that number may be up to 20 percent.
From nowhere to world domination has been the story of China and globalization for the past decade. Textiles, toys, televisions and cellphones — one global industry after another has succumbed to Chinese competition. Why should chips be any different?
Because the chip industry can be an example where globalization works right.
Salon’s editor’s note: Salon staff writer Andrew Leonard is on special assignment to explore the impact of globalization on the U.S. This article is Part 2 of his series “How the World Works,” which takes readers from the vacant business parks of Silicon Valley, Calif., to the high-tech boomtowns of Shanghai.
