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Computer production had moved first to Japan in the mainframe era, and then Japan was joined by the Asian newly industrialized economies (NIEs) as the PC industry went global. To a large extent, the global production system for PCs was really a U.S./Asian network.

The reasons for Asia’s prominent position are rooted partly in the earlier mainframe competition, in which only the Japanese survived intact against IBM. The causes are rooted even more deeply in the globalization of the electronics industry in the 1960s and 1970s. As U.S. electronics and semiconductor companies moved production to Asia, they helped create capabilities that formed the underpinnings for PC production.

The U.S. computer makers located production throughout Asia to tap these capabilities, and also to avoid dependence on Japanese suppliers. The U.S. consumer electronics companies had become dependent on Japanese components and were ultimately driven from the market by low-cost Japanese producers who controlled their own supply of components.

The U.S. computer industry feared the same fate, and diversified its supplier base beyond Japan to other parts of Asia.1 Why did so much of the computer industry end up in Asia? The answer boils down to a combination of effective industrial policies and national industry structures that were able to integrate effectively into the global production system.

East Asian governments actively sought foreign investment, supported technology transfer, and promoted exports, thus facilitating the development of global linkages. They also maintained labor discipline, giving them an advantage over other places with cheap labor, and they achieved high levels of education, particularly in the critical technical and engineering fields.

Tags: computer, development, history, industry