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Who in the USA is NOT Designing for the Chinese Market?

About a week ago, I posed a question on the “Design Engineers and Engineering Managers” LinkedIn group. I asked, “How many folks here design stuff that does NOT wind up in a product built in the Far East?” and explained: “I'm assuming that if you work for a semi company, designing chips or ref. designs, the sales are in Asia. But what about domestic industrial design? Show of hands please? (I'm trying to get a handle on the magazine's demographic.)

The responses have been interesting. I’ve copied them below. You can sign up for the group yourself and see who the responders are, but since I don’t have explicit permission to use their names, they’re anonymous in this blog.

Here’s what people are saying:

  • “We do for sure. Most of our customers are fed-up with Chinese made crap - the fact that we design and manufacture in the USA continues to be a great sell.”

  • “We actually purposefully have our designs made here in the US. We are not a chip designer, but items we have fabricated or assembled like circuit boards and final assembly are done here.”

  • “Everything we design is manufactured here in Poway, CA.”

  • “Everything we design is built in Boonton, NJ. The fact that [his company] manufactures in the USA (downstairs from engineering) was a *big* factor in [his] accepting the offer to be the manager of software development.”

At this point, I posted: “Unless there are competitive issues, please don't be reticent about telling us what it is that you design. I started this thread because I'm trying to get a broader view of the state of design than I get from semi companies.

“According to them, 2/3 or more of their business is with Chinese OEMs & ODMs. In response, they're absorbing a lot of the country's design engineers in order a. to create application-specific mixed signal semiconductors and referenced platforms for them, and b. to work as domestic and overseas FEs.

“So, I ask who's left and what are they doing? If I only write articles based on what the semi guys tell me, am I really serving my audience?”

Back came the responses:

  • “Sorry I didn't mention what we design—embedded industrial controllers. We did go overseas with manufacturing about 5 years ago, and at first it was OK—but there are communication issues due to language and time delays, shipping issues and the numerous freight and customs charges that are now piled on almost totally diminish the economic incentive. And then the quality, which was initially great, steadily declined as they tried to pinch out every possible cent. So we brought it back, invested in some new equipment and haven't looked back.”

  • “I design scientific grade cameras. The product base is primarily in the U.S., as is the manufacturing and support. We do manufacture some of the pcbs in Asia.

I said: “From what I hear, it's hard to beat the turnaround on prototype boards from Asia. But for quality in volume, you need somebody on-site, and there go your margins.

“What kinds of factory automation? Years ago, I knew guys automating sawmills and plywood plants with PDP-11s, and they made money with onsey-twozies. Forgetting the PDP-11's, can you still do stuff like that?”

  • “Almost! We had a USA designed and fabricated LED driver IC designed into a Polish LED light fixture... Then our Asian owners pulled the plug on the whole effort. We did manage to get them a last time buy so they could at least recover some of their not inconsiderable compliance costs and meet immediate deliveries.”

  • “We manufacture (assemble?) a low-volume, high-value product for repairing composite structures. The circuit boards are prototyped and assembled here in the U.S. by a subcontractor. The units are assembled here in Seattle. We have to maintain absolute control over the configuration and quality in order to meet the customer expectation. Again, we are not subject to consumer-level cost-cutting and mass manufacturing pressures.

    “Glad to be actually producing something of value here in the U.S. with local manufacturing base support (what is left of it!)”

  • “We design hardware for electrical substation communications and protective relaying. We are adding Ethernet based communications to all our lines.”

  • “I have designed products that are built here and built in China at the same time for markets in China and Europe. That is changing as China is now designing products for China.”

So I said, “What are you seeing relative to the skill level of the Chinese designers? I'll stipulate that they're smart and work real hard, but I hear that mentoring is hard to come by because of the Cultural Revolution. Is that baloney, or is there some truth to it?

“Another take on that: Chinese-designed products for Chinese markets are what the semi companies seem to be going after with their analog ASSPs and Reference Designs, promoted by their armies of FAEs. Is there a way for smaller US companies to get in on that business?

  • “Last year [his company]. won a major Analog ASIC from a Chinese Automotive Company because: 1. We had the right High Voltage Analog IC design skills and 2. We use exclusively US fabs. Our Chinese automotive customer specifically did NOT want a product that would be DESIGNED or BUILT in China. Gosh, I wonder why??????

    “The best news in all this is that some of those US greenbacks are now flowing back to the US.”

  • “I would venture to guess the reason they don't want to have the design and fab done in China is simply due to the rampant IP theft, copycatting, and other weirdness that happens in China. People don't like to talk about it much, but counterfeit parts typically have their origin in projects sent through Chinese fabs (and Malaysian).

  • “I do use Chinese board manufacturing, and would probably use their CM services for niche products where the application is not obvious... Many companies use the distributed manufacturing strategy, they have domestic final assembly and several Chinese contractors doing the sub assemblies, on the silicon side this doesn’t work exceptionally well unless you have processes which you can divide up (i.e. TSV and bump bonding).”

That’s it, up until a minute ago. As usual, you can post comments to this blog below, but if you want to get in on the conversation, join the Design Engineers and Engineering Managers group on LinkedIn.

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