Business Brains

Today's star tech products manufactured outside the US: should we be concerned?

Posting in Design

iPhones and Kindles, designed in the US, are made elsewhere. The US no longer even has the capacity to manufacture Kindles. Part of a natural evolution, or a loss of innovative spirit?

In a new post, Willy Shih, a Harvard management professor, points out that Amazon's Kindle e-reader is manufactured outside the United States.

This is nothing new, since most, if not all, high-tech products are manufactured overseas these days.  It's no secret that Apple's iPhone and iPod is produced by Hon Hai Precision Industry Co. (Foxconn), based in Taiwan and affiliated facilities in China.

What is disturbing to Shih however, is that the US doesn't even have the capability to produce the Kindle product, even if Amazon wanted it that way.

According to Shih, one of the key components of Kindle, its "ink" (or tiny microcapsule beads used in its electrophoretic display), were designed and are being manufactured by E Ink, a company based in Cambridge, Massachusetts. As Shih explains:

"The [Kindle's] display consists of E Ink's special beads and a sheet of glass that has a patterned layer of silicon transistors on it that turn the beads black or white when a voltage is applied... E Ink had to have the glass made in Asia because the companies there are the only ones that can deposit patterned silicon on sheets of glass. That capability left U.S. shores when American companies failed to keep up in the LCD flat-panel-display industry."

Shih expresses concern that by not being in the game for manufacturing electrophoretic displays, "the U.S. will miss out on the future industries that spring from it — things like large flexible displays, future generations of electronic signage, and plastic electronics. Those technologies could, in turn, spawn other innovations and new industries." The United States already lost its capabilities for manufacturing precision optics and semiconductors.

I don't know if Apple's products can be produced within the US. (Perhaps some readers can provide insight on this.) But is the loss of manufacturing capability to emerging markets something to be concerned about, or is part of an inevitable cycle? Certainly, the loss of heavy industry over the past few decades, from textiles to steel to autos, has resulted in a great deal of pain for many workers and communities. And lately, we've seen the shift with high-tech manufacturing, and even software design, to overseas markets.

Shih says the US is losing more than one industry when this shift occurs. It is losing an innovative edge, and the offshoots that innovation will foster.  Is the US simply advancing to higher-level conception and development, and leaving the grunt production work to others? Look at the innovations that are driving global progress, such as iPhone or the Internet itself, they still have a "Conceived in the USA" stamp on them. Or is the US losing something vital to its own advancement?  Again, should we be concerned?

Share this

Joe McKendrick

Contributing Editor

Joe McKendrick is an independent analyst who tracks the impact of information technology on management and markets. He is a co-author of the SOA Manifesto and has written for Forbes, ZDNet and Database Trends & Applications. He holds a degree from Temple University. He is based in Pennsylvania. Follow him on Twitter. Disclosure