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8/27/2007
04:17 PM
Rob Preston
Rob Preston
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Don't Fear The Acer-Gateway (And Other Globalization) Grim Reapers

Taiwan's Acer plans to acquire U.S. PC maker Gateway, a deal some may view as further evidence that the U.S. tech industry is bolting offshore. Despite the upheaval in the domestic tech industry and profession, however, the United States is holding its own as a high-tech center.

Taiwan's Acer plans to acquire U.S. PC maker Gateway, a deal some may view as further evidence that the U.S. tech industry is bolting offshore. Despite the upheaval in the domestic tech industry and profession, however, the United States is holding its own as a high-tech center.Since the Acer-Gateway deal, announced today, is top of mind, let's take a look at the global industry by way of the tech manufacturing sector. Stats published last year in a report by the National Science Board indicate that the United States is still far and away the world leader in high-tech production. At least it was in 2003, the latest year for which stats from the Global Insight World Industry Service database were available, when the U.S. share of the global high-tech manufacturing sector was 42.5%, down slightly from the country's 2002 peak of 43.1% but still well ahead of its roughly one-quarter share in the period 1980 to 1995.

In comparison, the European Union's share of global high-tech manufacturing peaked around 1980, at about 34%, falling to 28% in 1990, 20% in 2000, and an estimated 18.4% in 2003. Japan's share of global high-tech production peaked in the early 1990s, at around 25%, trending downward each year until 2003, to about 12%.

No question, the rest of Asia, led by China, is now where the tech manufacturing action is heading. In 2003, domestic production by China's high-tech industries accounted for about 9.3% of global production, compared with just 1% in 1980, according to the National Science Board report. The most recent data show that China's high-tech industries have surpassed those in South Korea and Taiwan, and if trends continue, may soon rival those in Japan "in size if not sophistication," the report says.

Anecdotal evidence shows the shift as well. Every major U.S., European, and Japanese chip, computer, and networking hardware manufacturer has moved much of its production to Asia, either on its own or through contract manufacturers. The acquisition of IBM's PC business by China's Lenovo in 2005 showed high-tech ownership shifting east as well; Acer's deal to buy Gateway is only a confirmation of that trend. Cisco CEO John Chambers has said he doesn't so much worry about the likes of Extreme, Foundry, Juniper, Nortel, and other North American-based rivals as he does the emergence of some still-unknown networking systems competitor out of China.

Yet for all that activity and anticipated activity, U.S. tech manufacturing still rules. For now, much of the high-paying R&D and engineering jobs remain in this country. For now. No guarantees about tomorrow.

That's what globalization is: Companies everywhere doing business everywhere. So Taiwan's Acer is snapping up the No. 3 U.S. PC maker for $710 million, creating the world's No.3 PC maker. So what? Almost everyone is on the move in some fashion. No doubt this constant and inconsistent reinvention of the IT sector makes for a lot of angst and even anguish, but it also makes for a lot of opportunity.

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