Where American chip companies sent their assembly lines, 1963 — 1972. Beginning with a converted rubber-shoe factory off Hang Yip Street in Kowloon and ending with the Bayan Lepas free trade zone, the back end of the chip industry pulled itself across the ocean in nine years.
The Bay Area assembly wage in 1963 was $2.50 an hour. The Hong Kong wage was about ten cents. Replace a Bay Area woman bonding gold wires under a microscope with a Hong Kong woman doing the same job, and the labor share of the cost collapsed by more than nine-tenths.
Within five years every American merchant chip company would be following Fairchild east. Investment in U.S. assembly automation slowed sharply for a decade.
| Site | Year | Hourly Wage | |
|---|---|---|---|
| Mountain View, CA | 1963 | $2.50 | |
| Kowloon, Hong Kong | 1963 | $0.13 | |
| Kallang Basin, Singapore | 1968 | $0.20 | |
| Chung Ho, Taiwan | 1969 | $0.19 | |
| Bayan Lepas, Penang | 1972 | $0.17 | |
| Kowloon, Hong Kong | 1980 | $1.00 |
By the early 1970s, chip manufacturing was no longer a single integrated process taking place in a single building. It had been pulled apart into a front end and a back end, with the front end (wafer fabrication) kept close to design and engineering in California or Texas, and the back end shipped to wherever labor was cheapest.
The seam that ran across the Pacific would only get longer. Photomasks would migrate. Test would migrate. Eventually fabrication itself would migrate, though that took another twenty-five years and required a different kind of company — TSMC — to make it happen.
The original logic, that some part of chipmaking would always live in Asia, was set in 1963 in a converted shoe factory off Hang Yip Street.
Eight multinationals signed onto the first phase of the Bayan Lepas Free Trade Zone in 1972. Intel · Advanced Micro Devices · Hewlett-Packard · National Semiconductor · Hitachi · Clarion · Osram · Bosch. Intel's plant — code-named A1 — would within a few years supply more than half of the company's worldwide assembly capacity.