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Why Silicon Glen had its chips

Douglas Fraser | 13:44 UK time, Wednesday, 19 May 2010

A little bit of history: Remember 10 or so years ago, when Silicon Glen was shedding thousands upon thousands of jobs?

We were told then that the market in silicon chips - including DRAMs, or dynamic random access memory - was flooded due to over-capacity.

Gigantic chip manufacturing plants were closed down across Britain, or never opened, and production was focused on countries with cheaper wages.

With around 60,000 jobs in electronics, and £11bn in exports, Scotland then made nearly a third of Europe's computers and laptops, while chip manufacturing was also a big employer in England.

What we've learned today is that there were darker forces at work. The European Commission has just slapped a fine of nearly a third of a billion euros (more than £300m) on 10 companies that were operating a cartel.

This was at precisely the time that Silicon Glen had a major malfunction, taking all those thousands of jobs with it.

NEC and Mitsubishi were among the companies that also had a significant manufacturing presence in Scotland at that time.

The others included market leader Samsung, and Infineon, Toshiba, Hitachi, Hynix, Nanya and Elpida, while Micron was part of the cartel but escaped a fine by fessing up on the details.

Those details show the cartel was in operation between July 1998 and June 2002.

It involved a network of contacts and sharing of secret information, mostly on a bilateral basis, through which they co-ordinated the price levels and quotations for DRAMs sold to major PC or server original equipment manufacturers (OEMs) in the European Economic Area.

That isn't to prove that Silicon Glen could have survived as it was. But it shows the problems it faced were not just down to the hidden hand of the market.

Comments

  • Comment number 1.

    Douglas
    the cartel was in operation between July 1998 and June 2002.
    And just what was the Labour/Liberal coalition Executive doing about it? And just what was the Labour Government at the time doing about it? Perhaps we should feel a little bit agrieved that the so called Workers Party did nothing for the workers that voted for them and that the Party that campaigned on Mrs Thatcher's devastation of Scottish jobs "managed" a similar outcome on their own behalf. The sooner we get some politicians who put Scotland first, if that is not a contradiction in terms, the better.

  • Comment number 2.

    Quite so, handclapping. But looking at the calibre of the people for whom the Labour party provides a career vehicle, what can we expect? Many are out of their depth at anything requiring more vision, responsibility and intelligence than that exercised at the level of soap-box accusations and fear-mongering propaganda. Thousands of jobs lost while Labour was in power at Westminster and Holyrood? 'Aw, it's they Tories - vote Labour again next time and we'll get you mair benefits.'

  • Comment number 3.

    You will notice no doubt that all those companies were foreign owned and were classed as foreign investors and therefore made welcome and in many instances offered tens of millions of taxpayers money.

  • Comment number 4.


    Handclapping, without meaning to cause offense, I think it should be pointed out that the article suggests that at the time the authorities were unaware of the illegal activities going on, so could do nothing about it.
    Also the companies were to blame for the job losses in Scotland, according to the article.
    As far as I know, the Scottish Government did not have the legal authority to challenge the companies. In fact I think even the UK parliament could not have raken action to save jobs, but the EU could have.
    I may be wrong, but if that is right, then things should change, imho.

  • Comment number 5.

    "1. Handclapping"

    While I am no defender of the industrial devastation that was inflicted on much of the UK during the eighties,at least the Tories made a determined effort to bring new industries. The Motorola's, NEC's Compaq's and others were all brought to Scotland under the Tories and together formed Silicon Glen. As "Handclapping" points out the administrations of the devolved Parliament were all but impotent when they decided to move on.

  • Comment number 6.

    I was working for a large Microelectronics company in 1998, in Scotland.
    They were world leader in a particular field for many years. Unfortunately the company did not continue to invest in the technology, mainly because the lucrative American market wouldn't accept the new microchips. They slipped from market leader to third place, then subsequently sold it off. Our section's jobs were in danger, so many of us found alternative employment. I recount this sad tale, not to exhonerate the Government, but to explain that it was companies such as mine, who failed their workers. Bad management decisions cost more than can be honestly reported.
    I am now working in the USA, for a company which values it's workers and rewards the innovative work we do.
    I still feel pangs of sorrow for my previous friends and co-workers, who were not as fortunate, but did good work for these companies who have closed their doors. RIP Silicon Glen.

  • Comment number 7.

    The 'invisible hand of the market' inevitably has the invisible hands of people manipulating it. Particularly when there is little or no regulation to hinder the acceleration of "market failure".
    It was the Thatcher era that deregulated the market but New Labour did little to rectify the situation.
    What difference more rules or scrutiny would have had in the long term is a moot point as firms will, in a competitive market, always look to cut costs as well as innovate.
    One of the problems the UK has got is we are not winning the race to the bottom with regard to labour costs and relative standards of living. Though it should be noted that the gap between the rich and poor is expanding rapidly.

  • Comment number 8.

    All this user's posts have been removed.Why?

  • Comment number 9.

    This comment was removed because the moderators found it broke the house rules. Explain.

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