The semiconductor industry first emerged in the U.S.A, it spread from the east coast to the west coast within a decade. Manufacturers would locate near universities because it proved highly skilled labour and thus it lead to creation of Silicon Valley, in Santa Clara, California. Nearby Stanford University was the basis for the creation of the area and because the university was supported by government funded electronics research.
During the 1960s and 1970s Japan and some European countries, such as UK and Germany, began to develop semiconductor industries. The success of the Japanese firms such as NEC was overwhelming and by the 1980s Japan had overtaken the United States to become the worlds leading semiconductor producer.
Semiconductor manufacturers located in these areas for many reasons, one of them was because of technological factors. The industry was separated in location by the stages of production, the low cost assembly production was often created in areas where labour is cheap, non-unionised labour markets and pay award wages and also that the area has steady economy and political scene. Clear examples of this would be Intel assembly plants in Penang, Malaysia and in Manila, Philippines. Design requires high level scientific, technical and engineering personal, usually in Japanese and American locations, as the chips are light transportation would not affect the location was these industries a great deal.
Another key economical factor was the economy of the region, areas such as United States, Japan and Western Europe are key examples of this. The political and financial systems allowed access to the financial capital needed for the development of semiconductor manufacturing. Thus it has meant that most research and development in the industry comes mainly from Japanese and American firms. So it meant that the manufacturers would locate in Japan and America because the economy was stable and there was large amounts of capital to ensure the country would not crumble.
Political factors also have a key effect on the location of semiconductor manufacturers. This includes the help that the industry receive from key government sectors such as the military. During the Cold War the American military poured money into electronics research for military and space programs, thus it had effects for the electronics industry. It meant that the public was exposed to electronics and it meant that individual firms were created from researchers that left government or academic institutes. Currently the U.S government is the biggest spender of the industry, and it is said that the military expenditure is the foundation of the industry.
Government assistance is a key factor when considering the expansion of the Japanese and South Korean semiconductor industries. The governments of the countries provided substantial financial assistance to the industry and created tax advantages to semiconductor manufacturers. All this assistance meant that the area would eventually become the world leader in the industry.
This help also occurred in Europe, several governments got together and launched a program concerned with developing advanced microchip technology worth $US4 billion. It was funded by mainly the French, German, British and Dutch.
Also the governments of these countries provided the infrastructure where by these manufacturers relied and worked upon. Also the government continually keeps the infrastructure of the country up to date thus it mean that the semiconductor industry was going to take advantage of this and expand within these countries. Another area where by governments helped the industry was by establishing high technology industrial parks to attract semiconductor manufacturers. These areas are well serviced with suitable infrastructure and are often near research facilities provided by universities.
Apart from economical and political factors, social and cultural factors also influence the location of semiconductor manufactures. A major factor why the research and design centers have often grown in specific areas are because the region tends to have a university. An example of this would be Silicon Valley near Stanford University, this is because the universities provide the area with centers of electrical engineering research, and they help to stimulate development of semiconductor manufacturing.
