Outsourcing

1 out of ten US tech jobs will be exported abroad by the end of the year. The answer to this problem, said T.J. Rodgers, CEO of San Jose-based Cypress Semiconductor, isn't to require U.S. companies to stop taking advantage of offshoring to low-cost countries. Rather, he said U.S. companies and Silicon Valley engineers have to keep innovating ahead of rivals, and the United States has to invest more in education so it can produce the qualified workforce companies need. Rodgers noted that Cypress has an excellent team of chip designers in Bangalore, India, and that India is making gains because it graduates 290,000 engineers a year, vs. only 65,000 in the United States (4/1/04 Business Section of SJ Mercury News). Rodgers says however that, “Silicon Valley is the capital of the technology world and I don't see that changing. It's getting expensive and hard to do business here, and that is pushing jobs out of the valley. If Silicon Valley is to recover, we have to move up to the next step and do what others can't do.''

Rodgers noted that he once tried to fight the offshoring trend by keeping a chip test and assembly facility in the United States in the 1990s. He said that the move put Cypress Semiconductor at risk and he eventually had to lay off all the U.S. workers at the facility. Cypress now has 2,000 workers in the United States and 2,000 overseas. With test and assembly in the Philippines and two chip wafer fabrication factories in the United States, Cypress is a much more stable company, Rodgers said. “Productivity gains are important, right and moral,'' Rodgers said. “CEOs have an obligation'' to take advantage of productivity improvements, even if it includes hiring foreign workers.