Labor Cost Arbitrage – Applied Materials moves to Asia

One of my pet theories is that they we see a lot of distortions and oppurtunities for arbitrage is because labor is not globalized while capital and trade are . When capital and goods/services with some restrictions can move freely around the globe , there are innumerable restrictions on movement of labor leading to outsourcing. The MNCs with sprawling global structures are able to best exploit this situation by moving most of their labor requirements to low cost locations in Asia. It is not only manufacturing and low valued added work that they are moving but their entire R&D capabilities. Applied Materials , one of the world’s largest semiconductor has moved and is in the process of moving the rest of its manufacturing and R&D capabilities to Asia. This is leading to mass layoffs in its US operations.

Rumor mill: Layoffs seen at Applied – EETimes

More rumors at Applied Materials Inc.: The fab tool giant is expected to have a layoff between May 10 to May 12, according to sources.

The layoff will involve an undisclosed number of employees in the solar and other groups around the company, sources said. There will be layoffs almost once a month over the summer, sources said. All cutbacks will be in the United States.

For some time, Applied has been reducing its headcount. The last layoff was small and happened at the end of March, sources said.