279
Global Value Chains in the Electronics Industry
the Taiwan-based contract manufacturer Quanta, which assembles the largest share of Dell-branded notebook PCs in China (see figure 7.5). This measure of profitability, which in fact does not take Intel’s huge capital investments into account, clearly shows the dominance of Intel in terms of value capture, the relatively modest performance of Dell, as well as the declining profitability of Quanta, despite its apparent success in capturing a growing share of global notebook PC design and production. Such disparities have led to a series of conflicts between Intel and branded-PC lead firms over the expropriation of value-added. In the early 1990s, lead firms, especially the Japanese firms Toshiba and NEC that dominated the notebook PC market at the time, enjoyed high profits. The capability of Japanese lead firms to develop Intel CPU-inclusive chips sets in-house and to verify those developed by
Figure 7.5 Value Capture in Notebook PC GVC in Three Competitors
ratio of gross margin to net sales (percent)
70
60
50
40
30
20
10
0
93
19
94
19
95
19
96
19
97
19
98
19
99
19
00
20
01
20 year
02
20
Intel (platform leader) Quanta (contract manufacturer) Source: Kawakami (forthcoming), based on annual reports.
03
20
04
20
05
20
06
20
Dell (lead firm)
07
20
08
20