THE DYNAMICS OF DESIGN-MANUFACTURING LAPTOPS: HOW TAIWANESE CONTRACT MANUFACTURERS MATTER IN THE HISTORY OF LAPTOP PRODUCTION A Dissertation Presented to the Faculty of the Graduate School of Cornell University in Partial Fulfillment of the Requirements for the Degree of Doctor of Philosophy by Ling-Fei Lin January 2015 © 2015 Ling-Fei Lin THE DYNAMICS OF DESIGN-MANUFACTURING LAPTOPS: HOW TAIWANESE CONTRACT MANUFACTURERS MATTER IN THE HISTORY OF LAPTOP PRODUCTION Ling-Fei Lin, Ph.D. Cornell University, 2015 This dissertation aims to open the knowledge production “black box” of laptop contract manufacturers in Taiwan and their factories in China from 1988 to 2012. By examining their engineering practices, I demonstrate the complexity and changing dynamics of design-manufacturing laptops across different time periods, which not only refutes a perception of linear progress from manufacturing to design for Taiwan’s industry, but also challenges the idea that manufacturing lacks innovation and importance. I show how manufacturing and design capability are equally crucial and argue that it is also the intensive interaction between design and manufacturing, internally and externally, that matters. I develop a concept, field knowledge, to describe this interactiveness that involves frequent multiple-sited and trans-organizational exchanges between actors from heterogeneous backgrounds. My research, based on extensive interviews, unpacks the sociotechnical process in producing laptops that involves the transnational flow of people, ideas, and materials. In Chapter One, I show how Taiwanese producers designed their first laptops in the late 1980s based primarily on design engineering capability and how they learned to specialize the development process through collaborating with brand-name firms. In Chapter Two, I explore the complexity of the product development process, analyzing how the relations between design and manufacturing are intertwined. Chapter Three covers the issue of ever-thinning margins for producers and the practice of field knowledge that enabled them to create useful knowledge through constant interaction with internal and external partners to reduce costs. In Chapter Four, I analyze how these manufacturers, as mediators in the production world, have been contained and standardized by powerful partners. In Chapter Five, I examine how large-scale factory relocation from Taiwan to China after 2001 affected the practices and the lives of employees engaged in a permanent struggle between rootedness and mobility. I also show how their manufacturing capability was ever expanding, along with growing design expertise. Overall, this dissertation problematizes the production process and demonstrates the changing dynamics of design-manufacturing laptops within their social and historical context, arguing that it is the proficient capability of both design and manufacturing, and the effective integration between them that increases and maintains laptop consolidation. BIOGRAPHICAL SKETCH Ling-Fei Lin earned an M.A. in Science and Technology Studies from Cornell University, an M.A. in Social Sciences from the University of Chicago, an M.A. in Journalism from National Taiwan University, and a B.S in Atmospheric Sciences from National Taiwan University. iii 謹獻給在天上的父親 林清雄 iv ACKNOWLEDGEMENTS This work would not be possible without the strong support from my committee: Trevor Pinch, Ronald Kline, Michael Lynch, and Suman Seth. For the past few years, they have spent much of their precious time discussing with me the framework, arguments, and details of my dissertation. My greatest appreciation thus goes to them. I am fortunate to have had an historian, Ron Kline, and a sociologist, Trevor Pinch, as my co-chairs. Trevor has been a great advisor since I began my Cornell studies and has consistently supported me with his valuable insights. Ron gave me incredible help and comprehensive suggestions at almost every stage of this project. I have benefited greatly from his patience, approachability, and precision. I refer to Mike Lynch as the underground chair of my project. Many important ideas of the dissertation came from extensive discussions with him. Suman Seth provided invaluable suggestions on my project. In particular, his intellectual challenges to my fundamental arguments always inspired me to think in a different way. A special thank is given to Fa-Ti Fan, the external reader for my oral defense, who indicated several significant issues that I can improve on. I am grateful to have received generous financial support from the following: Cornell University for the Sage Fellowship and TAship, Ministry of Education in Taiwan for Studying Abroad Scholarship, the National Science Foundation for Doctoral Dissertation Improvements Grant (ID: 1026247), the East Asia Program for a Lee Teng-hui Fellowship in World Affairs at Cornell, the Chiang Ching-kuo Foundation for a Dissertation Fellowship for ROC Students Abroad, and from the China Times Cultural Foundation’s Young Scholar Fellowship -- Mr. Chi Chung Yu Award. The Graduate School and Einaudi Center at Cornell and the NSF also provided travel grants for my research and conference presentations. This dissertation project is based on numerous interviewees’ help. I would like to first thank the consultant of this project, also the main founder of Acer Group, Stan Shih, for persuading a few top managers in Quanta and Wistron to accept my interviews for this dissertation. I am deeply grateful to Johnson Fong from Quanta v who introduced several important interviewees to me. I am indebted to Stan Shih, “Yao,” “Harrison,” “Christopher,” “Bruce,” “Charlie,” “Eli,” “Richard,” Steve Kung, Peter Wang, and Roger Huang for accepting multiple interviews. I thank many anonymous interviewees for providing inside stories of their company and the industry. I want to also thank several college students in Taiwan, especially Elsa Zhung, in assisting me to transcribe the large number of interview recordings. I spent several happy years at Cornell surrounded by an exceptionally amiable community that allowed my work and life to flourish. In addition to my special committee, Professors Peter Dear, Steve Hilgartner, Rachel Prentice, Judith Reppy, and colleagues Darla Thompson, Emma Zuroski, Ben Wang, Hansen Hsu, Anto Mohsin, Angie Boyce, and Ilil Naveh-Benjamin have all provided warm support and useful suggestions for my research. The staff in the Department of Science and Technology, especially Stacey Stone and Deb Van Galder have been of outstanding help in their administrative assistance. This project also benefited from discussions with the audience of several conference presentations, and I especially thank Atsushi Akera and my paper commentators, Ross Basset, James Cortada, Sungook Hong for their useful feedback of my dissertation chapters. Dissertation writing is a long journey. During the past few years, I have received writing and editing assistance from many people, in particular Sally Yates, Keith Hjortshoj, Mallory SoRelle, Jessica Sands, Carolina Iribarren, and Brad Zukovic. The writing boot camp and re-boot camps at Cornell, organized by Jan Allen and accompanied by many colleagues, also helped a great deal in keeping my writing momentum enhanced. Finally, I would like to thank my family in Taiwan and in the U.S. My husband Li-Chung has supported me in every aspect of my life over the years. I am profoundly indebted to him. Yuka, my son, was born in the second month after I entered the Ph.D. program, has literally grown with my dissertation project. He has always been the greatest comfort and the dearest person in my busy life! My mother-in-law, Hsueh, was so helpful when she came to Ithaca to take care of Yuka when he was young. Finally, I am thankful for the warmest support from my mother, Ming-Yu. vi TABLE OF CONTENTS BIOGRAPHICAL SKETCH iii DEDICATION iv ACKNOWLEDGEMENTS v LIST OF FIGURES viii LIST OF TABLES x INTRODUCTION: THE INVISIBLE CONTRACT MANUFACTURERS: RESITUATING DESIGN AND MANUFACTURING 1 CHAPTER 1: EMERGING THROUGH DESIGN ENGINEERING 30 CHAPTER 2: FLOATING BOUNDARIES AND INTERTWINING RELATIONS BETWEEN DESIGN AND MANUFACTURING 80 CHAPTER 3: CHEAP AND CHEAPENED INNOVATION: FIELD KNOWLEDGE, AND THE GLOBAL DE-VALUE CHAIN 147 CHAPTER 4: HOW TAIWANESE LAPTOP PRODUCERS ARE STANDARDIZED AND CONTAINED 211 CHAPTER 5: MOVING FACTORIES TO CHINA: ASSEMBLING (ASSEMBLED) IN CHINA, AND THE GLOBAL CONVEYOR LINES 255 CONCLUSION: THE CHANGING DYNAMICS OF DESIGN-MANUFACTURING LAPTOPS 352 APPENDIX 363 BIBLIOGRAPHY 371 vii LIST OF FIGURES FIGURE 1.1 Quanta’s first laptop QC201 42 FIGURE 2.1 ITRI’s Product Development Procedures Manual. The 1st page 92 FIGURE 2.2 ITRI’s Product Development Procedures Manual. The 2nd page 93 FIGURE 2.3 ITRI’s Product Development Procedures Manual. The 3rd page 94 FIGURE 2.4 ITRI’s Product Development Procedures Manual. The 4th page 95 FIGURE 2.5 C-system diagram 98 FIGURE 2.6 The design-factory "concerto" 120 FIGURE 3.1 Value capture in HP’s nc6230 notebook in 2005 155 FIGURE 3.2 Value captured in Apple’s iPad in 2010 155 FIGURE 3.3 Quanta’s changes of margins 157 FIGURE 3.4 Quanta’s engineer in the materials division 184 FIGURE 3.5 Quanta’s engineer in the R&D division 184 FIGURE 4.1 The “IBM Bible” from the early 1980s. Cover 222 FIGURE 4.2 The “IBM Bible” from the early 1980s. Two of the inside pages 222 FIGURE 5.1 Kunshan Processing Zone in Jiangsu, China 272 FIGURE 5.2 Quanta, Shanghai, before it was built 274 FIGURE 5.3 Quanta, Shanghai in 2012 275 FIGURE