While much of the work on outsourcing to China focuses on the low cost and its tradeoffs, this case examines in depth the interaction between human capital and a firm's cost and capabilities. Suitable for the MBA, EMBA, GEMBA, and executive education programs, the case presents a manufacturer of semiconductor assembly equipment looking to achieve growth in its wire bonding tools segment?in particular, capillaries and dicing saw blades?through geographic expansion. At the time, it manufactured capillaries in Yokneam, Israel, and blades in Santa Clara, California.
In the B case, which is now two years after establishing a new capillaries operation in a Suzhou industrial park, the same team is now moving K&S's dicing blade production from Santa Clara, California, to Suzhou. All things considered, the capillary example was a triumphant story of knowledge transfer between two very different populations and regions. The firm's sights now turned to expanding dicing blade capacity. Unlike capillaries, however, all dicing blade operations would move to China. Given the success of the copy exact model for the capillary product, the team wondered if it would make sense to use the same approach with the blade production.