This version condenses the two parts of "K&S Industries Inc. in China: Transferring Knowledge (A) and (B)" into a single-use case. 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. 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.
The expansion committee team is charged with designing and opening a new facility in Suzhou, China. Expanding operations to China meant cost savings, and it was where K&S's market had expanded. But it wasn't clear whether it made sense to move the capillary process, the dicing blade manufacturing, or both. And if K&S did move to China, it would keep the Israeli-based factory open but close the American-based. If both were moved, what order would make sense given that one existing factory would be closed down and the other kept open? And once those decisions were made, what exactly would the knowledge transfer look like?
