4 ms·

Philips is fractured and a shadow of its former self. They used to both make the machines and the chips now its ASML and NXP

berkes 5y ago
And ASMI too. Signify is another subsidiary, the former lightning division from Philips. Philips itself is doing very well in medical equipment. A sensible, sustainable and profitable pivot: in an age where every Chinese factory can churn out toasters or radio's with near zero margins, it makes little sense to remain worlds' leader in toasters or radio's.
- Cthulhu_ 5y ago
  Can't fault that argument. I mean Philips made and invented some nice products - CD's, LED lighting, my wake-up light - but when it comes to production they just can't keep up, and I'm confident the profit margin on electronics like that has completely tanked. Especially when their designs and inventions quickly get copied shamelessly. Corporate espionage is still a big thing; my girlfriend told me a story about a company presenting their new device at a trade show (iirc it was a jewelry casting machine or something). The Chinese competitor that had a stand not far from them had their stand empty, but on the third day there was a replica of that same casting machine at half the price. Medical equipment is a lot more specialized and probably harder to duplicate, and maybe more importantly, not a race to the bottom.
- baybal2 5y ago
  > in an age where every Chinese factory can churn out toasters or radio's with near zero margins, it makes little sense to remain worlds' leader in toasters or radio's. Surprise for you, Chinese factory can't run with near zero margins. Electronics industry been on the downsizing trend in China for the last 10 years. It now costs less to hire labour in flyover states in USA, than South China. Chinese factories themselves are rushing to relocate to South Asia.
  - berkes 5y ago
    > Surprise for you, Chinese factory can't run with near zero margins. I am aware of that. But when they can "outsource" most R&D (read: copy or steal IP) a lot of businesses have a very hard time competing against those margins. For example, when all the costs you make is plastics (raw materials), amortisation on your machines, wages and electricity, and some Ali-express fees, you can compete with a company like Lego easily. Because Lego has those same costs, but also marketing, R&D, legal, QA, distribution and so on. I'm not saying that any of those are "wrong" per sé. Maybe Lego is in the wrong business or on a dead end, and maybe that is not bad: IDK. But I do see why many companies are pulling out of this race-to-the-bottom and either becoming "almost entirely marketing" (Nike, Adidas, etc.) or pivoting to niches with other easier to defend moats, like Philips.
    - patentatt 5y ago
      Also what kind of protections do low level employees have in China? If an employee is harmed on the job, does the company have many repercussions? Can employees organize and negotiate as a group? What about healthcare costs? Or taxes? If the factory owner is in with the local government and/or the party, do they have to pay much in the way of taxes? What about public accountability? Are companies publicly listed and subject to financial disclosure rules? It’s my second and third-hand understanding that all of these factors contribute to an exceedingly low labor cost in China. I think we enjoy cheap stuff at the cost of supporting a pretty dismal situation for many ordinary Chinese.
      - berkes 5y ago
        I cannot evaluate if what you say is true. But it does not really matter when both the European Philips and the Chinese brand Pilhips, or both the Lego Harry Potter™ and "Justice Magician Bricks" are made under the same conditions. Both reap the same "benefits". This unfair advantage would only matter if the European Philips or Lego keeps all its production (of the entire chain) in Europe, which they do not.

berkes 5y ago

And ASMI too. Signify is another subsidiary, the former lightning division from Philips. Philips itself is doing very well in medical equipment. A sensible, sustainable and profitable pivot: in an age where every Chinese factory can churn out toasters or radio's with near zero margins, it makes little sense to remain worlds' leader in toasters or radio's.

Cthulhu_ 5y ago
Can't fault that argument. I mean Philips made and invented some nice products - CD's, LED lighting, my wake-up light - but when it comes to production they just can't keep up, and I'm confident the profit margin on electronics like that has completely tanked. Especially when their designs and inventions quickly get copied shamelessly. Corporate espionage is still a big thing; my girlfriend told me a story about a company presenting their new device at a trade show (iirc it was a jewelry casting machine or something). The Chinese competitor that had a stand not far from them had their stand empty, but on the third day there was a replica of that same casting machine at half the price. Medical equipment is a lot more specialized and probably harder to duplicate, and maybe more importantly, not a race to the bottom.
baybal2 5y ago
> in an age where every Chinese factory can churn out toasters or radio's with near zero margins, it makes little sense to remain worlds' leader in toasters or radio's. Surprise for you, Chinese factory can't run with near zero margins. Electronics industry been on the downsizing trend in China for the last 10 years. It now costs less to hire labour in flyover states in USA, than South China. Chinese factories themselves are rushing to relocate to South Asia.
- berkes 5y ago
  > Surprise for you, Chinese factory can't run with near zero margins. I am aware of that. But when they can "outsource" most R&D (read: copy or steal IP) a lot of businesses have a very hard time competing against those margins. For example, when all the costs you make is plastics (raw materials), amortisation on your machines, wages and electricity, and some Ali-express fees, you can compete with a company like Lego easily. Because Lego has those same costs, but also marketing, R&D, legal, QA, distribution and so on. I'm not saying that any of those are "wrong" per sé. Maybe Lego is in the wrong business or on a dead end, and maybe that is not bad: IDK. But I do see why many companies are pulling out of this race-to-the-bottom and either becoming "almost entirely marketing" (Nike, Adidas, etc.) or pivoting to niches with other easier to defend moats, like Philips.
  - patentatt 5y ago
    Also what kind of protections do low level employees have in China? If an employee is harmed on the job, does the company have many repercussions? Can employees organize and negotiate as a group? What about healthcare costs? Or taxes? If the factory owner is in with the local government and/or the party, do they have to pay much in the way of taxes? What about public accountability? Are companies publicly listed and subject to financial disclosure rules? It’s my second and third-hand understanding that all of these factors contribute to an exceedingly low labor cost in China. I think we enjoy cheap stuff at the cost of supporting a pretty dismal situation for many ordinary Chinese.
    - berkes 5y ago
      I cannot evaluate if what you say is true. But it does not really matter when both the European Philips and the Chinese brand Pilhips, or both the Lego Harry Potter™ and "Justice Magician Bricks" are made under the same conditions. Both reap the same "benefits". This unfair advantage would only matter if the European Philips or Lego keeps all its production (of the entire chain) in Europe, which they do not.