The U.S. has lost or is on the verge of losing its ability to develop and manufacture a slew of high-tech products. Amazon’s Kindle 2 couldn’t be made in the U.S., even if Amazon wanted to:

* The flex circuit connectors are made in China because the US supplier base migrated to Asia.
* The electrophoretic display is made in Taiwan because the expertise developed from producing flat-panel LCDs migrated to Asia with semiconductor manufacturing.
* The highly polished injection-molded case is made in China because the U.S. supplier base eroded as the manufacture of toys, consumer electronics and computers migrated to China.
* The wireless card is made in South Korea because that country became a center for making mobile phone components and handsets.
* The controller board is made in China because U.S. companies long ago transferred manufacture of printed circuit boards to Asia.
* The Lithium polymer battery is made in China because battery development and manufacturing migrated to China along with the development and manufacture of consumer electronics and notebook computers.

So the decline of manufacturing in a region sets off a chain reaction. Once manufacturing is outsourced, process-engineering expertise can’t be maintained, since it depends on daily interactions with manufacturing. Without process-engineering capabilities, companies find it increasingly difficult to conduct advanced research on next-generation process technologies. Without the ability to develop such new processes, they find they can no longer develop new products. In the long term, then, an economy that lacks an infrastructure for advanced process engineering and manufacturing will lose its ability to innovate.