Gateway City/Trend: Computer chip exports hurt by Intel move

The story of South Florida’s exports of computer chips is really an import story. Let me explain.

Two years ago at this time, South Florida’s imports of computer chips, microprocessors and similar integrated circuitry — the tiny things that seemingly empower our very existence but certainly our cellphones, computers, TV and, increasingly, care — were valued at a record $4.06 billion. Just last year, computer chip imports ranked as South Florida’s fourth-most valuable import.

Today, those same imports are totaling $40.45 million, a 99 percent decrease, according to WorldCity analysis of the latest U.S. Census Bureau data. Today, computer chip imports rank as South Florida’s No. 125-ranked import. That’s six positions below wigs, to provide a little perspective. (It’s a record year for wigs, by the way.)

Here’s what happened: Intel, which for a number of years had been manufacturing these little silicon-based wafers outside of San Juan, Costa Rica, moved that manufacturing to Malaysia, not too terribly far from where it is also expanding in Vietnam. Shipments that once relied on Miami International Airport to enter the U.S. market, as well as for export, all but vanished.

On the export side, computer chips rank as South Florida’s eighth-most valuable export, down 44.43 percent over the last two years to $839.63 million — which would have been a startling decline were it not for the 99 percent decline on the import side. The one-year decline, as shown in the chart, is 21.73 percent — more than twice the decline for all South Florida exports this year.

This is the eighth column in a series looking at South Florida’s top 10 exports. It follows a similar series on South Florida’s imports and its top trade partners.

U.S. rank: Computer chip exports are the nation’s seventh-most valuable export this year. That’s down one from last year at this time, down three from five years ago and down five from a decade ago, when they were the nation’s second most valuable export, trailing only aircraft, engines and parts.

Exports of computer chips have been relatively stable the last five years, down only 11.19 percent in that time period. The heyday for these exports, however, was earlier in the decade. Exports topped more than $30 billion for the first 10 months of the year from 2002 through 2008, including a record $38.99 billion in 2006.

On the import side — where South Florida inbound shipments have fallen 99 percent the past two years — computer chips are ranked No. 9, down 2.43 percent from last year and just 2.11 percent from two years ago.

Bottom line, midway through the column: The issue is not one of changing demand; it is one of changing supply chain.

South Florida trade: Before this year, the last time South Florida exports of computer chips were below $1 billion through the first 10 months of a year was 13 years ago. Three of the last five years, the total was above $1.4 billion. Don’t expect a turnaround anytime soon.

Export markets: As is the case with so many exports, South Florida traditionally shipped computer chips to Latin America and the Caribbean, as the accompanying chart makes clear.

Accounting for most of the decline this year is the top market, Brazil. Since 2008, it has been the leading export market — it replaced Costa Rica that year — and since 2010, it has accounted for more than 60 percent of all South Florida exports. So far this year, exports to Brazil have fallen 26.71 percent — accounting for a $188.21 million decline in a year when the total decline is $233.04 million.

Exports to Costa Rica, ranked No. 2 last year, are down 65.91 percent. Costa Rica now ranks No. 7. Malaysia, interestingly enough, advanced two positions to rank third behind only Brazil and Argentina.

For the fifth consecutive year, no country is accounting for more than 10 percent of South Florida computer chip exports outside of Brazil.

South Florida competition: Until last year, South Florida was regularly a top 10 exporter of computer chips among the nation’s roughly four dozen Customs districts. Last year, it slipped to No. 11. This year, it is No. 12. South Florida is, nonetheless, the dominant exporter to Latin America and the Caribbean, accounting for 83.14 percent of all those exports.

The bottom line on the export side is that the issue is demand and not supply chain, unlike on the import side. In fact, for the previous three years, South Florida’s share of exports to the region had been in the range of two-thirds of the total — so market share has actually increased as the market itself has declined.

The big losers of market share in that time period are some nontraditional competitors to South Florida: Los Angeles, its shipments falling from $454.99 million to $51.17 million in the last two years; Nogales, Arizona, its shipments to Latin America and the Caribbean plummeting from $140.26 million three years ago to $7.73 million this year; New York City, falling in that same time period from $107.87 million to $7.14 million; and Houston, its shipments off from $293.26 million to $6.28 million.

While South Florida’s exports have fallen sharply not only globally but also to Latin America and the Caribbean in that same three-year period, it is not as dramatic a stumble. Exports, which stood at $1.48 million two years ago are today at $781.54 million — or a little more than 93 percent of the total.

This story was originally published December 12, 2015 at 2:00 PM with the headline "Gateway City/Trend: Computer chip exports hurt by Intel move."