About 80 percent of the production of the semi-conductor industries comes from about 100 so-called "merchant" companies that make the components for general sale. Most of these are located in Silicon Valley, but because of skyrocketing housing costs and a shortage of labor, the industry now is expanding elsewhere around the United States, notably in Texas.

The balance of the production originates in the "captive" companies -- a group of giants including International Business Machines Corp., Western Electric Co. Inc. and Hewlett-Packard Co. -- who make semiconductors only for their own computers or end products.

Total employment is about 185,000, of whom 85,000 are workers in "offshore" producing centers in Southeast Asia and other places where wage scales are low.

By transferring a major share of the labor-intensive part of semiconductor production overseas, the industry has kept total costs down. The delicate computer chips must be wire-connected by hand to protective frames, which eventually go into the final product.

The chips are so small that they can be packaged off by air express to Singapore, Indonesia, Kuala Lumpur, Hong Kong or other cheap-labor areas, then back to the United States or even a third location for final assembly.

This labor-intensive part of the semiconductor manufacturing process has become an important part of the economies of these countries.