Securing the Future Regional and National Programs to Support the Semiconductor Industry (2003) / Chapter Skim
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II. Findings and Recommendations
II. Findings and Recommendations
Pages 63-90
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From page 65... ...
This support for industry research and development is fully justified. The semiconductor industry's technological progress has enabled major advances in technologies directly relevant to core government missions including those in national secunty, communications, health, weather, the environment, and education.
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From page 66... ...
Yet, at key points in the history of the Amencan semiconductor industry, particularly in the decade of the 1980s, the industry launched cooperative efforts through organizations such as the Semiconductor Research Corporation (SRC 1982) and SEMATECH (1987~.5 This cooperative research has pooled expertise, lowered costs, and encouraged the dissemination of knowledge across the industry.6 After two decades of relative declines, the decade of the 1990s witnessed a major resurgence in the competitive position of Amencan industry in many sectors.7 As 3Alan Greenspan, Technological Innovation and the Economy, Remarks Before the White House Conference on the New Economy, Washington, D.C.
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From page 67... ...
R&D Investments In aggregate terms, the outlook for R&D investments in the United States appears favorable. On December 20, 2001, Congress approved a record federal R&D budget for FY 2002 of $103.7 billion a 13.5 percent increase over FY 2001.
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From page 68... ...
SOURCE: National Science Foundation, National Patterns of R&D Resources. total.
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From page 69... ...
The program supports long-range, broad-based research that seeks to establish new perspectives and approaches to technological challenges facing the industry. In March 2001, the Semiconductor Industry Association announced that it would double the size of the FCRP.
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From page 70... ...
Taiwan's innovative policy mix of equity finance, technical support, favorable tax treatment, and the development of the Hsinchu Science and Technology Park Complex helped propel its industry forward in the l990s. Enhanced R&D support and other programs are not confined to new entrants.
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From page 71... ...
Given the perceived contributions of SEMATECH, countries and regions interested in supporting the semiconductor industry have adopted the consortium model as a means of encouraging cooperation among firms within a national industry and as a vehicle for providing government support. The combination of technical challenges facing the semiconductor industry and the perceived success of cooperative programs in the United States have led policy makers in several countries to increase government funding in support of their national semiconductor industries.2i Box B describes current trends in national programs to support national semiconductor industries.
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From page 73... ...
Continued Progress Depends on the Supply of Talented and Skilled Labor. 73 In order for the semiconductor industry to maintain high growth rates and respond to the growing challenges within the industry, the United States faces a long-term need to bolster support for highly skilled workers.
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From page 74... ...
26Germany, for example, has witnessed a major decrease in the supply of engineering graduates since the early l990s, which has subsequently spurred a worldwide search to attract qualified labor to the German semiconductor industry. See Wilhelm Beinvogl's comments on the German industry's global search for skilled workers to satisfy skilled labor demand in the semiconductor industry, Proceedings, Panel III, "European Partnerships, Government-Industry Partnerships in Europe II," this report, p.l48.
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From page 75... ...
In part, these trends reflect the global scale of the industry; they reflect as well the active industrial policies of leading East Asian economies. For example, Singapore and Malaysia have contributed significant public funds and have extended tax incentives to companies constructing "tabs," while Taiwan has approximately 100 "design houses," also supported through various government incentives.27 While far from certain, one foreseeable outcome of the growth in this model could entail a steady increase in U.S.
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From page 76... ...
industry, economic growth, and national security suggest that better data collection and further analysis would be appropriate.30 C Significant Technical Challenges Discovering a method that allows for the continued improvement in semiconductor productivity presents another significant challenge to the semiconductor industry.
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Korea and Taiwan exhibit global strength and significant progress in memory technologies and foundry-based fabrication facilities. Over time, these trends point towards a shared global leadership.
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From page 78... ...
Hodges, "Semiconductors," U.S. Industry in 2000, Studies in Competitive Performance, David C
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Many of the leading figures in the industry, though not all, believe the effort to overcome the multiple technological challenges faced by the industry should be international in scope if these challenges are to be met in the required timeframes.36 National and international consortia are likely to be a key element in encouraging the research that will aid in meeting these challenges. 36See the presentations of Genda Hu of the Taiwan Semiconductor Manufacturing Company and Masataka Hirose of Hiroshima University in this volume.
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From page 80... ...
Taiwan's science-park approach (notably Hsinchu Park) to creating partnerships between government and industry has shown substantial success.
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From page 81... ...
As Kenneth Flamm and Qifei Wang observe, "Finally, the underlying models of R&D cooperation which ultimately must be the basis of a scientific effort to untangle the chains of causality are simply too simplified at this point to capture the complexity of the real world of SEMATECH: a real world in which companies committed to R&D carried out within a joint venture while at the same time competing through internal R&D efforts which also may have spilled over to competitors, a real world in which the menu of consortium activities changes over time with experimentation and learning. At the end of the day, the only absolutely certain thing about SEMATECH is that a substantial portion of its member companies must have found it to be of net value having actually run the experiment of ending public subsidy, and finding that its consumers continued to buy its output." See Flamm and Wang, op.
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From page 82... ...
The industry interaction within the consortium, and between the consortium members and the suppliers, improved the dynamics between the device makers and the equipment industry, with collaboration generating new technical perspectives for the participants and encouraging the give-and-take between manufacturer and supplier necessary to expedite the technology development process.
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From page 83... ...
They further concluded that the reduction in firm-level R&D of member firms does not justify public support for the consortium, since firms are essentially free-riding on federal funds and would have expended the equivalent federal funds out of their own budgets had there not been a consortium. Irwin and Klenow argue further that firms joined SEMATECH to "share" information but not to necessarily "commit" funding for high spillover R&D, which, if true, would have resulted in an increase in R&D.
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From page 85... ...
illustrates this enhanced willingness to collaborate in innovative ways. This positive perception of SEMATECH has contributed to its emulation, notably in foreign programs to support national or regional semiconductor industries and among other U.S.
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From page 86... ...
economy recorded substantial gains in productivity growth between 1995 and 1999, with productivity growth more than double that of the 1973-1995 penod. The Council of Econom~c Advisers attributed "these extraordinary economic gains" to three factors, namely, technological innovation, organizational changes in businesses, and public policy.49 Two of these factors concern information technology, in particular the simultaneous advances in information technologies computers, hardware, software, and telecommunications which combine these new technologies in ways that sharply increase their economic potential.
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From page 87... ...
semiconductor producers. Overall, SEMATECH's record of accomplishment was achieved in no small part through the flexibility granted its management and the sustained support provided by DARPA, the public partner, complemented by the close engagement of its members' senior management and leading researchers.
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From page 88... ...
Recommendations The Committee's recommendations outline a series of modest steps that nonetheless may prove important to the long-term welfare, economic growth, and security of the United States. RESOURCES FOR UNIVERSITY-BASED SEMICONDUCTOR RESEARCH To better address the technical challenges faced by the semiconductor industry and to better ensure the foundation for continued progress, more resources for university-based research are required.
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From page 89... ...
Since professors typically respond to appropriate research incentives, augmented federal support for programs that encourage research in sem~conductors would attract professors and graduate students.52 In addition, specific incentive programs could be established to attract and retain talented graduate students. 5iThe president's FY 2003 budget makes important steps in this direction.
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