Semiconductors: A Key To The Nation's Competitiveness

Semiconductors lie at the heart of this nation’s industrial might and national security. Semiconductors are the building blocks of electronic products; and most industries, whether they manufacture products or deliver services, depend on electronics for their competitive advantage. Global competition in semiconductors and electronic products is jierce. But, the rewards are great. Electronics, a $750 billion global enterprise, employs large numbers of people with a broad set of skills. It is not fortuitous that many governments have been quick to realize the economic implication of a strong electronics sector and have set about developing policies and practices to both develop and nurture their domestic sectors. This paper traces key market trends in both semiconductors and electronics, and root causes are offered to explain the loss of US. market share in the various product areas. Linkages will be identifred between semiconductors, electronic products and the broad set of industries that depend on electronics. And, an argument will be set forth that strength in these three sectors depends on strength in each component (the chain being as strong as the weakest link). Finally, the proposals of the National Advisory Committee on Semiconductors, aimed at assuring robustness in semiconductor and electronic product markets, will be sketched. These proposals address a number of key issues, such as: improving industrial investment in plants and equipment, stimulating high-volume electronics manufacturing, and renewing the commitment to highquality manufacturing skills. These proposals are broad enough that, if acted upon, they would greatly enhance the global competitiveness of many US. industries. The Case for Semiconductors The U.S. semiconductor industry is a critical base for the hightechnology industry that, in turn, is vital to the country’s wellbeing. Land, labor, and capital once determined the economic strength of nations. Today, technology must be added as a fourth contributor. The standard of living and security of industrial nations have been linked to the success of high-technology industries, including aircraft, computers, telecommunications, and consumer electronics. To maintain its prosperity, the United States (both private industry and the various, relevant government departments and agencies) must take the necessary steps to assure that a process is in place that enables a continuous creation of a competitive advantage in such industries. High-technology industries are critically linked to each other and to their underlying technologies by a number of customer-supplier relationships. Customers must stimulate suppliers with abundant leading-edge systems applications and a market large enough to support investment in the suppliers’ people, technology development and manufacturing facilities. Suppliers must be easily accessible and willing to work closely with customers to provide timely delivery, improve their products, and to be responsible as the customers’ needs change. Suppliers must also offer state-of-the-art performance, cost, and constantly improving quality in their products and services. There is a critical customer/supplier feedback loop that must be healthy and interactive. A weakness in any link of these hierarchical relationships can undermine the whole industry. Electronics is a key link in the economic chain. Almost every product of high-technology industry is dependent on electronic systems for its production or operation. The U.S. electronics industry is, today, the nation’s largest employer. Semiconductors, in turn, are the vital components of electronics. Today, semiconductors annually represent a $21-billion U.S. industry, and a $63-billion world market. In addition, semiconductors are critical to the $384-billion U.S. electronics industry and the $751-billion world market for electronics (see Figure 1). By the year 2000, world semiconductor sales are Semiconductor Materials and Equipment $606 Figure 1 : Semiconductors: A Foundation for Preeminence expected to rise to $200 billion, and the world electronics industry to $2 trillion. Thus, electronics holds the promise for unusually impressive economic growth in the decade ahead. A cornerstone of this growth is the dependence of all electronic systems on semiconductors. Maintaining Competitiveness At the beginning of a decade that promises unprecedented growth in global high-technology markets, the U.S. firms competing in these markets are experiencing disturbing weaknesses. In a recent Japanese publication’, relative standings were presented for certain emerging technologies that compare U.S. and Japanese technology positions. The results shown in Table 1 were taken 0-7803-0755-0192 $3.00 01992 IEEE 332 1992 IEEEICHMT Int’l Electronics Manufacturing Technology Symposium from a Japanese source along with results published by the US. Department of Commerce. Emerging Technologies (Electronics, Information Systems) Advanced Semiconductors Devices High-Density Data Storage Digital Imaging Technology High-Pexformance Computing Optoelectronics Table 1: Relative Standing in Emerging Technologies: Japan vs U.S. STA (Jap. Esti.) Current Trends Status