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Introduction The semiconductor industry is one of the major contributors to modern economic growth.1 As one recent National Academies’ study notes2: “…often called the ‘crude oil of the information age,’ semiconductors are the basic building blocks of many electronics industries. Declines in the price/performance ratio of semiconductor components have propelled their adoption in an ever-expanding array of applications and have supported the rapid diffusion of products utilizing them. Semiconductors have accelerated the development and productivity of industries as diverse as telecommunications, automobiles, and military systems. Semiconductor technology has increased the variety of products offered in industries such as consumer electronics, personal communications, and home appliances.” This pervasiveness in use establishes semiconductors as the premier general-purpose technology of our post-industrial era.3 In its impact, the semiconductor is in many ways analogous to the steam engine of the first industrial revolution.4 1 Dale W. Jorgenson. “Information Technology and the U.S. Economy,” The American Economic Review, 91(1): 1-32, 2001. 2 This excerpt is taken from Jeffrey T. Macher, David C. Mowery, and David A. Hodges, “Semiconductors,” U.S. Industry in 2000: Studies in Competitive Performance, David C. Mowery, ed., Washington, D.C.: National Academy Press, 1999, p. 245. 3 For a full discussion and definition of general-purpose technologies and their impact on economic growth and development, see Helpman, E. and M. Trajtenberg “Diffusion of General Purpose Technologies,” pp. 85-119 in General Purpose Technologies and Economic Growth, E. Helpman, ed. Cambridge and London: MIT Press, 1998. 4 Ibid.
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The invention of the first transistor in 1947 at Bell Telephone Laboratories heralded the beginning of the modern era in technological advancement. Four years later, in 1951, Bell Labs sponsored a conference in which the capabilities of the transistor were demonstrated to leading scientists and engineers for the first time. Although the attendees from outside Bell Labs did not yet possess the capability of producing a transistor, the conference conveyed the enormous potential of transistors, and many eager scientists returned in the spring of 1952 for the Bell sponsored Transistor Technology Symposium.5 The foundation of the modern day high-tech revolution was established at this symposium as the attendees shared their knowledge and ideas about the capabilities and applications of the transistor. Bell Labs assembled the knowledge shared at the eight-day conference into two volumes, entitled Transistor Technology.6 As a matter of antitrust settlement and corporate policy, in 1955 Bell Labs established an important precedent in creating the merchant semiconductor industry through a decision to share its intellectual property on diffused-base transistor technology.7 This decision allowed other researchers access to the knowledge describing methods for creating this new technology. Four years later, in 1959, the first integrated circuit (IC) was created, and the semiconductor industry began its rapid ascent from the cradle of the research lab to become the largest value-added manufacturing industry in the United States.8 SUSTAINED, PREDICTABLE GROWTH The scale of this industry’s growth—exceptional both because of its rapidity and its predictability over time—and its contributions to the economy are not always fully appreciated. The U.S. Semiconductor industry is a major generator of high-wage jobs, employing 283,875 in 2000. The industry’s sales reached $102 billion9 in a global market estimated at $204 billion. The value of U.S. 5 For a more in-depth discussion of the events leading up to the Technology Transistor Symposium, go to: <http://www.pbs.org/transistor/index.html>. See also the Institute of Electrical and Electronics Engineers website, which also gives an excellent account of the transistor’s history. < http://www.ieee.org/organizations/history_center/>. 6 Ibid. The book also became known as “Mother Bell’s Cookbook.” 7 For an excellent description of the early evolution of the semiconductor industry see Kenneth Flamm Mismanaged Trade? Strategic Policy and the Semiconductor Industry, Washington, D.C.: Brookings Institution Press, 1996, pp. 30-31. See the paper by Thomas Howell, “Competing Programs: Government Support for Microelectronics,” in this volume. 8 Source: U.S. Census Bureau, Annual Survey of Manufactures, 1999, Statistics for Industry Groups and Industries, Series M99(AS)-1, in Statistical Abstract of the United States; 2001, 121st edition. U.S. Census Bureau, U.S. Department of Commerce. 9 Global market sales in 2000 were about $204 billion according to the SIA (Semiconductor Industry Association). For more information on the semiconductor industry, see <http://www.semichips.org/ind_facts.cfm>.
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FIGURE 1 Semiconductor Value Added: Largest Five Value-Added Manufacturing Industries Compared with Other Major Sectors (Value Added as a Percentage of Value Added by Manufacturers—1999). SOURCE: US Census Bureau, Annual Survey of Manufacturers. semiconductor sales has averaged 50 percent of total worldwide sales in the past six years. The semiconductor industry in 1999 was the largest value-added industry in manufacturing—almost five times the size of the Iron and Steel sector in that year (see Figure 1). It is, in fact, larger in terms of valued added than the Iron and Steel and Motor Vehicle industries (excluding Motor Vehicle Parts—a separate industry classification) combined. As noted below, the electronics industry, largely based on semiconductors, is the largest U.S. manufacturing industry.10 While the manufacturing sector’s contribution to GDP has been shrinking (accounting for just under 16 percent of GDP in 2000), U.S. semiconductor industry sales, as a percentage of output in the manufacturing sector, have increased steadily in the past 15 years, climbing from 1.5 percent of manufacturing GDP in 1987 to reach 6.5 percent in 2000 (See Figure 2).11 10 Bureau of Economic Analysis, Statistical Abstract of the United States: 2001, Department of Commerce, Table 641, Washington, D.C: U.S. Government Printing Office, 1999, p. 418. 11 National Research Council calculations derived from sales data from the Semiconductor Research Association and GDP data from the Bureau of Economic Analysis.
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FIGURE 2 Semiconductor Sales as a Percent of Manufacturing GDP. SOURCES: Semiconductor Sales; SIA GDP; Bureau of Economic Analysis. These positive trends reflect the strong global economic position of the U.S. industry in a technology which is seen as fundamental to the economy. Given the industry’s contribution to economic growth, other countries have taken a proactive approach to encouraging the development of their national semiconductor industries in order to ensure themselves a place in the technologies that underpin the knowledge-based economy.12 The growing impact of information technologies on economic growth, in large part the result of improvements in semiconductors, has attracted increased attention from leading economists. Yet, the underlying technological challenges facing the semiconductor industry pose a complex set of issues for both the industry and national policy. If the U.S. and global economy are to continue to benefit from the vast increases in semiconductor power characterized by Moore’s Law, a series of impending technical challenges must be overcome. How these challenges are addressed will likely affect future national U.S. competitiveness and leadership in this enabling industry. The first firm, or geographically con 12 See the Proceedings and Howell, op.cit., as well as earlier National Research Council Analysis.
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centrated group of firms, that resolves the technical challenges facing the industry could develop a position of leadership in semiconductor design and production in the years ahead. To help their companies meet these technical challenges, a number of countries are making substantial public investments in cooperative R&D. In addition, other firms are pursuing strategies that may ultimately challenge the current business models of U.S. firms. EARLY PUBLIC SUPPORT FOR THE INDUSTRY The birth and proliferation of the semiconductor was facilitated by substantial public support in transistor research. By 1952, the U.S. Army’s Signal Corps Engineering Laboratory had funded 20 percent of total transistor-based research at Bell Labs.13 The eagerness of the Defense Department to put to use this innovative and radical new technology encouraged the Signal Corps to fund half of the transistor work by 1953.14 Public support for the nascent semiconductor industry became more prevalent after 1955 when R&D funds were allotted to other companies after the U.S. Department of Justice’s ongoing antitrust suit against Bell Labs pressured Bell into sharing its patents on transistor diffusion processes.15 According to one estimate, the government directly or indirectly funded 40 to 45 percent of all industrial R&D in the semiconductor industry between the late 1950s and early 1970s.16 On the demand side, federal consumption dominated the market for integrated circuits (ICs), which found their first major application in the Minuteman II guided missile. In the 1960s, military requirements were complemented by the needs of the Apollo Space Program.17 Public support played a critical and catalyzing role in the development and initial growth of the semiconductor industry. The groundbreaking inventions that launched the industry were made at Bell Labs, which was in part sustained by U.S. communications policy as well as by defense funding.18 As the initial in 13 Flamm, op.cit., pp. 30-34. 14 Ibid. 15 Ibid. 16 Ibid. Government research contracts were not an unmixed blessing. Their heavy paperwork and rigidities acted as a significant constraint and could slow the redirection of research to more promising avenues. See Gordon Moore’s comments and presentation in the Proceedings of this report. 17 For an overview of the government’s early role in the semiconductor industry, and its contributions over time, see Flamm, op.cit. pp. 1-38. 18 See Michael Borrus, Competing for Control: America’s Stake in Microelectronics, Cambridge, MA: Ballinger, 1988.
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FIGURE 3 Worldwide Semiconductor End Use. SOURCE: World Semiconductor Trade Statistics and SIA, September 2002. vention revealed its potential, the government first encouraged the dissemination of the technology, then served as a source of sustained procurement for the most advanced products possible. This well-financed demand contributed directly to the early growth of the industry.19 In 1963, federal contracts accounted for 35.5 percent of total U.S. semiconductor shipments.20 Over the following decades, the semiconductor industry has grown enormously, and the government’s share of semiconductor consumption is now only about 1 percent of a much larger industry (see Figure 3). THE ECONOMIC CONSEQUENCES OF “FASTER AND CHEAPER” As noted above, the history of the semiconductor industry has been characterized by rapid growth, concurrently decreasing costs, and growing economic importance. For example, the industry is characterized by high growth rates, averaging 17 percent per annum.21 Semiconductors are also an enabling technol 19 See also Martin Kenney, Understanding Silicon Valley: The Anatomy of an Entrepreneurial Region. Stanford, CA: Stanford University Press, 2000. Government procurement continues to play a role, albeit a much smaller one. See Flamm, Creating the Computer: Government, Industry, and High-technology, Washington, D.C.: Brookings Institution, 1988 20 See Table 1-8 in Flamm, Mismanaged Trade? Strategic Policy and the Semiconductor Industry, p. 37. 21 Semiconductor Industry Association, “World Market Shares 1991-2001,” Data for 1991-2000. San Jose, CA: Semiconductor Industry Association, 2002. See website: <http://www.semichips.org>.
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FIGURE 4 Semiconductor and All Manufacturing Producer Prices (Index 1986=1.00). SOURCE: Producer Price Index, Bureau of Labor Statistics. ogy with widespread and steadily growing applications (e.g., in medical technologies and research.)22 As semiconductor prices have steadily declined, investment in information technologies has increased.23 In the early 1950s, for example, a transistor was manufactured at a cost of between $5 and $45. Today, transistors on a microchip cost less than a hundred-thousandth of a cent apiece, which makes their marginal cost essentially zero.24 While the manufacturing sector as a whole has experienced an increase in prices since the mid-1980s, the semiconductor industry has exhibited a deflationary trend (Figure 4), which accelerated in the middle 1990s. The significance of this deflationary trend in semiconductor prices has not only made powerful consumer electronics products more 22 See National Research Council, Capitalizing on New Needs and New Opportunities: Government-Industry Partnerships in Biotechnology and Information Technologies, Washington, D.C.: National Academy Press, 2001. 23 Semiconductor prices have declined at an annual rate of 30 percent in the past three decades. For an in-depth, technical discussion of semiconductor price evolution and its impact on information technology investment, see Jorgenson, op.cit. 24 The exponential increase in power of the integrated circuit in the past several decades has been commensurately matched by a decrease in cost of each additional transistor on a chip. For a brief discussion of the decreasing cost of each new generation of integrated circuits, see National Academy of Engineering website; <http://www.greatachievements.org/greatachievements/ga_5_2.html>.
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accessible, but has spurred increased business investment in information technology, which has in turn catalyzed improvements in productivity. The ability to increase device power and decrease device cost underlies the semiconductor industry’s growth. In 1965, just seven years after the invention of the integrated circuit, Gordon Moore predicted that the number of transistors that would fit on an integrated circuit, or chip, would double every year. He tentatively extended this forecast for “at least 10 years.” 25 At that time, the world’s most complex chip had 64 transistors. Dr. Moore’s extrapolation proved to be highly accurate in describing the evolution of the transistor density of a chip. By 1975, some 65,000 transistors fit on a single chip. More remarkably, Moore’s general prediction has held true to present day, when microcircuits hold hundreds of millions of transistors per chip, connected by astonishingly complex patterns.26 The implications of Moore’s Law have been far-reaching. Since the doubling in chip density was not accompanied by commensurate increases in cost, the expense of each transistor was halved with each doubling. With twice as many transistors, a chip could store twice as much data. Higher levels of integration meant that greater numbers of functional units could be placed onto the chip, and more closely spaced devices—such as the transistors—could interact with less delay. Thus, these advances gave users increased computer processing power at a lower price, consequently spurring chip sales and a demand for yet more power.27 Beginning in the late 1970s, the use of semiconductors became more pervasive, spreading from computers to air traffic control systems, microwave 25 See Gordon E. Moore, “Cramming More Components onto Integrated Circuits,” Electronics 38(8) April 19, 1965. Here, Dr. Moore notes that “[t]he complexity for minimum component costs has increased at a rate of roughly a factor of two per year. Certainly over the short term, this rate can be expected to continue, if not to increase. Over the longer term, the rate of increase is a bit more uncertain, although there is no reason to believe it will not remain nearly constant for at least 10 years. That means by 1975, the number of components per integrated circuit for minimum cost will be 65,000.” See also, Gordon E. Moore, “The Continuing Silicon Technology Evolution Inside the PC Platform,” Intel Developer Update, Issue 2, October 15, 1997, where he notes that he “first observed the ‘doubling of transistor density on a manufactured die every year’ in 1965, just four years after the first planar integrated circuit was discovered. The press called this ‘Moore’s Law’ and the name has stuck. To be honest, I did not expect this law to still be true some 30 years later, but I am now confident that it will be true for another 20 years.” 26 Ibid. See also Michael Polcari’s presentation in the Proceedings, which discusses the progression of Moore’s Law. 27 For a complete analysis of the impact of the increase in the power of the semiconductor accompanied by its subsequent decline in price, and its positive influence on economic growth, see Jorgenson, op.cit. See also G. Dan Hutcheson and Jerry D. Hutcheson, “Technology and Economics in the Semiconductor Industry,” Scientific American, <http://www.sciam.com/specialissues/1097solidstate/1097hutch.html>.
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FIGURE 5 Employment 1972-2001: Semiconductor and Related Devices Industries. SOURCE: Bureau of Labor Statistics, Form 790. ovens, video cameras, watches, grocery checkout machines, automobiles, touch-tone phones, wireless communications, and satellite broadcasts. A DRIVER OF MODERN INDUSTRY The semiconductor has become the engine of growth for many fledging industries, as well as a source of revitalization and increased efficiency for more established industries (see Box A). Consequently, semiconductors, as well as related industries, have acquired significant global visibility and have become targets of national economic priority in many countries. As of August 2001, the semiconductor industry employed some 284,000 people in the United States alone.28 The industry, in turn, provides enabling technologies for the $425 billion U.S. electronics industry.29 Figure 5 exhibits the employment trends in Semiconductor and Related Device industries dating back to 1972. The cyclicality of the industry is evident, but employment has increased steadily by more than two-and-a-half times since 1972. Importantly, the semiconductor industry is a substantial source of high-wage jobs. In addition to the increase in overall industry employment, real average 28 According to the Semiconductor Industry Association, the semiconductor industry employs some 283,875 within the U.S. See <http://semichips.org/ind_facts.cfm>. 29 This recent estimate is from Cahners Business Information at <http://www.cahners.com/2001>.
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direct and indirect funding in this sector. The declines in federal funding for research are of particular concern to U.S. industry. Cooperative Research Programs Continuing to advance microelectronics technology is becoming increasingly difficult. As semiconductors become denser, faster, and cheaper, they approach physical limits that will prevent further progress based on current chip-making processes. Significant research breakthroughs will be required to allow historic trends to continue; yet if these occur, in 15 years semiconductor memory costs could be one one-hundredth of today’s costs and microprocessors 15 times faster. Reflecting this concern, the industry has initiated several new programs aimed at strengthening the research capability of U.S. universities. The largest of these, carried out under MARCO (the Microelectronics Advanced Research Corporation), is the Focus Center Research Program (FCRP). In this program, the U.S. semiconductor industry, the federal government, and universities collaborate on cutting-edge research deemed critical to the continued growth of the industry (see Box D). As an industry-government partnership supporting university research in microelectronics, the FCRP research is long range (typically eight or more years out) and essential for the timely development of a replacement technology for the current chip-making process.125 There are currently four focus centers, addressing design and test; interconnect; materials, structures and devices; and circuits, systems, and software. The four focus centers now involve 21 universities. A brief description of each of the centers is provided in Appendix A. The FCRP plans to eventually include six national focus centers channeling $60 million per year into new research activities. However, the sharp downturn in the industry may jeopardize this commitment, and the federal government’s commitment is also in doubt. The industry funds 75 percent of the program, and the government has funded the remaining 25 percent. The government’s share has been supported through the Government-Industry Co-sponsorship of University Research (GICUR) program within the Office of the Secretary of Defense. When the industry and government embarked on the FCRP, the plan outlined a ramp-up which would now require $10 million in funds for semiconductors in 2003, $12 million in 2004, $13 million in 2005, 125 The FCRP is part of MARCO, the Microelectronics Advanced Research Corporation, within the SRC. See MARCO website, <http://marco.fcrp.org>. MARCO has its own management personnel but uses the infrastructure and resources of the SRC. MARCO’s supporters include the following: Advanced Micro Devices, Inc., Agere Systems, Agilent Technologies, Analog Devices, Inc., Conexant Systems, Inc., Cypress Semiconductor, IBM Corporation, Intel Corporation, LSI Logic Corporation, MICRON Technology, Inc., Motorola Incorporated, National Semiconductor Corporation, Texas Instruments Incorporated, Xilinx, Inc., Air Products & Chemicals, Inc., Applied Materials, Inc., KLA-Tencor Corporation, Novellus Systems, Inc., SCP Global Technologies, SpeedFam-IPEC, Teradyne, Inc., DARPA, and the Deputy Undersecretary of Defense for Science & Technology.
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Box D Characteristics of the MARCO Program Characteristics of the MARCO program are as follows: University-driven Management Philosophy. The goal is to identify the best professors in outstanding universities, outline broad areas of interest to the industry, and then delegate decisions about the research agenda to the university researchers. Substantial Funding. The MARCO program awards are significant, often in the $10 million range, which is substantially larger than many normal academic grants. This enables researchers to focus on a substantial program of work without the need to continually seek supplemental funding. New Technical Approaches. The substantial autonomy provided to the researchers is designed to encourage “out-of-the box” or non-traditional approaches to the technical problems the industry must address. New technical solutions and new manufacturing methods may be required to sustain the industry’s current high rate of growth. Student Training. An important component of the program is its ability to attract top students through the engagement of leading professors in major universities with first-class facilities. Sustained Industry Commitment. The semiconductor industry’s long-term commitment to the Semiconductor Research Corporation, and more recently its sustained investment in the MARCO program, reflect the widespread recognition that research and training are the key to its long-term success. and $15 million in 2006. These funding targets have not been met, yet the centers seem to be providing valuable research results for the Department of Defense. International SEMATECH continues to promote collaboration among major firms, which now include non-U.S. members. Among its activities, it is funding the development of new 300-mm tools and has taken a leadership position in pursuing the technology roadmaps in cooperation with industry. It has supported initiatives on mask-making tools, lithography using very-short-wavelength ultraviolet light (157 nm) from a special laser, next-generation lithography consensus, low dielectric-constant materials, and other innovations. It has also continued to benchmark the industry and to help improve manufacturing methods, among other
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contributions. The most recent budgets for NSF and DoD include increases in some important semiconductor areas that had been reduced during the 1990s.126 The responsibility of the government to ensure the availability of trained, educated manpower is widely accepted. Further, while immigration policy is admittedly complex—especially now, in light of September 11—it can be administered in a manner that facilitates the attraction of foreign talent to the United States. Top-quality research talent, whether foreign or domestic, will be required to address the technological “brick wall” confronting the industry. In the past, large, complex technical challenges have been surmounted through prolonged federal support of basic science and pre-competitive R&D. The nation that is able to produce, attract, and retain this talent may lead technical progress in the research and development clusters that will condition commercial success in the decades ahead. The United States was able to muster an appropriate policy mix in the 1980s that helped U.S. firms succeed. Today’s challenges in research and manpower will require similar innovative efforts. The events of September 11, 2001 and the dispersal of semiconductor technologies and expertise make these issues more pressing. SYMPOSIUM SUMMARY The presentations, discourse, and commissioned papers offered in this symposium may help inform the policy community of the challenges faced by the industry. Taken together, they offer an assessment of the industry’s contributions as well as provide information on the technical challenges, research needs, and the range of foreign efforts currently characterizing the microelectronics sector. The analysis presented by such insight may raise questions about the scope and scale of public programs to support this unique industry in the United States. The next section reviews the main points made by the speakers at the symposium. They present expert perspective on challenges in the research and development of new semiconductor technologies. Considerable effort has been made to accurately capture key points from the discourse of the symposium; however, the presentations themselves should be consulted for a fuller, more measured record of the participants’ remarks. 126 In light of the information and analysis presented in this report, the Committee believes these efforts should be strengthened. The Committee’s recommendations are elaborated in the Findings and Recommendations section of this report.
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PANEL I:THE U.S. EXPERIENCE: SEMATECH Moderator Clark McFadden of Dewey Ballantine reviewed the SEMATECH program—the pioneering government-industry partnership initiated in 1987 to revitalize the U.S. semiconductor industry. He observed that it has been successful in meeting a variety of goals, such as attracting investment from its industrial participants, developing industry roadmaps, and fostering an industry-wide perspective on technology development. At the same time, he recognized that assessing its impact on the semiconductor industry as a whole, and on U.S. technology development, is a more difficult exercise. It is nonetheless true that the informed observations of the participants below suggest that the consortium is effective. Perhaps the most compelling evidence of the value of the consortium is that it still exists. Supported now only by private funds, it has retained most of its membership for over a decade while adding new member companies from other countries. Gordon Moore, cofounder of Intel Corp., said that the primary early challenge for SEMATECH was to raise the quality and productivity of American industry. Its mission was “unusual” in promoting collective action by industry and cooperation between industry and government, but it succeeded in focusing attention on the fragmented tool-manufacturing industry. He concluded that a government-industry partnership can have “a positive impact on the U.S. industry.” He added that the focus of industrial R&D on short-term, predictable results makes it extremely important for the government to support long-term research “across a very broad base.” Kenneth Flamm of the University of Texas at Austin offered an economist’s view of SEMATECH. He said that it is generally perceived as a success by industry, but that only a few economic studies have been done.127 His own review of the economic literature revealed that cooperation can have either positive or negative impacts on R&D. From a public policy perspective, he saw three motives for cooperation: information sharing; cooperation on projects that promise such large spillovers that a company would not do the projects at all in the absence of partners; and the creation of an institutional structure that can increase spillovers. In their empirical contribution to this report, Flamm and his co-author Qifei Wang reexamine the impact of SEMATECH on semiconductor industry R&D by updating and improving on the published work on this issue. Their results suggest that SEMATECH reduced the R&D expenditures of its membership 127 See the paper presented in this report by Flamm and Wang, op. cit. Flamm and Wang note that there has been a limited amount of empirical attention focusing on the impact of R&D cooperation on industrial R&D outcomes. Further, the authors note that SEMATECH has been the subject of only three more rigorously oriented studies.
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somewhat, in part by eliminating duplication. They conclude that the underlying models of R&D cooperation that ultimately must be the basis of a scientific effort to untangle the chains of causality are too simplified to capture the complexity of the real world of R&D consortia. Moreover, they note that “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.” Current Challenges: A U.S. and Global Perspective Michael Polcari of IBM called the technical challenges facing the computer industry “unprecedented.” It will be very difficult to maintain the industry’s rapid increases in productivity, which, following Moore’s Law, has approximately doubled every 18 to 24 months. To date, these increases have come primarily from scaling—the progressive shrinking of component size. The challenge for the near future is to find new solutions when scaling ends. Dr. Polcari listed many areas of anticipated improvement such as the importance of building the nation’s capacity in the basic sciences, continuing to adequately fund high-risk research, and training more engineers. David Mowery of the University of California at Berkeley listed five observations about SEMATECH: It proved to be dynamic and adaptable. The rigid requirements of the Government Performance and Results Act might reduce such flexibility in future collaborations. Its contribution was important for its “extension” role, in the sense of agricultural extension programs, and its collaborative agenda. It is difficult to evaluate economically because it is impossible to know what would have happened in its absence. More needs to be known about the importance of the government’s catalytic role in providing funding for eight years. He suggested additional study on how “this unusual instrument of R&D collaboration” can evolve in response to changes occurring in the structure of this industry. PANEL II:CURRENT JAPANESE PARTNERSHIPS: SELETE AND ASET Akihiko Morino described Selete (SEmiconductor Leading Edge TEchnologies) as a joint venture company that performs R&D on behalf of the semiconductor industry. The mission of Selete is to develop semiconductor de
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vice and process technologies to the point where they can be produced at reasonable cost. Selete fosters collaboration among academia, industry, equipment and materials suppliers, research institutes, and overseas consortia, including International SEMATECH. Hideo Setoya said that ASET (the Association of Super-Advanced Electronics Technologies) is a consortium of the electronics device industry that also includes equipment and materials suppliers. Of 14 members, six are non-Japanese companies or subsidiaries. Its mission is to perform pre-competitive research between the basic and applied levels. All research is performed by the staffs of member companies. It is 100 percent financed by the national government and open to the public. Japanese Consortia for Semiconductor R&D Yoichi Unno described SIRIJ, the Semiconductor Industry Research Institute of Japan, as a think tank founded in 1994 by 10 Japanese semiconductor companies to promote joint R&D. The objectives of SIRIJ are to promote development of next-generation technologies, study the future of the industry, and implement projects for international cooperation. It has recently added an educational program in LSI (Large Scale Integrated) design for small companies, a roadmap committee, and a team to study the needs of the industry. University Research Centers for Silicon Technology Masataka Hirose of Hiroshima University described the structure and missions of three university research centers for silicon technology, all sponsored by Monbusho, the Ministry of Education, Science, and Culture: The VLSI Design and Education Center, established in May 1996 at the University of Tokyo; The New Industry Creation Hatchery (“Incubation”) Center, located at the Department of Electrical Engineering of Tohoku University; The Research Center for Nanodevices and Systems at Hiroshima University, of which he is director. PANEL III:EUROPEAN PARTNERSHIPS Michael Borrus of Petkevich and Partners told the audience that the panel’s presentation might prove to be “a bit of a surprise to some of you.” He said that European semiconductor activities have strengthened rapidly in recent years.
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The MEDEA Program Jürgen Knorr of Micro-Electronics Development for European Applications (MEDEA) confessed that it feels “very strange” to lead a program in support of a multinational semiconductor industry. The tradition, he said, has been to support one’s national industry. MEDEA, however, is proof that the semiconductor industry is global, and each company’s objectives must be shaped accordingly. Competition today is not as much between nations as between companies. MEDEA is an industry-initiated, industry-driven program supported by the national governments of 12 participating countries to stimulate trans-border R&D cooperation. A four-year program that ended in December 2000 has now been extended as MEDEA Plus under the guideline “system innovation on silicon.” Government-Industry Partnerships in Europe (1): Embedded Technologies and Systems-on-a-Chip Peter Draheim of Philips Semiconductor said that Europe in recent years has taken a leading position in several areas: communications, automotive electronics, smart cards, and multimedia. These applications are driven by system innovations on silicon and require embedded technologies. Philips expects major breakthroughs in “portable infotainment,” third-generation mobile communication, home networks, and enhanced digital TV. The next big cooperative challenge will be to develop systems-on-a-chip—achieving the same functionality in one-fiftieth the space. To meet this challenge, he said, Philips will cooperate in both MEDEA Plus and ITEA, the Information Technology for European Applications. Government-Industry Partnerships in Europe (2): International Cooperation: SEMATECH and IMEC Wilhelm Beinvogl of Infineon noted that the three major information technology (IT) players in Europe are all members of International SEMATECH. They are not only financial contributors but also significant technical contributors, especially to 300-mm technology. Another example of collaboration, he said, is that the IMEC institute in Belgium, a world leader in cooperative research, which is closely cooperating with International SEMATECH on a major project. He also described one “full-blown success story,” a joint venture between Infineon and Motorola to move to the leading edge in transition to the next wafer size. He echoed the manpower needs cited by other speakers, calling the decrease in engineers “dramatic.” PANEL IV:THE TAIWANESE APPROACH Patrick Windham of Windham Consulting said that the Taiwanese approach
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constitutes “a rare success story,” and that Taiwan’s journey to become the fourth-largest semiconductor producer in the world is a “remarkable” one. Government-Industry Partnerships in Taiwan Genda J. Hu of Taiwan Semiconductor Manufacturing Co. said that Taiwan’s rise to success had depended on the government’s decision in 1974 to focus on semiconductors as a key industry. The government set up a special agency to develop the industry, and helped establish several companies and secure rights to key technologies. It sought steadily to shift more responsibility to the private sector: In 1990, the government provided some 44 percent of total R&D spending to benefit the private sector; by 1999 the government’s share had fallen to 6.5 percent. Another factor in success was the decision to concentrate on “fabless” designs and the manufacture of custom devices for other companies. TSMC is a member of International SEMATECH; UMC, another leading company, has an alliance with IBM and Infineon. The Science Park Approach in Taiwan Chien-Yuan Lin of National Taiwan University said that the government in Taiwan, unlike the U.S. government, has actively promoted economic development. In 1980, the government began Hsinchu Science Park as a government-industry partnership, providing major venture capital, some tax deductions or exemptions, the infrastructure (including the park itself), special public services (such as the “one-stop business service”), and other services, such as R&D and education. At the time of the symposium, the park held 291 units and was considered by some analysts to be a model S&T park. Two other parks have been initiated in Taiwan. Discussion Michael Luger of the University of North Carolina at Chapel Hill offered a “continuum” of government-industry parks. At one end are large, national consortia that have abundant basic research, high spillover, and few direct local applications. Next are programs supported directly by federal funds, which also emphasize basic research, including university R&D centers. Beyond them are state-funded R&D centers, which feature more applied research, fewer spillovers, and more concentrated spatial effects. Localization economies lead to clusters of firms and industries that are related through input-output linkages and other growth-stimulating relationships. Dr. Luger, building on the discussion of high-technology clusters initiated by Chien-Yuan Lin, shared insights on technology
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parks by highlighting a brief history of the Research Triangle Park in North Carolina.128 PANEL V:CHALLENGES FACING THE EQUIPMENT INDUSTRY Kalman Kaufman of Applied Materials said that the semiconductor and electronics industry represents an increasingly significant force in the economy, and that equipment suppliers play an increasingly important role in the industry. He listed several “imperatives” for sustained success: Equipment suppliers must continue to invest heavily in technology de velopment and commercialization. Governments in every country must ensure fair access to markets and technologies. Universities must teach and motivate more researchers and engineers. Semiconductor producers must reduce risk and improve the efficiency of the industry. National labs must bridge the widening gap between academic research and the “next-generation” industry requirements for generic, pre-competitive research. The most important functions of a consortium, he said, are to foster cooperation and provide valuable information to the industry so it can change its roadmaps and learn how better to serve customers. He recommended that a national lab with close ties to universities be dedicated to pre-competitive generic research problems. John Kelly of Novellus Systems said that problems facing the supplier industry are “fairly simple and straightforward.” The first is the undersupply of talented graduate students, a “situation that seemed to be worsening.” Many graduate students have moved away from semiconductors to other areas, such as nanotechnology, and professors have been going “where the money is.” Another, more complex issue, he said, is the problem of shrinking resources for long-term research. The technological “brick wall,” he said, could be very real “if we don’t work on the right problems fast enough.” A current challenge to the equipment industry is that it is no longer acceptable simply to deliver a tool to the customer. It must be delivered as part of a process, and the process has to be perfect. This requires far more work on long-term “fundamentals, materials, the real basics.” 128 For a review of science and technology parks, see Michael I. Luger, “Science and Technology Parks at the Millennium: Concept, History, and Metrics,” in National Research Council, A Review of the New Initiatives at the NASA Ames Research Center, C. Wessner, ed.,Washington, D.C.: National Academy Press, 2001.
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Papken Der Torossian of Silicon Valley Group (SVG) said that the technical challenges of moving from a three-year cycle to a two-year cycle require huge investments by the industry. Research spending will have to increase by almost 30 percent to accelerate the equipment cycle. Because these investments are huge and often long term, they cannot be borne by a single company. A consortium is one simple way of working with competitors, which is “the only way we’re going to advance the science in the next few years.” He praised SEMATECH for having created an environment for buyers and sellers to work together. PANEL VI:THE INTERNATIONALIZATION OF COOPERATION A U.S. Perspective George Scalise of the Semiconductor Industry Association said that the SRC is a “structure that works well.” It was founded in 1982 to address a lack of engineers coming out of college and a shortage of engineers trained in the then-new solid-state technology. It has created an “integrated, virtual semiconductor research laboratory” by funding projects at about 65 universities across the country. Through two other programs, it supports research in semiconductor design and testing, and in layout. SEMATECH, he suggested, could help promote international research programs on materials structures and devices, circuits systems, and software that will begin to fill a part of the research gap. A “consortium of consortia,” he said, is needed to make more efficient use of the R&D dollar. A Japanese Perspective Toshiaki Masuhara of Hitachi said that university-industry consortia in both process and design R&D will be very important in the future and will require a great deal of funding. He offered five criteria for organizing a successful R&D consortium: Business merit: Is the technology applicable to industry and can the market accept the new technology? Technical merit: Are there pitfalls in application, technology matching, suitability, or reliability? Participants’ merit: Does the consortium provide good opportunities for participants and a good career path? Academic merit: Can the work lead to research papers, advanced degrees, and faculty success? Industry manager’s merit: Are managers willing to send the best R&D people from industry?
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He added that inter-consortium collaboration will be needed if the industry is to avoid hitting the “red brick wall” of technical challenges. A Taiwanese Perspective Genda Hu discussed a planned Taiwanese consortium called ASTRO, which had been placed “on hold” due to issues beyond the control of the industry. The attempt to form that organization, he said, had been a clear demonstration that Taiwan intends to participate in R&D consortia. One objective of ASTRO is to facilitate participation in international R&D activities. Absent ASTRO, the best strategy for individual companies is to join international collaborations on their own, which almost every semiconductor company in Taiwan has done. A European Perspective Erik Kamerbeek of the European Semiconductor Equipment and Materials Association said that collaboration is common in Europe, which has a greater need for joint efforts than a single, large country like the United States. Among international consortia, the Information Society Technologies Programme is planned and organized by the European Commission with the support of industry. Programs are approved by the national representatives of the 15 EU countries. Another major IT program is MEDEA, in which each project is accepted by the ministers’ conference of participating countries. All projects are initiated and guided by industry. The views summarized above reflect the diversity in the national and regional approaches to meeting the needs of the semiconductor industry. They also affirm the common perception of the technical challenges the industry must overcome if it is to continue its extraordinary rate of growth.
Representative terms from entire chapter: