Keeping the U.S. at the Forefront of Innovation

by Semiconductor Industry Association

The U.S. semiconductor industry has long emphasized that sustaining America’s global leadership in the commercialization of innovation is critical to our economic and national security. A new report by the National Research Council (NRC), titled Rising to the Challenge: U.S. Innovation Policy for the Global Economy, bolsters that assertion.

The report, which is the culmination of a 7-year project at the National Academies, argues the U.S. is no longer assured of being the world’s leader in turning laboratory discoveries into the new commercial products, industries and jobs that drive economic growth. It asserts that while the pillars of the U.S. innovation system erode through wavering financial and policy support, the rest of the world is working to improve its capacity to generate new technologies and products, attract and grow existing industries, and build positions in the high technology industries of tomorrow.

To address this challenge, the report outlines a series of policy recommendations, which are organized under the following four core goals:  1) Monitor and learn from what the rest of the world is doing; 2) Reinforce support for U.S. innovation leadership; 3) Capture greater value from its public investments in research; and 4) Cooperate more actively with other nations.

Interestingly, the report identifies the U.S. semiconductor industry as a case study in how U.S. policy can help restore and preserve the competitiveness of a critical innovation-intensive industry:

The decline and resurgence of the U.S. semiconductor illustrates that government policy can help retain a high-tech manufacturing industry to keep America at the technological forefront. Government financial and policy support for the original SEMATECH research consortium is widely regarded as a successful experiment and has influenced subsequent public-private partnerships in other U.S. industries and in other nations. The determination of the U.S. government to challenge unfair trade practices and to take action within international law at the time helped stem Japanese dumping and provided inroads into the Japanese market, providing U.S. semiconductor companies with an opportunity to make the large investments needed to diversify into other, more lucrative products.

The report discusses the successful model exhibited by the industry’s Nanoelectronics Research Initiative (NRI) and the Focus Center Research Program (FCRP) — public-private partnerships that support scientific research at over 40 universities nationwide.

However, the report cautions that the continued leadership of the U.S. semiconductor industry cannot be taken for granted:

A new set of competitive challenges has arisen, such as America’s declining share of leading-edge manufacturing capacity, possible skilled talent shortages, and China’s drive toward “indigenous innovation” that envisions a diminishing foreign share in its huge and growing semiconductor market. Each of these elements requires American policy attention at a time of intensifying global competition. As the industry heads into historical technology transition, government funding of basic research is critical to maintaining U.S. semiconductor leadership. The U.S. partnership between industry, academia, and government is unrivaled in developing and implementing leading-edge semiconductor technology and in training talent. The U.S. should continue to nurture areas in which it leads the world today and compete in areas such as tax and regulatory policy that determine where companies build new production and R&D capacity.

With the implementation of policies and actions identified in the NRC report, the U.S. semiconductor industry can continue to create jobs, drive economic growth and keep America at the forefront of innovation.

Click here to download the report for free.