Semiconductor Industry’s Outsized Impact on Innovation

by Semiconductor Industry Association

Last week, the Commerce Department’s Economics and Statistics Administration and the United States Patent and Trademark Office (USPTO) published a comprehensive study entitled, “Intellectual Property and the U.S. Economy.” You can access a copy of it here.

The premise of the study was to quantifiably demonstrate that; ”Innovation, the process through which new ideas are generated and put into commercial practice, is a key force behind U.S. economic growth and national competitiveness.”  Not surprisingly the semiconductor industry plays a central role in this narrative.

The study looks at a number of industries that account for the majority of innovation in the U.S. Chief among these segments are IP-producing industries, of which the study identified 75 IP-intensive industries from among 313 total, with the semiconductor industry toppping the list. In fact, 7 of the top 15 U.S. corporate patent recipients are semiconductor producers.

Employment in IP-intensive industries reached 27.1 million jobs in 2010, and the study showed that these industries indirectly support another 12.9 million jobs, accounting for almost 30 percent of all U.S. jobs which are directly or indirectly attributable to the IP-intensive industries.  Of the IP-intensive industries, the semiconductor and electronic component manufacturing industry has the second highest direct employment at 373,800 jobs. 

More importantly, the semiconductor industry is a key driver of job growth, productivity and innovation in other American industries. There is no segment of the American economy that has not been positively impacted by innovations in the semiconductor industry.

Recent research in preparation by SRC Robert Burger Fellow,  Jon D. Samuels entitled, “Semiconductors and U.S. Economic Growth”,  points out that from 1960-2007, innovation in the semiconductor industry grew close to 9 percent per year, twenty five times the innovation growth rate for the economy as a whole. Over the 1995-2000 period, the innovation rate was around 21 percent per year, thirty one times that of the economy as a whole.

This study also points out that from 1960-2007, semiconductors accounted for;

• 37% of the Communications Equipment industry, and

• 8% of the Computer industry.

From 2000-2007, the period following the IT-Boom, semiconductors had a widespread impact on many sectors of the economy including accounting for;

• 24% of the growth of the Other Electronic Components industry,

• 16% of the Motor Vehicles industry,
• 15% of the Communications Equipment industry,

• 7% of the Other Transportation equipment industry, and
• 5% of the growth in Food and Beverages.

The results show the outsized impact of semiconductors, from their contribution to the remarkable productivity gains in the production of IT-equipment itself, to the more widespread gains post-2000 in industries that use semiconductors as an intermediate input.

All of these facts and figures help us paint a broad picture of the significant impact of the semiconductor industry on the larger economy. Further, they help to demonstrate that the industry is critically strategic to the competitiveness of other key industries and the nation both for today and well into the future.