The view from within the electronics industry – individual comment pieces from people working in the technology sector.

High-tech needs government

Government and high-tech. The relationship is complex despite what knee-jerk free marketeers may claim, says David Manners. The US government spends far more on microelectronics R&D than any other government and there’s more to the industry than products – process, for example, is just as important and much process development is done in state-funded laboratories, universities and research institutions…

NASA - The Last Moonshot

NASA – The Last Moonshot

It is surprising to hear people say that governments have no part to play in technological development.

Maybe it’s a sign of these uber-capitalist times that government tech initiatives are frequently damned by knee-jerk free marketeers.

You’d think it was accepted fact that the early IC industry got off the ground so quickly because President Kennedy’s moonshot programme and the Minuteman missile programme both required micro-miniaturisation for their electronics.

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But there in California where it all started, a chip man was saying last week at an ISSCC evening panel session that this interpretation of history is baloney.

“I don’t give John Kennedy credit for my goddam industry,” stated T.J Rodgers, founder and CEO, of Cypress Semiconductor, after warning the audience that he’d had a bit to drink, “we invented it right here, not some goddam bureaucrat in government.”

Rodgers’ fellow panellist Dado Banatao, co-founder of Chips and Technologies and S3 and a notable Silicon Valley VC, insisted on the accepted view of history that JFK sparked the microelectronics revolution.

“If you look at all the things that I’ve done and what you guys are doing now,” said Banatao, “it was because of that one humungeous singular funding to miniaturise electronics.”

In one respect TJ is right. The seminal products of the microelectronics industry were invented by commercial companies. The transistor by Bell Labs, the DRAM by IBM, the SRAM, EPROM, E2PROM and microprocessor by Intel, flash by Toshiba and programmable logic by Monolithic Memories, Altera, Xilinx and Lattice.

Bell and IBM were, of course, both directly and indirectly subsidised by the US government.

But there’s more to the industry than products – process is just as important and much process development is done in state-funded laboratories, universities and research institutions.

In one way and another the US government spends far more on microelectronics R&D than any other government. Indeed, the US Government is the world’s largest VC, argued Banatao pointing out that the development of the internet “was researched by a lot of universities funded by the government,” and adding, “look at GPS, look at all the derived industries out of location-capable products. Incredible: tracking, logistics, things like that.”

The history of the IC industry shows what happens when governments set targets and provide money to support ICs.

Japan’s 1969 VLSI project resulted in six Japanese semiconductor companies getting into the world top ten in 1988 and Japan taking 50% world market share in semiconductors.

The USA’s 1988 Sematech project restored the USA’s competitiveness in process technology and propelled the USA back to market share leadership. That was significantly helped by the 1986 US-Japan Semiconductor Trade Agreement which mandated a 20% market share in Japan for US companies.

Taiwan’s ITRI and ERSO brought leading edge CMOS to the island and spawned UMC, Mosel, Vitelic and a host of other start-ups.

Korea’s KIET and Semiconductor Industry Promotion plan transitioned Samsung, Hynix and LG into world-competitiveness in ICs.

Europe’s Megaproject, Jessi and Medea propelled three European companies into the world top ten.

The US semiconductor industry would have been killed off by the Japanese in the 1980s if it hadn’t been protected and supported by the US government.

Before the 1984 Megaproject, many voices in Europe were saying that microelectronics was something to be left to the Americans and Japanese. European collaboration with government support kept the industry alive for another generation.

Taiwan and Korea wouldn’t have had their world-leading semiconductor industries without multi-decade consistent government support.

In fact, without the support of government, no country has any chance in the IC business.

Image: NASA – The Last Moonshot

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