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International competitiveness
Superlattices
and Microstructures,
INTERNATIONAL
Semiconductor
13
Vol. 2, No. 7, 1986
COMPETITIVENESS
Robert M. Burger Research Corporation, Research Triangle Park, North Carolina 27709 (Received 15 October 1985)
Factors affecting international competitiveness in microelectronics are reviewed. and weaknesses The competitive strengths of the U.S. are identified and suggestions are made for improving the U.S. position.
1. Introduction future of An introspection into the would not be complete without microstructures examination of the international competition and the position of the U.S. in this competition. This subject has engendered much discussion in the last year or so and for very good reason. The U.S. leadership in this sphere of activity has eroded to the point that, in some particular areas of microstructures, this country is a follower. If these trends continue, we may have to travel abroad and learn other languages to participate in state-of-the-art conferences. However, the implications of this loss of leadership extend well beyond an impact on travel budgets and language studies. In this discussion, the U.S. position in microelectronics is examined and a strategy for countering the leadership threat is discussed. Some of us may believe that in science national boundaries are of little importance, so international competition is not a germane subject. However, the close connection between fundamental science and the economic and technical status of a nation is no more evident than in microelectronics. This connection is bidirectional, has many strands, and is replete with feedback loops to the extent that the science, economics, and politics are inseparable, whether we like it or not. These connections are a necessary part of this discussion. In meetings on international competition, some of our leaders are ready to concede loss of U.S. leadership to our competitors and are moving to strategies that focus on how to cut the losses. They argue that the U.S. can maintain its leadership in IC (integrated circuit) design and thus in systems, irrespective of who makes the chips. There is a parallel to this in the steel industry. The Japanese built steel mills and depressed world steel prices to where the U.S. cannot compete. Other countries have also built steel mills and have become even more lower-cost producers than the Japanese. However, the larger goal of the Japanese "as not to dominate steel markets, but to depress shipbuilding costs and
0749-6036/86/020013+04
$02.00/O
thus the cost of sea transportation upon which they are dependent. They have done this ar.d it inexpensive to transport oil or is now very autos by sea. They achieved this goal. In IC'S, the announced goal of the Japanese is to gain leadership in the markets for electronic information systems. IC leadership is one step toward this goal, not an end in itself. A U.S. concession of the IC market to Japan can set into motion a train of events that results in unacceptable consequences for the microelectronics industry, much as similar concessions adversely affected American steel and automobile industries. Despite the strong international competition, the U.S. retains leadership in many areas of microelectronics and, in others, we are not that This is in spite of considerable far behind. prominent handicaps. To quote one of our industry leaders, Jerry Sanders, "while high technology industry is supposed to be one of our country's great hopes for economic growth, the basic high-tech industry, semiconductors, is fighting for survival." By removing some of the handicaps and by reshaping the U.S. microelectronics industry in a "aY that utilizes our strengths while minimizing our weaknesses, we can survive. 2. Importance of Microelectronics The importance of microelectronics is evident, so this discussion will be brief. My approach is to note that the cost of computation has been decreasing at an exponential rate for over three decades, dropping from about $15 per million multiplications in 1950 to 50 cents in 1970 and no" to 2 cents (See Fig. 1). Accompanying this has been an even more rapid decrease in the cost of memory (Fig. 2). One can no" purchase 64K DRAMS for less than 1 millicent per bit. These bare numbers tell us what we all know. The cost of computers has decreased so rapidly that because of progress in microelectronics almost every form of human they will permeate but most activity, from warfare to recreation, they will comprise the backbone of importantly, an information age in which acquisition,
0 1986
Academic
Press Inc. (London)
Limited
14
Superlattices
COST
OF
and Microstructures,
Vol. 2, No. 1, 1986
COMPUTATION
.-
a ._ I
5 ZE
: -._ 10-l
.=
r
2 lo-2
\
in ; lo‘3
\ 1950
I
I
1960
I970
I
I
1990
I960
\ 2000
YEAR Figure 1 The cost of computation using electronic computers has decreased exponentially for three decades. This trend will apparently continue for at least several more decades.
COST
OF
MEMORY ,
10000 IO00
tu
\ I
I::
t
\
\
0.1
\
\
\
0
0.01 0.001
L 1970
1990
1980
2000
YEAR Figure 2 Memory costs are approaching 0.1 millicent per bit and will continue to fall. At that price a book (10 million bits) stored in electronic memory costs $10 and, when the 16 Mbit DRAMbecomes available, will be stored one silicon chip.
organization, and application of vast knowledge resources will define the winners in whatever form of competition that exists. It follows that the possession of the most advanced technology for these functions will be key elements in that competition. The society that produces the best chips will ultimately produce the most capable information systems that, in turn, Will enable
on
that society to lead the pack - in production, in marketing, in defense, in research, and, ultimately, in the quality of the lives of the members of that society. This briefly is the argument for the importance of microelectronics. It is compelling but is probably not complete enough here t& convince the neophyte or the politician.
Superlattices
and Microstructures, 3. Competitive
15
Vol. 2, No. 7, 1986
Positions
The January 1985 report of the President's Competitiveness [l] Commission on Industrial defined competitiveness as "the degree to which a nation can, under free and fair market conditions, produce goods and services that meet international markets while the test of simultaneously maintaining or expanding the real incomes of its citizens." This report further points out that competitiveness is not an end in itself, and does not require U.S. leadership in all economic sectors. That report makes a number recommendations that address the broad of competitiveness issues. To understand the present competitive position of the U.S. it is useful to examine some of the advantages and disadvantages that this country has in micfoelectronics. 3.1 Competitive Advantages The creativity of U.S. industry and the research establishment is the envy of the world. concepts, innovations, and Many of the that have fueled .microelectronics inventions progress have originated in this country: the transistor, the integrated circuit, the planar process, photolighography, and the l-transistor cell This dynamic memory are examples. creativity, and the support given to research in this country by industry and the government, have kept the U.S. in a strong competitive position in research, despite the successes of areas. This other countries in some specific does not appear to be seriously position threatened today. Diversity (which can also be a disadvantage) has been an advantage at times. Every idea was being tried by some company or organization so that the best idea always seemed to emerge from may sometimes be the crowd. This diversity overdone to where the associated redundancy in some research areas becomes a luxury that cannot be afforded in a competitive environment. Design capability is an area of U.S. which has been maintained both leadership because it is an area on which high value has been placed by industry and because of the contributions to design from the universities. result has been increased activity by One venture capitalists as they see an expanding market for CAD (computer-aided design) systems In any case, in the U.S., and software. circumstances have worked to our advantage in design. We cannot be complacent. Other countries recognize the importance of this technology design and are working hard to catch up, and they will if we relax. of U.S. universities in The contributions microelectronics has remained a very strong plus for the U.S. Unfortunately, because we have had using their research output difficulty in effectively, other countries have gained as much more from our universities than and sometimes Even now a large industry. has the U.S. percentage of U.S. graduate students in science
and technology are of foreign origin, and other countries are providing significant support for university research in this country and in the process are obtaining ready access to the large academic research base that has been built and nourished by U.S. industry and government. The number of engineers that are graduated is not so significant, so long as the quality of both education and research in U.S. universities retains a strong lead. The U.S. retains a lead in both consumption and production of integrated circuits. The nature of world markets and market shares is difficult for anyone to understand when most of the industry has become international in its of a U.S. company's range. Are the shipments French, Scottish, or Japanese plants included in the U.S. totals or in others? Is Mitsubishi tallied with Japan or the U.S.? U.S.A. Is Fairchild a French or American company? Concerns are with tabulation such as the Semiconductor Industry Association data shown in Table I. Even the current industry in the middle of depression, the U.S. leads in half of the markets tabulated and in the total value of ICs. These data do not include the $4.5 billion or so of IC production attributed to U.S. captive producers. 3.2 Competitive
Disadvantages
Much has been made of the handicaps of the in order to'explain the fact that the U.S. U.S. share of world IC production has been decreasing These handicaps are real and do exist. rapidly. Capital costs, trade barriers, the nature of the work force, inefficiency in technology transfer, leadership and and the meandering of our have been cited. decision-making ability than the Probably no factor is more important loss of the once-unique American talent for manufacturing superior products at the lowest this topic has been discussed by cost. Again, everyone and is the subject of much attention by our business schools. Hardly a week passes that by someone doing the SRC is not interviewed besetting the anotl?eIt study of the problems industry. What can be done to reverse the upsetting trends? The safe statement is to do more of what. address our well and to we are doing deficiencies. At least one industry spokesman has called for a national mobilization in order, to survive. Others say the battle is over and we extreme view is have lost. Probably neither in a few areas may well Improvements correct. result in greatly-improved U.S. competitiveness. in meeting the Cooperation of U.S. companies competition is one of our strongest, but so far The SRC is an example of little-used, weapons. industry cooperation in generic research. The cooperative of possible broad spectrum activities include information collection and technology assessment, joint analysis, development of manufacturing tools and methods, training and motivation of the work force, and that selected advanced development activities
16
SuperlattIces
JUNE BILL
and Microstructures,
YR-TO-DATE
Vol. 2, No. I, 1986
BILL/BOOK
DIGITAL BIPOLAR
US/CANADA WEST EUROPE JAPAN
169 59 71
1,055/720 4261247 4521391
ANALOG
US/CANADA WEST EUROPE JAPAN
99 65 129
5891554 4221343 742/680
LOGIC
US/CANADA WEST EUROPE JAPAN
103 54 62
572/299 328/228 357 /288
US/CANADA WEST EUROPE JAPAN
67
DIGITALCMOS LOGIC
DIGITAL NMOS
367/297
2241187 103:
572/515
US/CANADA WEST EUROPE JAPAN
121 74:
865/621 361/250 541/321
CMOSMEMORY
US/CANADA WEST EUROPE JAPAN
18 9 32
138/138 69/66 203/139
TOTAL IC'S
US/CANADA WEST EUROPE JAPAN
577 271 473
3,587/2,627 1,830/1,322 2,868/2,334
1,397
8,728/6,629
NMOSMEMORY
TOTALS
JUNE BILL represents the dollar value of products shipped and billed to customers during the month of June YR-TO-DATE BILL is the value of shipments for the calendar year through June BOOK is the dollar value of orders received for the calendar year through June
become can microelectronics
important assets industry i.n the U.S.
to
the
4. Summary In summary, changes are necessary if the U.S. is to retain its position as a leader in microelectronics. The required changes are not that difficult to identify and, though each
change does not appear to be pivotal by itself, the sum of the changes can make the difference between the U.S. retaining its leadership role or nor;.
[l] "Global Competition Government Printing D.C., January, 1985
The New Reality," Office, Washington,
and Microstructures,
INTERNATIONAL
Semiconductor
13
Vol. 2, No. 7, 1986
COMPETITIVENESS
Robert M. Burger Research Corporation, Research Triangle Park, North Carolina 27709 (Received 15 October 1985)
Factors affecting international competitiveness in microelectronics are reviewed. and weaknesses The competitive strengths of the U.S. are identified and suggestions are made for improving the U.S. position.
1. Introduction future of An introspection into the would not be complete without microstructures examination of the international competition and the position of the U.S. in this competition. This subject has engendered much discussion in the last year or so and for very good reason. The U.S. leadership in this sphere of activity has eroded to the point that, in some particular areas of microstructures, this country is a follower. If these trends continue, we may have to travel abroad and learn other languages to participate in state-of-the-art conferences. However, the implications of this loss of leadership extend well beyond an impact on travel budgets and language studies. In this discussion, the U.S. position in microelectronics is examined and a strategy for countering the leadership threat is discussed. Some of us may believe that in science national boundaries are of little importance, so international competition is not a germane subject. However, the close connection between fundamental science and the economic and technical status of a nation is no more evident than in microelectronics. This connection is bidirectional, has many strands, and is replete with feedback loops to the extent that the science, economics, and politics are inseparable, whether we like it or not. These connections are a necessary part of this discussion. In meetings on international competition, some of our leaders are ready to concede loss of U.S. leadership to our competitors and are moving to strategies that focus on how to cut the losses. They argue that the U.S. can maintain its leadership in IC (integrated circuit) design and thus in systems, irrespective of who makes the chips. There is a parallel to this in the steel industry. The Japanese built steel mills and depressed world steel prices to where the U.S. cannot compete. Other countries have also built steel mills and have become even more lower-cost producers than the Japanese. However, the larger goal of the Japanese "as not to dominate steel markets, but to depress shipbuilding costs and
0749-6036/86/020013+04
$02.00/O
thus the cost of sea transportation upon which they are dependent. They have done this ar.d it inexpensive to transport oil or is now very autos by sea. They achieved this goal. In IC'S, the announced goal of the Japanese is to gain leadership in the markets for electronic information systems. IC leadership is one step toward this goal, not an end in itself. A U.S. concession of the IC market to Japan can set into motion a train of events that results in unacceptable consequences for the microelectronics industry, much as similar concessions adversely affected American steel and automobile industries. Despite the strong international competition, the U.S. retains leadership in many areas of microelectronics and, in others, we are not that This is in spite of considerable far behind. prominent handicaps. To quote one of our industry leaders, Jerry Sanders, "while high technology industry is supposed to be one of our country's great hopes for economic growth, the basic high-tech industry, semiconductors, is fighting for survival." By removing some of the handicaps and by reshaping the U.S. microelectronics industry in a "aY that utilizes our strengths while minimizing our weaknesses, we can survive. 2. Importance of Microelectronics The importance of microelectronics is evident, so this discussion will be brief. My approach is to note that the cost of computation has been decreasing at an exponential rate for over three decades, dropping from about $15 per million multiplications in 1950 to 50 cents in 1970 and no" to 2 cents (See Fig. 1). Accompanying this has been an even more rapid decrease in the cost of memory (Fig. 2). One can no" purchase 64K DRAMS for less than 1 millicent per bit. These bare numbers tell us what we all know. The cost of computers has decreased so rapidly that because of progress in microelectronics almost every form of human they will permeate but most activity, from warfare to recreation, they will comprise the backbone of importantly, an information age in which acquisition,
0 1986
Academic
Press Inc. (London)
Limited
14
Superlattices
COST
OF
and Microstructures,
Vol. 2, No. 1, 1986
COMPUTATION
.-
a ._ I
5 ZE
: -._ 10-l
.=
r
2 lo-2
\
in ; lo‘3
\ 1950
I
I
1960
I970
I
I
1990
I960
\ 2000
YEAR Figure 1 The cost of computation using electronic computers has decreased exponentially for three decades. This trend will apparently continue for at least several more decades.
COST
OF
MEMORY ,
10000 IO00
tu
\ I
I::
t
\
\
0.1
\
\
\
0
0.01 0.001
L 1970
1990
1980
2000
YEAR Figure 2 Memory costs are approaching 0.1 millicent per bit and will continue to fall. At that price a book (10 million bits) stored in electronic memory costs $10 and, when the 16 Mbit DRAMbecomes available, will be stored one silicon chip.
organization, and application of vast knowledge resources will define the winners in whatever form of competition that exists. It follows that the possession of the most advanced technology for these functions will be key elements in that competition. The society that produces the best chips will ultimately produce the most capable information systems that, in turn, Will enable
on
that society to lead the pack - in production, in marketing, in defense, in research, and, ultimately, in the quality of the lives of the members of that society. This briefly is the argument for the importance of microelectronics. It is compelling but is probably not complete enough here t& convince the neophyte or the politician.
Superlattices
and Microstructures, 3. Competitive
15
Vol. 2, No. 7, 1986
Positions
The January 1985 report of the President's Competitiveness [l] Commission on Industrial defined competitiveness as "the degree to which a nation can, under free and fair market conditions, produce goods and services that meet international markets while the test of simultaneously maintaining or expanding the real incomes of its citizens." This report further points out that competitiveness is not an end in itself, and does not require U.S. leadership in all economic sectors. That report makes a number recommendations that address the broad of competitiveness issues. To understand the present competitive position of the U.S. it is useful to examine some of the advantages and disadvantages that this country has in micfoelectronics. 3.1 Competitive Advantages The creativity of U.S. industry and the research establishment is the envy of the world. concepts, innovations, and Many of the that have fueled .microelectronics inventions progress have originated in this country: the transistor, the integrated circuit, the planar process, photolighography, and the l-transistor cell This dynamic memory are examples. creativity, and the support given to research in this country by industry and the government, have kept the U.S. in a strong competitive position in research, despite the successes of areas. This other countries in some specific does not appear to be seriously position threatened today. Diversity (which can also be a disadvantage) has been an advantage at times. Every idea was being tried by some company or organization so that the best idea always seemed to emerge from may sometimes be the crowd. This diversity overdone to where the associated redundancy in some research areas becomes a luxury that cannot be afforded in a competitive environment. Design capability is an area of U.S. which has been maintained both leadership because it is an area on which high value has been placed by industry and because of the contributions to design from the universities. result has been increased activity by One venture capitalists as they see an expanding market for CAD (computer-aided design) systems In any case, in the U.S., and software. circumstances have worked to our advantage in design. We cannot be complacent. Other countries recognize the importance of this technology design and are working hard to catch up, and they will if we relax. of U.S. universities in The contributions microelectronics has remained a very strong plus for the U.S. Unfortunately, because we have had using their research output difficulty in effectively, other countries have gained as much more from our universities than and sometimes Even now a large industry. has the U.S. percentage of U.S. graduate students in science
and technology are of foreign origin, and other countries are providing significant support for university research in this country and in the process are obtaining ready access to the large academic research base that has been built and nourished by U.S. industry and government. The number of engineers that are graduated is not so significant, so long as the quality of both education and research in U.S. universities retains a strong lead. The U.S. retains a lead in both consumption and production of integrated circuits. The nature of world markets and market shares is difficult for anyone to understand when most of the industry has become international in its of a U.S. company's range. Are the shipments French, Scottish, or Japanese plants included in the U.S. totals or in others? Is Mitsubishi tallied with Japan or the U.S.? U.S.A. Is Fairchild a French or American company? Concerns are with tabulation such as the Semiconductor Industry Association data shown in Table I. Even the current industry in the middle of depression, the U.S. leads in half of the markets tabulated and in the total value of ICs. These data do not include the $4.5 billion or so of IC production attributed to U.S. captive producers. 3.2 Competitive
Disadvantages
Much has been made of the handicaps of the in order to'explain the fact that the U.S. U.S. share of world IC production has been decreasing These handicaps are real and do exist. rapidly. Capital costs, trade barriers, the nature of the work force, inefficiency in technology transfer, leadership and and the meandering of our have been cited. decision-making ability than the Probably no factor is more important loss of the once-unique American talent for manufacturing superior products at the lowest this topic has been discussed by cost. Again, everyone and is the subject of much attention by our business schools. Hardly a week passes that by someone doing the SRC is not interviewed besetting the anotl?eIt study of the problems industry. What can be done to reverse the upsetting trends? The safe statement is to do more of what. address our well and to we are doing deficiencies. At least one industry spokesman has called for a national mobilization in order, to survive. Others say the battle is over and we extreme view is have lost. Probably neither in a few areas may well Improvements correct. result in greatly-improved U.S. competitiveness. in meeting the Cooperation of U.S. companies competition is one of our strongest, but so far The SRC is an example of little-used, weapons. industry cooperation in generic research. The cooperative of possible broad spectrum activities include information collection and technology assessment, joint analysis, development of manufacturing tools and methods, training and motivation of the work force, and that selected advanced development activities
16
SuperlattIces
JUNE BILL
and Microstructures,
YR-TO-DATE
Vol. 2, No. I, 1986
BILL/BOOK
DIGITAL BIPOLAR
US/CANADA WEST EUROPE JAPAN
169 59 71
1,055/720 4261247 4521391
ANALOG
US/CANADA WEST EUROPE JAPAN
99 65 129
5891554 4221343 742/680
LOGIC
US/CANADA WEST EUROPE JAPAN
103 54 62
572/299 328/228 357 /288
US/CANADA WEST EUROPE JAPAN
67
DIGITALCMOS LOGIC
DIGITAL NMOS
367/297
2241187 103:
572/515
US/CANADA WEST EUROPE JAPAN
121 74:
865/621 361/250 541/321
CMOSMEMORY
US/CANADA WEST EUROPE JAPAN
18 9 32
138/138 69/66 203/139
TOTAL IC'S
US/CANADA WEST EUROPE JAPAN
577 271 473
3,587/2,627 1,830/1,322 2,868/2,334
1,397
8,728/6,629
NMOSMEMORY
TOTALS
JUNE BILL represents the dollar value of products shipped and billed to customers during the month of June YR-TO-DATE BILL is the value of shipments for the calendar year through June BOOK is the dollar value of orders received for the calendar year through June
become can microelectronics
important assets industry i.n the U.S.
to
the
4. Summary In summary, changes are necessary if the U.S. is to retain its position as a leader in microelectronics. The required changes are not that difficult to identify and, though each
change does not appear to be pivotal by itself, the sum of the changes can make the difference between the U.S. retaining its leadership role or nor;.
[l] "Global Competition Government Printing D.C., January, 1985
The New Reality," Office, Washington,