We can’t let our lead in semiconductor technology slip away

With transistors 10,000 times thinner than a human hair — so small billions can fit on a chip the size of cufflink — today’s semiconductors are a triumph of innovation and a hallmark of America’s technological prowess.

U.S. companies have led the world for decades in producing these tiny chips that power modern technologies and are a big reason America has the world’s most advanced technologies, the biggest economy and the greatest military. Semiconductors are a foundational technology found in virtually every product with an electric current. 

{mosads}Competing countries, however, are plowing significant resources into semiconductor technology, attempting to challenge our country’s future technology leadership. Ambitious U.S. policy action is needed to help keep America on top for decades to come. 

The Chinese government, for example, has announced efforts to invest well over $100 billion over the next decade to catch up to the United States in semiconductor technology and the semiconductor-enabled technologies of the future, including artificial intelligence and quantum computing.

The country that leads in semiconductors will win in these technologies of the future, reaping huge social, economic and national security benefits. 

To help sustain American leadership in semiconductors, Congress and the Trump administration should strengthen three time-tested pillars underpinning America’s semiconductor industry and our economy: pioneering research, an unparalleled workforce and unfettered access to customers around the world. 

First, keeping America on top in semiconductor technology requires ambitious investment in research. Since 1995, the U.S. share of global research and development (R&D) has declined significantly, according to a new report by the Task Force on American Innovation (TFAI), an alliance of U.S. leaders in business, science and academia.

America is one of only a few countries whose public-sector R&D investment as a share of GDP has declined by over 15 percent since 1995.

U.S. policymakers should therefore triple federal investments in semiconductor-specific research to $5 billion annually and double federal funding for semiconductor-related research in fields such as materials science, computer science, engineering and applied mathematics to $40 billion annually.

Second, American semiconductor technology is only as strong as its workforce. Unfortunately, the U.S. trails key competitors in the number of bachelor’s degrees in science and engineering awarded since 2000, and China’s output of such degrees has increased by over 360 percent during that time, according to the TFAI report.

Congress and the administration should therefore remove caps on green cards for qualified science, technology, engineering and mathematics (STEM) graduates and increase federal funding for STEM education by 50 percent to over $1.5 billion per year to double the number of American STEM graduates by 2029. 

Third, with more than 80 percent of their customers overseas, U.S. semiconductor companies are at their competitive best when they can export their products freely to markets that protect their intellectual property.

The global semiconductor ecosystem is under threat, however, from isolationist trade policies and non-market initiatives, including forced technology transfer and intellectual property theft.

Policymakers should approve free trade agreements, including the United States-Mexico-Canada Agreement (USMCA), that remove market barriers, protect IP and enable fair competition. Government leaders should also substantially increase resources for law enforcement agencies to prevent and prosecute semiconductor IP theft. 

The semiconductor industry is one of America’s greatest success stories, boosting U.S. economic growth, national security and innovation. As the world leader in semiconductor technology, America has a head start in the race for the must-win technologies of the future. But we must not be complacent. 

With smart government policies and an eye to the future, we can fulfill the boundless promise of semiconductor technology, win the race, and keep America at the leading edge of innovation.

John Neuffer is president & CEO of the Semiconductor Industry Association, the voice of the semiconductor industry.