When the Chips are Down: Navigating Strengths and Strategic Vulnerabilities in the Semiconductor Industry

Quotes

• Victoria Coleman

  “So how would you know if we now have leadership?... The reversal of the [shrinking market share] trend is very important but also world class technology will be discovered, developed, and scaled by U.S. based companies. There would be highly profitable and sustainable business models. There will be a thriving, diverse research community. We will have the world's best people working on these problems here at home. Last but not least… would have availability of reasonably priced, affordable, performant and trustworthy microelectronic components for the Department of Defense mission.”

   

  “Luckily we have a number of levers at our disposal. We have incredible R&D institutions. We also need investment. We talked about venture capital drying up and we need to reverse that trend. Incentives – we know that many of our competitors overseas are applying incentives that make it difficult for domestic companies here in the U.S. to compete effectively. We need to think about regulation -- too much or too little? And finally, we have to build alliances. We don’t have to do it alone.”

• Susie Armstrong

  “We believe [the chip shortage] is far beyond a pandemic problem. The semiconductor industry is being driven by demand. With the digital transformation…everything is being driven by semiconductors. We believe this is not a two-quarter automotive industry issue or a pandemic-related issue. Those were just harbingers of what is to come.”

   

  “We not only need the investment in money, we need the investment in training. It is a virtuous cycle. People who go to university and study engineering, they need a place to go when they get out of university.”

   

  “Does it have to be US ownership on US soil? I don’t think it does. Companies like Qualcomm, we want second and third and fourth choices. Design companies cannot afford to put all of their eggs in one basket.”

• Ajit Manocha

  “People did not really appreciate semiconductors for many years. We took semiconductors for granted. If you ask a lot of students about the semiconductor companies, they don’t give a hoot about semiconductors. They all believe they want to go work for Google, Facebook, and Amazon. What they fail to realize is, without semiconductors, none of these companies would exist.”

   

  “Behind this success [of vaccines] is the role of semiconductors… It takes years to do [genome] sequencing, but thanks to semiconductors that have enabled innovations in supercomputing, we were able to do genome sequencing within weeks, hence getting vaccines out in less than a year.”

• Vladimir Bulovic

  “What you do see is a tremendous amount of money that venture capital controls… $156 billion was invested in startups in 2020, and only a very small fraction of that money is being invested in hard technology companies.”

   

  “The one thing we have in plentitude in places like MIT is people who are about to lose their job and they’re eager to find their next job – meaning they’re about to graduate and leave MIT and are looking for something to do, and hence have all that ability and drive to start that next company. They need just a little bit of capital and a place where they can have their tools.”

• Meg Hardon

  “For the players in the industry, the concern comes to: “Does this alarm lead to decoupling?” We can’t really operate a global semiconductor industry with dual sets of standards, dual sets of export compliance, dual sets of manufacturing compliance, massive subsidies in certain regions.”

   

  “I think industrial policy is like a third rail or a dirty word and and I think we should just think about it alternatively…We need a strategy because the US government and other governments around the world are already pulling levers. There are a lot of levers that are being pulled so why not do it strategically?”

   

  “We really think that in the industry that the bipartisan support for CHIPS [For America Act] is a huge achievement and a positive one... [But] there’s just been a precipitous fall in federal R&D spending and it's uncompetitive and we really, really need more funding.  I think it's a huge achievement that we got CHIPS authorized, but now I think we really need to see the money.”

   

  “For every dollar invested in semiconductor R&D, you get a 16.5 dollar return in GDP over a period of years. That's huge. And if CHIPS does get fully funded as described, it would create nearly half a million jobs before the end of this decade. So it is a worthwhile industrial policy to focus on semiconductors.”

• Eric Burger

  “So the sky is not falling. The US unquestionably has the largest integrated manufacturer, our friends have the largest foundries, and of the next 6 integrated manufacturers, a bunch of them are American. In fact, the fabless manufacturers are all American depending on who you ask.”

   

  “China does have a large domestic market for chips…and China is highly dependent on the U.S. for intellectual property for those chips. Likewise, the U.S. is highly dependent on those China revenues. It is really an inter-related problem.”

   

  “Like many things, it's a shade of grey. There was definitely discussion about, “Is it industry versus national security when we ban exports of American semiconductors and intellectual property to those under sanction?”… I would offer it's not really an industry versus national security tradeoff but really a short term versus long term tradeoff… This is the leadership opportunity that's really only available to the government.”

• Eileen Tanghal

  “For example. in order to make the latest nodes there is only one company in the entire world that lets you do that – it’s called ASML and it’s in Holland. So, we do have to work with our allies to make sure that equipment that enables the next generation is something that we and our allies can do together.”

   

  “There is a funnel when you’re looking at startup companies…there is money for the seed stage, and then the large companies like Applied Materials, Qualcomm, Intel – they might buy at the seed stage or they might buy at the later stage when something is more proven. The issue is the middle stage -- there is not enough money for the middle of the funnel. We need to talk about this right now as a real problem…the capital for these Series B/C companies is not there.”

   

  “You can't just throw money without knowledge and expertise. So you don't want people who know nothing about semiconductors just handing out funds to startup companies but [you want them to] do it in cooperation with the existing players. Let's just remember Applied [Materials] was a startup, Intel was at startup, Nvidia was a startup, Qualcomm was a startup, Cadence was a startup -- they were all startups and over the past 40 years now they've become the big [companies]. So, let’s work with them to create the next startups.”