trial and error. It relies to a remarkably small extent on simulations or reliable, robust, predictive models.

A good example of this approach to process innovation is the so-called “copy exactly” philosophy that the Intel Corporation relies on in transferring process technologies among manufacturing plants. This approach to managing the development and transfer of process technologies concedes that in the absence of a complete understanding of the process technology it is necessary to copy the entire system—the length of pipes, the placement of equipment—exactly, rather than in a way that is based on engineering or scientific knowledge. This is a remarkable example of pre-scientific problem solving and trial-and-error experimentation in this industry. At the same time, however, semiconductor manufacturing process technology and manufacturing performance have benefited enormously from the application of computing technology to manufacturing process control, data capture, and analysis.

In some respects the process technology side of the semiconductor industry resembles that of the chemicals industry in the 1940s and 1950s. During this period in the chemicals industry, process technologies frequently were developed and initially applied in small pilot plants, and subsequently scaled up and applied in commercial-scale plants. This approach to process development was time consuming and tied up expensive facilities for long periods while people worked on incremental improvements in process technologies. The application of computers to the design and simulation of chemical reactions and the use of minicomputers to monitor plant operations have changed the development and management of manufacturing processes in the chemicals industry. The lack of a complete scientific understanding of semiconductor manufacturing processes is likely to constrain the scope for increased application of computer technologies to process simulation and manufacturing management. With advances in understanding, however, such expanded applications could have a transformative effect on industry structure and performance.

New Specialty Firms in Design

Computer-aided tools have been widely applied to the design of semiconductor devices, yet design remains a constraining factor in technical progress. Innovation in this industry has been a horse race between design and manufacturing technologies, and design has been the key constraining factor. This is revealed to some extent in the successive formulations of Moore’s Law. Initially the doubling in transistor density on semiconductor devices took only one year; subsequently the time required for such an advance was extended to a year and a half. These revisions have been driven by constraints in design rather than in manufacturing.

This design bottleneck has had interesting implications for the evolution of the industry’s structure. Integrated firms that combine design and manufacturing



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