technical advance that has made increases in semiconductor power possible is of major policy interest.

Growing Technical Challenges—Declines in Research Support

The second development concerns the technical challenges faced by the industry as it strives to sustain the remarkable technological progress predicted by Moore’s Law.5 Leading figures in the industry and academic experts are concerned that the federal government is not allocating adequate resources to the basic research required to maintain technical advance in what is now the largest manufacturing industry in the United States. At the very least, the analysis suggests that measures should be taken to reverse the disturbing decline in U.S. public support for the basic research on which this industry ultimately depends.

Significant Program Growth Abroad

The third development involves the significant growth in programs abroad that support national and regional semiconductor industries, how this support is fueling the structural changes, and its consequences in the global industry. The emergence of specialized design firms (referred to as “fabless” semiconductor companies because they do not engage in the production of the actual memory chip but rather only design them) and the rise of specialized manufacturing firms (the dedicated foundries), especially in Taiwan and mainland China, represent a structural shift in the industry that may present a challenge to U.S. firms over time. These structural changes may be accelerating in part as a result of programs to support national industries.

A further development involves the perception that SEMATECH contributed to the resurgence of the American industry. This perception has led to its emulation in many producing countries—often on a significantly larger scale and


nologies on productivity. See National Research Council, Measuring and Sustaining the NewEconomy. See also Dale W. Jorgenson and Kevin J. Stiroh, “Raising the Speed Limit: U.S. Economic Growth in the Information Age.” Brookings Papers on Economic Activity. No 1:125-211, 2000.


In 1965, just seven years after the invention of the integrated circuit, Gordon Moore predicted that the number of transistors that would fit on an integrated circuit, or chip, would double every year. He tentatively extended this forecast for “at least 10 years.” Dr. Moore’s extrapolation proved to be highly accurate in describing the evolution of the transistor density of a chip. By 1975, some 65,000 transistors fit on a single chip. More remarkably, Moore’s general prediction has held true to the present day, when microcircuits hold hundreds of millions of transistors per chip, connected by astonishingly complex patterns. Beyond its technical accuracy, the implications of “Moore’s Law” have been far-reaching. Since the doubling in chip density was not accompanied by commensurate increases in cost, the expense of each transistor was halved with each doubling.

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