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It is also a sector in which governments have played, from the industry's very inception, an extraordinarily significant and interventionist role in helping to create launch markets for the technology, funding research and development, and in helping to resolve some of the disputes that have arisen in the industry.

The governments of Korea, Taiwan, and Singapore have played a very effective role in helping those producers to emerge as major players in the industry, as the government of Japan did before them, as the U.S. and European governments did before the Japanese government. And, indeed, from the mid-1980s on, to some extent the competitive success of the U.S. industry owes a debt to both aggressive intervention on the trade front, through the semiconductor trade agreement and the market-opening negotiations with Japan, and the domestic support to technology in the form of such enterprises as SEMATECH.

Indeed, this sector would seem to be the embodiment of the central tension that we have been talking about here that exists in our system of technology and trade: that is, the coexistence of very different national, perhaps regional, political economies in the same economic space, each of which wants a piece (preferably a large piece) of the same set of high-technology industries that we all assume are the guarantors of future high-wage jobs, high-value-added activities and, therefore, which none of us can do without if we are going to have a rising standard of living.

Fortunately, this is a sector that, having been the source of trade-technology tensions, has also moved very far in the last decade to resolving some of those tensions. It has moved from being highly confrontational to being much more cooperative. We have seen the emergence of a broad range of cross-national alliances between companies, of direct investment, and interpenetration of industries that originate in one nation or one region into markets and industries that originate in other parts of the world.

These alliances and direct investments have spanned the gamut from R&D to production, product development, and distribution. Therefore, perhaps it is also an industry that can provide us with some useful lessons and ways of thinking about the future. As we move forward, we should consider such issues as:

  • whether the move from conflict to cooperation in this industry is permanent, driven by the horrendous economics of technology development associated with getting ever smaller and smaller line widths on silicon, with improved price and performance;

  • whether the industry will be able through private negotiation to resolve foreseeable tensions that will arise as other aggressively government-supported entities, Chinese firms, for example, enter the arena;

  • what the impact will be as other regions, notably Asia, become the primary arena not just for producing semiconductors, but also for defining new products as a launch market, a role the U.S. and Japanese markets have exclusively played in the industry's past;



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