Reversing the Global Migration of the U.S. Semiconductor Industry
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Reversing the Global Migration of the U.S. Semiconductor Industry Sen. Joseph Lieberman The United States is facing a serious threat to its economy and national security as a result of government actions in other countries that have capitalized on the changing composition of the semiconductor industry. My concern is the loss to the United States of the high-end semiconductor manufacturing sector, the potential subsequent loss of the semiconductor research and design sectors, and the grave economic and national security implications that these would entail. East Asian countries are leveraging market forces through their national trade and industrial policies to drive a migration of semiconductor manufacturing to that region, particularly China. Historically, shifts in manufacturing result over time in the migration of research and design capabilities. This is especially true of leading-edge industries such as advanced semiconductor manufacturing, which requires a tight linkage of and geographic proximity for research, development, engineering, and manufacturing activities. This loss also has equally serious national security implications. If the ongoing migration of the chip manufacturing sector to East Asia continues, the U.S. defense and intelligence communities will lose both first access and assured access to secure advanced chip-making capability at the same time that these components are becoming a crucial defense technology advantage. The influence of the semiconductor industry on the U.S. economy in the last decade is difficult to overstate. The U.S. semiconductor sector currently employs 235,000 people (July 2003) in high-wage manufacturing jobs and had sales totaling $102 billion in the global market in 2000 (50% of total worldwide sales). The productivity growth in the United States in the 1990s was due in significant part to 886
computer production and advances in information technology that depended on the semiconductor industry. The U.S. high-tech industry has been in a recession for the last two years, with sharply reduced sales and severe losses. The number of state-of-the-art U.S. chip manufacturing facilities is expected to sharply decrease in the next 3–5 years to as few as three firms that now have the revenue base to own a 300 mm wafer production fabrication facility (“fab”). The remaining state-of-the-art U.S. chip-making firms face great difficulty in obtaining the huge amounts of capital required to construct next-generation fabs. This situation stands in contrast, for example, to that in China. To ensure that China develops the ability to build the next-generation fabs, the central government of China, in cooperation with regional and local authorities, has undertaken a large array of direct and indirect subsidies to support its domestic semiconductor industry. China has provided an effective combination of government trade and industrial policies that has taken advantage of opportunities resulting from market forces and changes in the semiconductor industry. In a sector c
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