Electronics: –
While currently assessed as mature and healthy, the global semiconductor industry is facing a strategic inflection point. This inflection will shape a future for the industry that is significantly different than the past. Although outlook for that future remains favorable, numerous challenges place that future at risk. Challenges found in Chinese competition, skilled workforce shortages, commercial semiconductor market shifts, unique DoD electronics needs, and ongoing requirements for rapid innovation threaten the stability of the market, the U.S. competitive advantage, and U.S. economic and national security. Future success in the industry hinges upon policies which address these challenges and enable U.S. companies to embrace future opportunities.
Semiconductors are essential to modern life. Progress in semiconductors has opened up new frontiers for devices and services that use them, creating new businesses and industries, and bringing massive benefits to American workers and consumers as well as to the global economy. Cutting-edge semiconductor technology is also critical to defense systems and U.S. military strength, and the pervasiveness of semiconductors makes their integrity important to mitigating cybersecurity risk…Today, U.S. semiconductor innovation, competitiveness, and integrity face major challenges.
This paper is the culmination of five months of extensive analysis of the semiconductor industry that the Electronics Industry Study seminar (Seminar) at the Dwight D. Eisenhower School for National Security and Resource Strategy conducted from January – May 2017. This analysis stems from intensive seminar instruction; industry, academia, and government visits in the National Capital Region; and field studies in New York, California, Taiwan, and China.
The Seminar’s five-month evaluation of the industry validates the conclusions of the January 2017 President’s Council of Advisors on Science and Technology (PCAST) report: the semiconductor industry is both essential to the modern American way of life and facing challenges that threaten the future success of U.S. companies in this industry. While currently assessed as mature and healthy, the global semiconductor industry is facing a strategic inflection point. This inflection will shape a future for the industry that is significantly different than the past. Although the outlook for that future remains favorable, numerous challenges put that future at risk.
The Seminar found challenges flowing from increased Chinese competition in the industry, crosscutting workforce shortages, shifts in commercial semiconductor market demand and structure, ongoing unique Department of Defense (DoD) electronics needs, and continuing requirements for rapid innovation. Combined, these challenges threaten the stability of the market and U.S. competitive advantage.
Government involvement in this industry, if implemented correctly, has the potential to support continued industry success. Policy which focuses on future, post-inflection markets and goals, rather than trying to preserve past achievements, will be the most successful. Through proactive action to address the challenges highlighted in this paper, the U.S. government can enable U.S. semiconductor companies to embrace future opportunities, ultimately preserving U.S. competitive advantage in this foundational industry, and thus preserving U.S. economic and national security.
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