By Bob Pearson, Founder & Chair, The Next Practices Group
COVID-19 has illustrated for all of us how fragile the technology supply chain is and can become due to a virus. The risk is similar if we have a natural disaster or a trade war or another action that can disrupt how our world runs.
The answer is more pragmatic than political.
The private and public sector of the USA can build global balance in technology…if they choose to do so…and if they choose to partner and build an ecosystem that is truly competitive when versus the best manufacturing ecosystems in the world today.
The US starts strong. We remain the R&D engine of our world. In fact, we’ve led the development of microelectronics since the first semiconductors were developed and patented by Robert Noyce at Fairchild Semiconductor in 1961. We remain a current global leader in technology advancement.
But we have fallen far behind in our ability to manufacture what we create and it is easy to see why.
We have issues we need to address right in our own backyard. In addition to high capital costs, U.S. companies must navigate a minefield of Federal, State, City, Municipal, School District and City Council rules and regulations to successfully build a foundry. It is described as complex, painful and a real barrier to entry by those who have built foundries in the U.S. But that can be addressed.
The real driver that makes this discussion timely is due to the exponential innovation that we are seeing in industry. The technology industry is entering a new era of innovation, while our domestic risk is increasing just as fast.
5G is being launched and 6G has potential to be a game changer in terms of how we consume/use data. Autonomous machines are making autonomous vehicles. Artificial Intelligence is finding more use cases every day. Billions of sensors are powering our Internet of Things products worldwide.
Technology is once again changing how we live and work. Here are just a few important examples that will drive future growth in the technology industry.
The Workplace of the Future will be a Hybrid of Physical and Virtual – it’s a world of Teams Zoom, Ring Central and an office now and then.
The New Family Room will be in the Palm of Your Hand – nearly three billion people consider themselves gamers, which is becoming the center of our personal entertainment. 6G will allow instant downloads of movies. The center of this universe will be the phone. We will be convening, chatting and exposing our information in new ways via these platforms.
Autonomous Transportation will become just Normal Transportation – 6G will unlock the potential of autonomous travel, in part, due to 10x greater speeds than 5G, improving reaction times. Unmanned factories will create unmanned vehicles.
We Will Shift from the Genome to the Menome – the field of genomics will evolve to where we have a personal “menome” in the cloud filled with our genetic data, health records, our fit bits and other relevant information.
A New Infrastructure of Networks & Sensors will Wire our World – in addition to the tectonic shift from 5G to 6G, IoT is on track to connect 50 billion “smart” things this year as we move towards a “one trillion sensor” economy, which will lead to new data storage issues and an increased reliance on hyperscale data and edge data centers, as we look to scale increased capacity while localizing processing power closer to end users.
So, back to the answer. In my view, it is to build manufacturing capabilities in the U.S. that are as good or better than the best firms in Asia. Partnerships of any type could make sense, as long as we are able to build the volume of microelectronics necessary to share the balance of power worldwide in this market while increasing our capabilities to improve the security of microelectronics and become less sensitive to any unforeseen circumstances.
If I imagine a day where all of my health information is in a personal cloud and I am accessing it via the autonomous vehicle I’m riding in while I get ready to hold a sensitive business call on Teams, I would say it is not a stretch to think that security and safety of my data…our data…is a primary objective.
The good news is that Congress is working diligently to craft legislation that has the potential to solve the problem over time. Senators Cornyn and Cotton are specifically working on plans. We have the American Foundries Act of 2020 and surely other initiatives are in early stages.
Rather than outline what I like or don’t like about any of the ideas, I’d like to provide my perspective from working in the technology industry and alongside it as a consultant for many years. Based on conversations with more than 30+ technology companies and their leaders over the last few years, I can say the following with a high degree of confidence.
America’s technology sector is not looking to be part of another trusted foundry.
Instead, they believe it is time for a new model where the public and private sector partner, in innovative ways, to build full-scale foundry ecosystems…for memory, logic and analog.
America’s companies understand the risks they face today, whether it be the difficulty in protecting their IP or the risk they have within their supply chain. That being said, they won’t move without a competitively built foundry and prices to match. Money and margins talk.
New legislation too often contains old ideas. Our minds default to what we know vs. what we should rethink, in some cases.
As we craft new legislation and pursue new ideas, it is important, in my view, to remember three global macro trends of importance that should shape our thinking for the technology sector.
The Macro Trends….
#1 — Capitalism cannot compete with country subsidization. The economics will never work. It is why the public and private sector need to partner.
#2 — Intellectual property theft is widespread. Companies know their microelectronics devices and related software are at risk. It’s just not discussed out loud too often. We can increase the standards for security…create new global standards…and there is no better group to lead the way then SEMI, who has created over 1,000 standards for the technology industry.
#3 — A single point of failure is not acceptable. Whether it is COVID-19 or a geographic blockade or an earthquake or another catastrophic event, why would we have nearly the entire supply chain located in one general location?
The future of technology will be shaped by all of you in the SEMI universe.
It’s time for the world to achieve a balance of power in the microelectronics industry.
The US is the perfect spot for this to happen and SEMI is the group that can play a role in setting the new standards for security to protect companies, citizens, communities and countries.
The ball is in our court.