In January 2017, a report Ensuring Long-Term U.S.Leadership in Semiconductors was delivered to the President. It was not yet the 20th of the month, so that was still President Obama. I read the report at the time but made the mistake of not downloading it. Then it vanished. I think it was simply that whitehouse.gov had to be moved to obamawhitehouse.archives.gov since it soon re-appeared once the search engines found the new location. PCAST is the President's Council of Advisors on Science and Technology. There currently is none, although President Trump has said that he will staff it. The Obama-era PCAST commissioned the report, and It was delivered literally days before the end of the Obama administration, presumably so that it was officially published. The Working Group PCAST themselves didn't produce the report. They created a working group who actually knew something about semiconductors, named prosaically the PCAST Ensuring Long-Term U.S. Leadership in Semiconductors Working Group. I think it is worth listing the members of the group, since it gives the report some credibility, not just in Washington but with people like me, and probably you. Let's face it, if they assembled a bunch of politicians to write the report, the sort of people who think the internet is a series of tubes, then we'd all give it the attention it deserved. This is the group. I've added more color than is in the report, and also updated people's position where I know what it is. Co-Chair: John Holdren, Assistant to the President for Science and Technology Co-Chair: Paul Otellini, former CEO of Intel. He died in October last year. There is a short section on his passing in my post Xcelium Simulation on Arm Servers . Rich Beyer, who was CEO of Freescale. He was also COO of VLSI Technology for a few years, and I used to meet with him once per week to explain to him how chips were designed (he was a marketing guy by background). Wes Bush, CEO of Northrop Grumman. Diana Farrell, CEO of JP Morgan Chase Institute. John Hennessy, who was the founder of MIPS, was President of Stanford for many years, is now Chairman of Alphabet (parent of Google), and just was the co-recipient of the 2018 Turing Award with Dave Patterson. Paul Jacobs, for many years CEO of Qualcomm and then its Chairman (but recently retired). Ajit Manocha, former CEO of GlobalFoundries, and currently the CEO of SEMI, see my post Ajit and the History of SEMI for more background. Jami Miscik, co-CEO of Kissinger Associates, with a background in the CIA. Craig Mundie, President of Mundie Associates, but was Chief Research and Strategy Officer at Microsoft. He is also the only person in the working group to also be a member of PCAST itself. Mike Splinter, former CEO of Applied Materials. Laura Tyson, Professor of the graduate school at UC Berkeley. Various other staff appointments. I think we can all agree that this is a group that knows something about the semiconductor industry and global competitiveness. Letter to President Obama The report opens with a letter to President Obama. I will just extract what I consider the two key paragraphs, which are actually a rephrasing of a couple of paragraphs from the executive summary of the report itself. Today, U.S. semiconductor innovation, competitiveness, and integrity face major challenges. Semiconductor innovation is already slowing as industry faces fundamental technological limits and rapidly evolving markets. Now a concerted push by China to reshape the market in its favor, using industrial policies backed by over one hundred billion dollars in government-directed funds, threatens the competitiveness of U.S. industry and the national and global benefits it brings. The report looks at these challenges in greater detail. The core finding of the report is this: only by continuing to innovate at the cutting edge will the United States be able to mitigate the threat posed by Chinese industrial policy and strengthen the U.S. economy. Thus, the report recommends and elaborates on a three pillar strategy to (i) push back against innovation-inhibiting Chinese industrial policy, (ii) improve the business environment for U.S.-based semiconductor producers, and (iii) help catalyze transformative semiconductor innovation over the next decade. Delivering on this strategy will require cooperation among government, industry, and academia to be maximally effective. In the executive summary, a third paragraph appears between these two, that I also think is worth quoting in full, since it points out something critical, that policy changes are required, not just sitting back and letting the major semiconductor companies slug it out for market share. That is critical, too, since even the military today depends heavily on what they call COTS parts, which stands for Commercial-Off-The-Shelf, meaning that even the military needs a strong domestic industry. The global semiconductor market has never been a completely free market: it is founded on science that historically has been driven, in substantial part, by government and academia; segments of it are restricted in various ways as a result of national-security and defense imperatives; and it is frequently the focus of national industrial policies. Market forces play a central and critical role. But any presumption by U.S. policymakers that existing market forces alone will yield optimal outcomes – particularly when faced with substantial industrial policies from other countries – is unwarranted. In order to realize the opportunities that semiconductors present and to effectively mitigate major risks, U.S. policy must respond to the challenges now at hand. The Six Strategic Responses The middle of the report lists six strategic responses. Of course there is detail added to each one, but you'll have to read the report itself for that: Win the race by running faster. Focus principally on leading-edge semiconductor technology. Focus on making the most of US strengths rather than trying to mirror China. Anticipate Chinese responses to US actions. Do not reflexively oppose Chinese advances. Enforce trade and investment rules. The recommendations resulting from these (again there is more detail in the report): Recommendation 1.1: Create new mechanisms to bring industry expertise to bear on semiconductor policy challenges. Recommendation 2.1: Boost the transparency of global advanced technology policy. Recommendation 2.2: Reshape the application of national security tools, as appropriate, to deter and respond forcefully to Chinese industrial policies. Recommendation 2.3: Work with allies to strengthen global export controls and inward investment security. Recommendation 3.1: Secure the talent pipeline. Recommendation 3.2: Invest in pre-competitive research. Recommendation 3.3: Enact corporate tax reform. Recommendation 3.4: Responsibly speed facility permitting. Recommendation 4.1: Execute moonshot challenges. Conclusion My main conclusion is that if you are involved in the semiconductor industry in some way, and you probably are if you are reading this, then it is worth a little of your time to read the report. The heart is just 20 pages long. If you can't manage that, then at least read the executive summary, which is a page and a half. One thing that I think is very positive is that the report was done during the Obama administration, but the actions starting to take place now are in the Trump administration. There is some continuity of purpose. Let me conclude with the final paragraph of the conclusion of the report: We strongly recommend a coordinated Federal effort to influence and respond to Chinese industrial policy, strengthen the U.S. business environment for semiconductor investment, and lead partnerships with industry and academia to advance the boundaries of semiconductor innovation. Doing is essential to sustaining U.S. leadership, advancing the U.S. and global economies, and keeping the Nation secure. Sign up for Sunday Brunch, the weekly Breakfast Bytes email.![]()
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