An Allied Approach to Semiconductor Leadership

Semiconductors represent one of the world’s most important industries, the core technology that powers the modern digital world and empowers innovation and productivity growth across every industry. In turn, the evolution of global value chains has enabled the industry to sustain its relentless, multi-decades drive to produce ever-more powerful integrated circuits at ever-lower costs—a dynamic captured in Moore’s Law: the notion that the number of transistors on a microchip doubles about every two years, effectively meaning a semiconductor’s capability in terms of speed and processing is doubled, even though its cost is halved. However, recognizing semiconductors’ foundational role in the modern global economy, and their importance to national security, an increasing number of nations are seeking to capture as much value as possible from the industry, whether from semiconductor research and development (R&D); design; fabrication; or assembly, test, and packaging (ATP).

While national, including U.S., policies to spur semiconductor R&D and production are important, it’s also important to recognize that self-sufficiency cannot and should not be the goal. The increasing expense, complexity, and scale required to innovate and manufacture semiconductors means that no single nation can afford to go it alone. However, there exists an opportunity and a need for a like-minded set of nations committed to open trade and fair economic competition to collaborate in ways that collectively empower the competitiveness of their semiconductor industries.

This report begins by examining the global semiconductor industry, including the rise of semiconductor global value chains, and by examining nations’ semiconductor competitiveness strategies. It then examines how a community of allied nations can work together across four areas—by working collaboratively on semiconductor technology development, ecosystem support, and technology protection, as well as by developing supportive trade rules and regimes—to collectively enhance the competitiveness and innovation potential of their respective semiconductor industries and the industry globally.

Stephen Ezell is vice president, global innovation policy, at the Information Technology and Innovation Foundation (ITIF)

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