Like-Minded Nations Can Advance Their Leadership in Semiconductors Through International Collaboration, Says New ITIF Report

September 21, 2020

WASHINGTON—The semiconductor sector constitutes one of today’s most important industries, providing the core technology that powers the modern digital world. Yet countries seeking self-sufficiency in this space threaten their own competitiveness, as succeeding entirely independently is almost impossible in such a complex sector, argues a new report released today by the Information Technology and Innovation Foundation (ITIF), the world’s top-ranked think tank for science and technology policy. In order to lead, like-minded allies should collaborate in technology and infrastructure development, calibrate protective measures like export controls and investment screening, and support rules-based trade.

“While national policies are important for spurring semiconductor research, development, and production, countries also must recognize that self-sufficiency cannot and should not be the goal in this sector,” said Stephen Ezell, ITIF’s vice president for global innovation policy, who authored the report. “The increasing expense, complexity, and scale required to innovate and manufacture semiconductors means that no single nation can afford to go it alone. Like-minded nations should come together to open trade and fair economic competition and collaborate in ways that collectively empower the competitiveness of their respective semiconductor industries.”

Each segment of the global semiconductor value chain has, on average, 25 countries involved in the direct supply chain and 23 involved in support functions, ITIF notes. In this environment, successful semiconductor innovation depends on numerous scientists, researchers, and engineers from numerous countries working together across international companies, universities, government agencies, research institutions, and public-private research consortia.

ITIF’s report also hihglights the importance of semiconductor global value chains and explains how the United States has effectively leveraged them to remain a leader in the field by collaborating with enteprises from various nationsto develop and produce semiconductors. Yet allied effort alone is not enough in the long run and will have limited impact if the United States and other like-minded nations don’t also increase government funding for more ambitious, collaborative, pre-competitive R&D efforts.

“The semiconductor sector promises to produce tremendous innovations for generations to come, and these will arrive faster and with greater impact if like-minded nations find constructive ways to work together,” added Ezell. “Separately, each country needs to focus on policies that make their nations attractive environments for semiconductors and other advanced-technology sectors. That includes creating strong IP regimes and regulatory environments, ensuring access to a skilled labor force, and providing favorable tax and investment environments. Together, strong partners form strong partnerships. In the semiconductor sector, it is important that each nation in this global race fosters an environment conducive to breakthrough technologies for the world’s benefit.”

Read the report.