The Semiconductor and Semiconductor Manufacturing Industries and the Creation of Sematech
As the Reagan administration was debating the machine tool VRA issue, the U.S. semiconductor industry lurched into a crisis of its own. After inventing the semiconductor device and dominating world markets for years, American firms faced a concerted onslaught from rapidly expanding Japanese competitors. Fearing the potential extinction of domestic production capacity, U.S. semiconductor firms turned to Washington for help.
As in the machine tool case, advocates for tile U.S. semiconductor industry encountered significant obstacles in their efforts to initiate action. But, in the end, they succeeded even more remarkably than the NMTBA, prompting a dramatic change in policy that remains a model today. Policymakers noted at the time, and still recognize today, that the creation of the Sematech consortium was a seminal event. 1
A significant evolution in policy ideas made this change possible. As strategic trade concepts filtered through the academic and policy communities, the case against market intervention was fatally weakened. As we saw in Chapter Four, the decision to support die U.S. machine tool industry resulted from a questioning of the traditional laissez-faire doctrine. As resistance faded, proponents also created a viable intellectual case for supporting the semiconductor industry through Sematech. By late 1987, these factors made Sematech's creation a relatively noncontroversial decision.
A vast literature on the history of the American semiconductor exists. 2 The industry dates back to 1947, when Bell Laboratories invented the transistor.