Plan for New Chip Consortium Endorsed
The U.S. semiconductor industry’s chief trade group said Wednesday that it has approved a plan to raise $1.5 billion over six years to fund a proposed chip manufacturing-technology consortium aimed at maintaining U.S. competitiveness in the industry.
The Semiconductor Industry Assn. said it will begin efforts immediately to raise $250 million per year--half from the industry and half from the government--to fund the consortium, dubbed Sematech.
The trade group also said it will select a manufacturing site by September, with Sematech producing its first semiconductors by the second half of 1988.
The group also said it will immediately begin a search for a chief executive and a chief operating officer, both expected to be hired by September.
“We believe it is absolutely essential that Sematech gets launched without delay to stop the erosion of America’s semiconductor industry by subsidized foreign competitors,” Charles E. Sporck, president of National Semiconductor and chairman of the Sematech steering committee, said Wednesday in a statement.
Announcement of the funding and leadership plan, analysts said, represents a major early step forward for the project in its bid to fight mounting competition from the Japanese, who now control nearly half the world chip market and almost the entire market for D-RAM (dynamic random access memory) chips, which are used in all computers.
Sematech, unveiled in March, would seek to develop state-of-the-art semiconductor manufacturing technology that members could then use in their own operations. Such a group effort is needed, industry officials reason, because of the high costs of developing such advanced technology for individual companies, particularly when facing government-subsidized Japanese companies.
But industry experts added that the project still faces a number of critical organizational, financial and legal hurdles.
Sematech organizers still need to raise the money, and some companies may have trouble coughing up enough funds given the industry’s slump of recent months, analysts suggested. Organizers are shooting for September to line up funding commitments from companies, but none has stepped forward so far, Semiconductor Industry Assn. spokeswoman Sheila Sandow said.
Government funding may also be a problem. A number of bills are under consideration in Congress to fund the type of work proposed for Sematech, with the Defense Department a likely conduit for the funds. But some Pentagon officials and others in Washington are said to be leery about the consortium’s cost and its uncertain benefits.
Sematech organizers also must work out details of how the consortium will be structured, what it will manufacture and how the technology gained from that manufacturing will be shared, said Mel Thomsen, analyst at Dataquest, a high-tech market research firm based in San Jose.
At least some of the companies expected to participate in the consortium have been bickering among themselves trying to agree on specifics, said Drew D. Peck, semiconductor analyst at the Wall Street firm of Donaldson, Lufkin Jenrette Securities, New York. “Each member has their own agenda, and so far it’s not clear that any consensus has arisen,” Peck said.
Such problems of cooperation, Peck said, have slowed progress at Microelectronics & Computer Technology Corp. of Austin, Tex., another consortium formed in 1982 to beat the Japanese at developing the next generation of advanced computers.
Sematech also must surmount potential antitrust problems, although some analysts said that may not be a major obstacle given concerns in Congress and the Reagan Administration about the slide in U.S. competitiveness and about alleged unfair trade practices by the Japanese chip industry.
Participants in Sematech would include U.S. semiconductor manufacturers, materials companies, equipment manufacturers, universities and government. Participants are expected to include all companies represented on the Semiconductor Industry Assn.’s board, association spokeswoman Sandow said.
