Silicon and the Economy

The semiconductor industry is the largest economic segment of the US economy. We still dominate in a few areas. Semiconductor equipment, hard disk drives, computers as finished products, laser printers and inkjets are some of the product areas where American companies continue to dominate. And a lot of the innovation that drives technology originates in the US.

We don’t have a major position in the display technology arena, most of the flat panel display technology comes from Asia. But organic LED may be the next emerging technology and it is still substantially in American hands.

Battery power storage and fuel cell development is a big technology effort in the US and development of small, power dense battery technology has “fueled” (pun intended) many new product breakthroughs like the iPhone and iPod. Scalable storage technology like the recently improved Lithium Ion battery is going to be the key to short range electric vehicles that operate at a few pennies per mile, unlike the hydrocarbon based vehicles that dominate the road today.

And like the classic economists would predict, all the electronics businesses behave in perfectly linear economies of scale. The more product made, the lower the price. The entry level laptop is now $500 and is far more powerful than the most expensive desktop available five years ago. Now that’s my idea of a great “engine of commerce”.

And the commerce cuts across many fields. Medical imaging would not be possible without PC-like products to calculate the volumetrically correct image to be rendered and manipulated in 3D. Mechanical design workstations that used to cost $50,000 can now be hosted on $1000 PC’s The DaVinci surgical robot, an extraordinary accomplishment of mechatronic excellence, would be impossible without semiconductors to control and power it. In fact, we run all our businesses with computers, because its cheaper and faster.

These are multi-billion dollar market segments that are all closely knit together in an industry infrastructure that requires a lot of support. And the factories of the current era of semiconductors and consumer electronics are multi-billion dollar facilities that host some of the most sophisticated technology ever conceived by man.

So it strikes me as somewhat irresponsible that we can have the megalithic technology structure hobbled by the inability to generate electricity, a business that has been with us for almost 100 years. How can we let the energy infrastructure fall into such a state of disrepair that in the summer in California, when demand for electricity is high because of air conditioning usage, that our semiconductor industry can have brown outs and plant shutdowns.

Its absurd. And it is irresponsible for politicians who hold the power to grant permits to build new powerplants, to deny the industry the ability to supply its customers. There haven’t been powerplant permits granted in the US in 30 years. No wonder we’re in trouble.

A former client of mine is in the power generation business and I have done work for his company. Powerplants in the US are among the cleanest burning anywhere. There are even a handful of plants that burn garbage that is carefully pre-screened, and some of those plants are even cleaner than the cleanest coal fired plants.

Then there is the nuclear option. 20 years ago the American Nuclear Regulatory Agency participated in demonstrations of the “pebble bed” reactor. The size of a waste paper basket and totally safe. It can’t melt down and it can’t become unstable because each “pebble” of nuclear material is encased in ceramic that is resistant to temperatures of 3000 degrees.

Let’s wake up the sleeping giant of American ingenuity and start putting to work the people, the technologies that will reinvigorate our economy, before its too late.