Congressional Record: June 5, 2003 (Senate)
Page S7468-S7471
THE NATIONAL SECURITY ASPECTS OF THE GLOBAL MIGRATION OF THE U.S.
SEMICONDUCTOR INDUSTRY
Mr. LIEBERMAN. Mr. President, I rise today to express my concern
about the loss to the U.S. economy of most of our high-end
semiconductor chip manufacturing sector, the threat of the subsequent
loss of the semiconductor research and design sectors, and the
resulting serious national security implications.
The composition of the global semiconductor industry has changed
dramatically in recent years. East Asian countries are leveraging these
changing market forces through their national trade and industrial
policies to drive a migration of semiconductor manufacturing to that
region, particularly China, through a large array of direct and
indirect subsidies to their domestic semiconductor industry. If this
accelerating shift in manufacturing overseas continues, the U.S. will
lose the ability over time to reliably obtain high-end semiconductor
integrated circuits from trusted sources, at a time when these advanced
processing components are becoming a crucial defense technology
advantage to the U.S. Experts in the military and intelligence sectors
have made clear that relying on semiconductor integrated circuits
fabricated outside the U.S., e.g. in China, Taiwan and Singapore, is
not an acceptable national security option. The economic impact in the
U.S. of the loss of manufacturing, research and design has equally
serious implications.
I would like to direct my colleagues' attention to a White Paper,
that I am asking to be included in the Congressional Record, which
outlines the fact that this off-shore migration of high-end
semiconductor chip manufacturing is a result of concerted foreign
government action, through an effective combination of government trade
and industrial policies which have taken advantage of opportunities
resulting from market forces and changes in the semiconductor industry.
This White Paper lists a number of possible actions the defense and
intelligence communities should consider to prevent this serious loss
of U.S. semiconductor manufacturing and design capability. I have also
requested that the Department of Defense, the National Security Agency,
and the National Reconnaissance Office submit reports and plans of
action to respond to this impending national security threat. I have
asked that these reports provide an analysis of the semiconductor
manufacturing issues that relate to defense and national security, as
well as an analysis of the potential solutions that are discussed in
the White Paper. I hope these reports will detail the steps that will
be taken to counteract this loss of critical components for U.S.
defense needs, as well as a timetable for the implementation of such
steps. I note that the Armed Services Committee report on the bill we
passed yesterday requests similar information.
I hope we can act promptly to avoid a potential national security
crisis in terms of reliable access to cutting-edge technology necessary
to the critical defense needs of our country. The loss goes beyond
economics and security. What is at stake here is our ability to be
preeminent in the world of ideas on which the semiconductor industry is
based. A prompt, concerted effort by the defense and intelligence
community in cooperation with industry can reverse this trend of off-
shore migration of manufacturing, research and design that is now under
way and that will become essentially irreversible if no action is taken
in the next few months.
I ask consent that my "White Paper on National Security Aspects of
the Global Migration of the U.S. Semiconductor Industry" be printed in
the Record.
There being no objection, the material was ordered to be printed in
the Record, as follows:
White Paper: National Security Aspects of the Global Migration of the
U.S. Semiconductor Industry
The U.S. is facing an imminent threat to national security
as a result of foreign government actions that have
capitalized on the changing composition of the semiconductor
industry. Our concern is the loss to the U.S. economy of the
high-end semiconductor manufacturing sector, the potential
subsequent loss of the semiconductor research and design
sectors, and the grave national security implications that
this would entail. East Asian countries are leveraging market
forces through their national trade and industrial policies
to drive a migration of semiconductor manufacturing to that
region, particularly China. If this accelerating shift in
manufacturing overseas continues, the U.S. will lose the
ability to reliably obtain high-end semiconductor integrated
circuits from trusted sources. This will pose serious
national security concerns to our defense and intelligence
communities. Historically, shifts in manufacturing result
over time in the migration of research and design
capabilities. This is especially true of leading-edge
industries such as advanced semiconductor manufacturing,
which requires a tight linkage and geographic proximity for
research, development, engineering and manufacturing
activities. The economic impact in the U.S. of the loss of
manufacturing, research and design has equally serious
implications.
The Pentagon's Advisory Group on Electron Devices (AGED)
has warned that the Department of Defense (DoD) faces
shrinking advantages across all technology areas due to the
rapid decline of the U.S. semiconductor industry, and that
the off-shore movement of intellectual capital and industrial
capability, particularly in microelectronics, has impacted
the ability of the U.S. to research and produce the best
technologies and products for the nation and the war-fighter.
This global migration has also been discussed in a recently
released National Research Council/National Academy of
Sciences report on the U.S. semiconductor industry, which
details the significant growth in foreign programs that
support national and regional semiconductor industries. This
support is fueling the structural changes in the global
industry, and encouraging a shift of U.S. industry abroad.
critical national security applications
Studies have shown that numerous advanced defense
applications now under consideration will require high-end
components with performance levels beyond that which is
currently available. These cutting-edge devices will be
required for critical defense capabilities in areas such as
synthetic aperture radar, electronic warfare, and image
compression and processing. Defense needs in the near future
will also be focused on very high performance for missile
guidance ("fire and forget"), signal processing, and
radiation-hardened chips to withstand the extreme
environments of space-based communications and tactical
environments. There are profound needs for much more advanced
onboard processing capabilities for unmanned aerial vehicles
undertaking both reconnaissance and attack missions, for
cruise missiles and ballistic missile defense, and for
[[Page S7469]]
the infrastructure that connects these systems. As the
military transforms to a "network-centric" force in the
future, the DoD's Global Information Grid will demand
extremely high-performance computation to overcome the
technical barriers to a seamless communication network
between terrestrial 24 and 48 color optical fiber and
satellite platforms transmitting in 100+Mbps wireless. Such
performance will also be necessary for "last-mile"
extremely high-speed connectivity to platforms and to the
soldier in the field, as well as for the high-speed
encryption requirements for a secure communication system.
Intelligence agencies will increasingly need the most
advanced chips for very high-speed signal processing and data
analysis, for real-time data evaluation, for sensor input and
analysis, and for encryption and decryption.
As studies for DARPA have indicated, the next several
generations of integrated circuits, which emerge at roughly
eighteen-month intervals as predicted by Moore's Law, offer
the potential for exponential gains in defense war-fighting
capability. It is erroneous to believe that future U.S. war-
fighting capability will be derived from chips one or two
generations behind current state-of-the-art technology. Many
of the integrated circuits and processing platforms that are
coming in to use, and which are at the heart of DoD defense
strategies, are clearly at the cutting edge in their
capabilities.
With the dramatic new capabilities enabled by rapidly
evolving chip technologies, DoD and the intelligence agencies
will need to be first adopters of the most advanced
integrated circuits, and will be increasingly dependent on
such chips for a defense and intelligence edge. If the
ongoing migration of the chip manufacturing sector continues
to East Asia, DoD and our intelligence services will lose
both first access and assured access to secure advanced chip-
making capability, at the same time that these components are
becoming a crucial defense technology advantage. Informed
elements of the intelligence community therefore have made
clear that relying on integrated circuits fabricated outside
the U.S. (e.g. in China, Taiwan and Singapore) is not an
acceptable national security option.
economic importance and changes in the semiconductor industry
The influence of the semiconductor industry to the U.S.
economy in the last decade is difficult to overstate. The
U.S. semiconductor sector currently employs 240,000 people in
high-wage manufacturing jobs, and had sales totaling $102
billion in the global market in 2000 (50 percent of total
worldwide sales). In 1999, this sector was the largest value-
added industry in manufacturing in the U.S.--larger than the
iron, steel and motor vehicle industries combined. The
productivity growth in the U.S. in the 1990s was due in
significant part to the computer production and advances in
information technology that depended on the semiconductor
industry. The economic implications of the potential
migration of high-end semiconductor chip research, design and
manufacturing to off-shore facilities has the potential to
cause (and, it could be argued, is already causing) long-term
damage to the economic growth of this country, with
corresponding national security ramifications.
A fundamental change in the semiconductor industry has
been, in very simplified form, that the price to performance
curve has reduced revenue in the industry dramatically over
the last decade. During the early 1960's, and continuing
until about 1994, the compound annual growth rate in revenue
of the industry was 16 percent. From 1994 to the present, the
growth rate has been approximately 8 percent. This situation
is combined with the very large costs associated with the
development of new 300 mm fabrication facilities ("fabs"),
as well as the increasing complexity and cost of research and
design as the industry must develop methods other than the
traditional scaling methods (making all aspects of the chips
smaller and smaller) in order to increase performance. These
factors, and the current recession, are driving the industry
to consolidations. As those consolidations take place, new
business models, such as fabless companies and consortia,
come into play.
a process driven by government policy in reaction to market forces
The principal reason that China is becoming a center of
semiconductor manufacturing is the effective combination of
government trade and industrial policies which have taken
advantage of opportunities resulting from market forces and
changes in the semiconductor industry. In a sector
characterized by rapidly increasing capital costs and the
need to have access to large, rapidly growing markets, such
as China's, Chinese government policies and subsidies can
decisively change the terms of international competition. The
impact of these incentives is accentuated as a result of the
multi-year recession, which has sharply reduced revenue and
increased the competition for markets to absorb the
industry's characteristic high fixed costs. Government
policies in Taiwan were already drawing new manufacturing
capability, as well as tool and equipment makers, to its
science and technology park complex. However, in the last two
years, Chinese policy has resulted in a sharp upsurge in
construction of fabrication facilities in that country, with
plans for a great many more.
The U.S. high-tech industry has been in a recession the
last two years, with sharply reduced sales and severe losses.
The number of state-of-the-art U.S. chip manufacturing
facilities is expected to sharply decrease in the next 3-5
years to as few as 1-2 firms that now have the revenue base
to own a 300 mm wafer production fab, and likely less than a
handful of firms. Although the U.S. currently leads the world
semiconductor industry with a 50 percent world market share,
the Semiconductor Industry Association estimates that the
U.S. share of 300 mm wafer production capacity will be only
approximately 20 percent in 2005, while Asian share will
reach 65 percent (only 10 percent of this from Japan). The
remaining state-of-the-art U.S. chip-making firms face great
difficulty in attaining the huge amounts of capital required
to construct next-generation fabs. This situation stands in
contrast to that in China. To ensure that they develop the
ability to build the next-generation fabrication facilities,
the Chinese central government, in cooperation with regional
and local authorities, has undertaken a large array of direct
and indirect subsidies to support their domestic
semiconductor industry. They have also developed a number of
partnerships with U.S. and European companies that are cost-
advantageous to the companies in the short-term. The Chinese
government is successfully using tax subsidies (see below) to
attract foreign capital from semiconductor firms seeking
access to what is expected to be one of the world's largest
markets. This strategy, which is similar to that employed by
the European Union in early 1990s, is a means of inducing
substantial inflows of direct investment by private firms.
Indeed, much of the funding is Taiwanese, driven by the tax
incentives and their need for market access, especially for
commodity products such as DRAMs. The strategy does not
rely on cheaper labor, as that is a small element in
semiconductor production.
The Chinese are, however, able to increasingly draw on
substantially larger pools of technically trained labor as
compared to the U.S., from the large cohorts of domestic
engineering graduates. Importantly, the output of Chinese
universities is supplemented by large numbers of engineers
trained at U.S. universities and mid-career professionals who
are offered substantial incentives to return to work in
China. These incentives for scientists and engineers, which
include substantial tax benefits, world-class living
facilities, extensive stock options taxed at par value, and
other amenities, are proving effective in attracting
expatriate labor. They also represent an important new
dimension in an accelerating global competition for highly
skilled IT labor.
The immediate and most powerful incentives for a highly
leveraged industry are the direct and indirect subsidies,
including infrastructure needed for state-of-the-art fabs,
offered by the government. For example, the Chinese central
government has undertaken indirect subsidies in the form of a
substantial rebate on the value-added tax (VAT) charged on
Chinese-made chips. While many believe this is an illegal
subsidy under GATT trade rules, the impact of the subsidy on
the growth of the industry may well be irreversible before--
and if--any trade action is taken. There are a variety of
other documented measures adopted by the Chinese government.
The development of special government funded industrial
parks, the low costs of building construction in China as
compared to the U.S., and their apparent disinterest in the
expensive pollution controls required of fabrication
facilities in the U.S. all represent further hidden
subsidies. The aggregate effect of these individual
"subsidies" may be only a few tens of percentage points of
decrease (literally, only 20-30 percent in the manufacturing
costs of the chips, but in such a cost-driven industry, this
difference appears to play an important role in driving the
entire offshore migration process for these critical
components. Essentially, these actions reflect a strategic
decision and represent a concerted effort by the Chinese
government to capture the benefits of this enabling, high-
tech industry, and thereby threatening to be a monopoly
supplier and thus in control of pricing and supply.
It is therefore important to understand that the current
shift in manufacturing capacity to China is not entirely the
result of market forces. It is equally important to recognize
that even if some residual U.S. manufacturing capacity
remains after this large-scale migration takes place, the
shift of the bulk of semiconductor manufacturing will
severely constrain the ability of the U.S. to maintain high-
end research and development capabilities. Such directed
government support has proven itself to be a severe threat to
U.S. industry. For a variety of reasons, the U.S. government
has never been able to provide such coordinated support. The
results of this deficit have been devastating. The idea that
national governments cannot contribute to the health and
direction of such a "consumer based" industry is unfounded,
particularly given the national security implications.
A Plan of Action
The stakes are real. The time for the country to react
effectively is limited. There are things that can be done. If
these steps are taken in a timely fashion, the collective
impact of the measures will be more powerful in maintaining
reliable first access to high-end semiconductor chip design
and manufacturing in the U.S. These could include:
Active Enforcement of GATT trade rules. Currently the
Chinese government is providing a 14 percent rebate on VAT to
customers who buy Chinese-made semiconductor chips,
essentially providing a large
[[Page S7470]]
subsidy of their domestic industry in clear violation of GATT
rules. Thus, U.S.-made chips would pay a 17 percent VAT, and
Chinese-made chips would pay a 3 percent VAT. Given the tight
price competition of chips and the growing importance of the
Chinese chip market, this is a very significant step towards
ending U.S. production. It is important to ensure that GATT
rules are properly enforced in this instance, and not allow
government imposed advantages for foreign competitors to
damage U.S. manufacturers. DoD should insist that the U.S.
Trade Representative undertake prompt bilateral negotiations
to remove these measures.
Joint production agreements. With the current downturn in
the high-tech sector, it is probable that many chip
manufacturing companies will be unable to acquire the
necessary capital to invest in the $3+ billion required for
new 12-inch water advanced chip fabrication facilities, which
are radically increasing in cost. Title 15 of the U.S. code
(sections 4301 through 4305) gives private technology
companies facing global competition the ability to enter into
joint production ventures with a waiver of certain anti-trust
laws. Under this provision, a group of companies could
consolidate assets into a small number of chip fabrication
plants, which could be jointly run by a cooperative of two to
five companies. This cooperative investment in a fab could
sharply reduce the risk and cost to each participating firm,
and their agreements to purchase chips from the new fab could
be the basis to obtain financing. The Department could
encourage this kind of venture and offer contracting
opportunities to meet DoD's own chip-making needs, thus being
an additional guarantor of demand.
Business models. A variety of creative business models
exist which can help the Department and intelligence agencies
obtain improved access to advanced manufacturing lines. The
Department and intelligence agencies can enter into
agreements with a number of U.S.-based chip manufacturers
within the context of one of these models to the mutual
benefit of all parties. DoD should contract with selected
U.S. fabs for long-term access, using any one or more types
of contractual vehicles (such as "take or pay"). DoD should
also direct its aerospace end-users to employ the services of
these domestic fabs. While DoD, NSA and NRO are only a very
small piece of the semiconductor market, they can still use
their residual contracting power to encourage retention of
U.S. advanced chip manufacturing in a coordinated way. DoD
and the intelligence agencies must pursue this avenue of
creative government-industry cooperation, and must do so
soon, as time is not on the side of the U.S. industrial base
or the U.S. Government. It is important to note, however,
that even a much stronger and better coordinated effort in
this area alone will not resolve DoD's problems because over
time without a strong domestic commercial semiconductor
industrial base it will become very difficult for DoD to
retain access to state of the art chips. DoD requires an
industry with technology leadership, not just its own
short term supply fix.
Encourage tax incentives for U.S. investment. As the next
generation of chip fabrication facilities can cost at least
$3 billion per plant, the manufacturing sector will require
assistance in acquiring the investment capital necessary to
develop the manufacturing capabilities for cutting edge
semiconductor chips. DoD and the intelligence agencies should
work with industry and propose targeted tax incentives,
possibly in coordination with state and local government
financing, to assist in meeting these investment costs. As
noted above, these efforts cannot be delayed into the out-
years, as time is of the essence.
Increase Science and Engineering Graduates. The
unprecedented technical challenges faced by the industry will
require technically trained talent to provide solutions to
these problems. In order to effectively compete against the
concerted effort by the Chinese to capture the semiconductor
industry, it will be necessary to counter the growing
disparity of trained talent in both physical sciences and
engineering between East Asia and the U.S. Incentives need to
be created for increasing university student training in
these fields, in particular, of students who are U.S.
citizens. The training over the past two decades of East
Asian students in American universities, who increasingly
return to their country of origin, is a partial cause of the
present situation. Additionally, efforts need to be
undertaken to encourage their retention in the U.S. Overall,
DoD should focus on programs that increase the number of
science and engineering graduates at the B.S. and M.S. level
needed to provide the technical capabilities for the
semiconductor industry.
Increases in Federal Funds for Research and Development
(R&D). Levels of federal funding in the U.S. for research on
microelectronics have been steadily decreasing, while at the
same time, competitors in Asia and Europe have dramatically
expanded public support for semiconductor R&D. This decline
in U.S. research support is of particular concern because the
industry is increasingly addressing extremely complex
technical challenges for which no solution is readily
apparent. The following points highlight this need for
restoration of funding and describe possible steps that could
be taken:
a. DARPA's annual funding of microelectronics research and
development--the principle channel of direct federal
financial support in this area--has declined since 1999, and
is projected to decline further. DoD should consider
restoring this funding.
b. SEMATECH, the private industry partnership with
government which was created to help revive the weakened U.S.
industry in 1987 through collaborative research and pooled
manufacturing knowledge, was provided with government funds
of $100 million per year, fully matched by industry funds.
Since 1996, SEMATECH has no longer received any government
fundings. Originally an entirely U.S. endeavor, SEMATECH has
now had to become "international" to remain in operation,
thereby destroying its original U.S.-centric focus. DoD
should consider alternative mechanisms for cooperative R&D
efforts with industry in critical research areas.
c. In the current harsh financial climate of the U.S. high-
tech industry, the private sector will not be able to
continue an adequate investment in research and development--
there have in fact been widespread anecdotal report of major
decreases in R&D efforts in the U.S. commercial electronics
industry. The need is developing for processors based on the
next generation of silicon chip technology (referred to as
the "90 nanometer" generation), and the U.S. could find
itself without a domestic manufacturing base, as the research
for that technology generation should be under way now. The
area of non-silicon semiconductors, which offer a level of
speed performance exceeding that of silicon components, is
clearly under-funded. For example, research is needed on
nano-electronics, such as alternatives to silicon CMOS
through nanotubes and nanowires. This technology will be
important for next-generation military communications and
radar systems (operating in consort with advanced silicon
processor chips). Here too, the DoD must find ways to assist
the U.S. non-silicon semiconductor manufacturing based by
further encouraging R&D appropriate to DoD requirements.
d. I urge the Department and intelligence agencies to
support increased government funding for R&D of advanced chip
technologies and also to support the development of new DoD-
specfic chip designs within the aerospace industry, which,
like the fabs, are losing their capabilities as the chip
designs themselves are increasingly conducted overseas. DoD's
decades-long role in the support of such research has
diminished in recent years. Rejuvenation of this long-
standing DoD role in advanced R&D would help to assure that
U.S. industry, to the extent that it can be retained, will
lead the future shifts to the most advanced chip technology
which DoD will need.
Cooperative Research Programs. Programs such as the Focus
Research Center Program (FRCP) under the Microelectronics
Advanced Research Corporation (MARCO) seek to overcome the
growing challenges companies face in advancing
microelectronics technologies through government-industry
partnerships that focus on cutting-edge research deemed
critical to the continued growth of the industry. The
government's share of funding (25 percent) of this
cooperative program has been supported through the
Government-Industry Co-sponsoring of University Research
(GICUR) program within the Office of Secretary of Defense.
The funding targets for this program as outlined in the
original ramp-up plan have not been met. In fact, this
program has been zeroed out of the administration's FY 2004
budget. DoD should ensure that funding levels for this vital
area of government-industry collaborative research be
properly supported, and that when U.S. universities are the
recipients of such funding, the training of U.S. citizens (in
contrast to foreign students) is strongly emphasized.
Survey of Trade Practices. DoD should survey all possible
technologies that the Chinese government may be targeting for
subsidies that would assist in the transfer of U.S. chip-
making and related fields to China, and then develop a list
of those subsidies that are in violation of GATT trade rules
and seek USTR action For those that are not in violation but
nonetheless create a competitive "edge" for China, the
Department and the intelligence agencies will need to develop
counter strategies. The focus should aid to strengthen the
entire electronics and IT "food chain"--from semiconductor
manufacturing equipment to semiconductors to computers and
systems. This will require broad interagency coordination and
cooperation. It would probably be necessary to form such a
"tiger team" immediately, and to provide that team with the
authority and resources to act to stem the deterioration of
our defense-critical on-shore infrastructure.
The Semiconductor Equipment and Materials Industry. Over
the last decade a fair fraction of U.S. semiconductor tooling
and equipments capability has migrated off shore. This has
been particularly true of the "high technology" end of the
business--advanced lithography. The migration has had a
significant impact on our ability to guide and direct
development in the chip economy as a whole. For example, when
ASML (a Dutch firm) tool over SVG-L (our last cutting edge
lithography stepper supplier) the personnel base at the
former SVG-L site, in part because of the recession, was
reduced, and some advanced product development shifted to
Europe. Along with the sale of SVG-L, Tinsley, an SVG-L
subsidiary, which is the world's premier supplier of aspheric
optical components widely used in defense surveillance
systems, was also conveyed to ASML. Lithography patent
battles that could affect sales and services to U.S. chip
[[Page S7471]]
makers using equipment from either of these companies are
continuing. As another example, it is generally accepted
throughout the industry that the photomask is a key gating
element in semiconductor development today, and that mask
development is one of the largest challenges currently facing
the industry. The cost of photomask infrastructure
development is currently outstripping available R&D resources
by a factor of 4 to 5. A recent SEMATECH study indicated the
shortfall at approximately $750 million. Outside the U.S.,
this shortfall is being met with Government sponsored
development activities in hopes of taking over the market. A
small number of U.S. merchant mask companies are currently
spearheading an effort to establish a pre-competitive R&D
activity focused on U.S. mask infrastructure development. The
need, supported by SEMATECH, includes advanced tool
evaluation and development, along with materials, metrology,
and standards activities to improve future photomask
manufacturing capability. The goal is to accelerate leading
edge photomask infrastructure capability on-shore by building
on prior and current mask industry investments. DoD should
give full consideration to supporting this effort for a U.S.
mask consortium. Overall, the "tiger team" should survey
and make recommendations on what can be done to stimulate and
grow what is left of the on-shore semiconductor equipment
industry, including masks and lithography.
necessity of comprehensive action
If DoD and the intelligence agencies lose commercial
advanced chip production capability, off of which they have
sharply leveraged over the past two decades to greatly reduce
their costs and to improve war-fighting capability, the
ability to benefit from such cost-saving relationships will
be permanently lost. DoD can attempt to achieve temporary
solutions, such as building its own next generation
government-owned chip fabrication facility, but this is
likely to be both expensive and ineffective. If the best
research and design capability shifts to China along with
manufacturing, this approach will not work past the next
generation or two of semiconductor chip production. In
addition, such temporary solutions are not only unworkable
over time if the U.S. wishes to retain the best capability
that is required for defense and intelligence needs, but will
be far more expensive than the solutions proposed above. This
is because the opportunity to leverage off the commercial
sector (an approach which the DoD and intelligence community
rely upon at present) for new advances and cost savings will
be lost. The U.S. policy goal should not be to seek to
prevent China from obtaining significant chip-making
capability in the very near future. That will happen. The
issue is whether the U.S. can improve its competitive
position and remove unfair distortions in order to retain
significant on-shore manufacturing capacity.
conclusions and further action
A prompt, concerted effort by the defense and intelligence
community can reverse this trend of off-shore migration of
manufacturing, research and design that is now underway and
that will become essentially irreversible if no action is
taken in the next few months. I am requesting a report and
plan of action from DoD and the intelligence community, based
on the steps enumerated above, on how they will act to
prevent the national security damage that the loss of the
U.S. semiconductor industry will entail.
The loss goes beyond economics and security. What is at
stake here is our ability to be preeminent in the world of
ideas on which the semiconductor industry is based. Much of
applied physical science--optics, materials, science,
computer science, to name a few--will be practiced at foreign
centers of excellence. This stunning loss of intellectual
capability will impede our efforts in all areas of our
society.
I hope that by bringing attention to this matter, we can
avoid a potential national security crisis in terms of
reliable access to cutting edge technology necessary to the
critical defense needs of our country. We are being
confronted by one of the greatest transfers of critical
defense technologies ever organized by another government and
the time for action is overdue.
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