Date: 1987-05-19
Speaker: CHARLES A. FOWLER (democrat)
Chamber: S

Chairman. Defense Science Board. Office of the Secretary of Defense The Pentagon. Washington. DC. DEAR MR. FOWLER: Submitted herewith is the final report of the Defense Science Board Task Force on Semiconductor Dependency. The report is the result of an approximately 10month effort during which the Task Force interrogated some 60 expert witnesses. surveyed the existing literature on the subject. and solicited via the Federal Register comments from all interested parties. The Task Force concludes that procurement by the Department of Defense is a relatively insignificant factor to the semiconductor industry. but. in contrast. the existence of a healthy U.S. semiconductor industry is critical t the national defense. Because of this asymetry. the Task Force believes that it is imperative for the Department of Defense to take action to assure the longterm viability of a U.S. semiconductor industry which can at least meet critical defense needs. Semiconductors today represent the most highly leveraged and most ubiquitous element for assuring the technological superiority of the United States military forces. It is widely recognized that the manufacturing capacity of the U.S. semiconductor industry is being lost to foreign competitors principally Japan. It is less widely recognized. but of even greater longterm concern. that technological leadership is also being lost. It would be relatively easy to blame these ominous happenings on various forms of inappropriate behavior of foreign competitors. This would. however. be a gross oversimplification. For a multitude of reasons. the U.S. has not positioned itself to compete effectively in the world semiconductor market. The consequences of this fact are now being suffered. Although the implications of these trends on the nations economy as it enters the information age are serious indeed. the consequences for the Department of Defense are more immediate and predictable. Certain actions can nonetheless be taken which may enable the U.S. semiconductor industry to reestablish itself as a viable world competitor and a source of stateoftheart semiconductors for defense needs. The most important of these actions is for the Department of Defense to encourage and actively support with contract funding (approximately $200M per yar) the establishment of a U.S. Semiconductor Manufacturing Institute formed as a consortium of U.S. manufactuers. The purpose of this private consortium is to perform generic manufacturing process development for very advanced semiconductor devices and to sponsor equipment and materials research and development which will benefit the U.S. semiconductor industrys contributions to our economy in general and national defense in particular. The fact that this investment by the government does benefit the commercial competitiveness of U.S. merchant semiconductor firms would be an unfortunate basis for withholding Defense Department support of these recommendations which are .viewed as critical to national defense. It .is simply no longer possible for individual U.S. semiconductor firms to compete independently against -worldclass combinations of foreign industrial. governmental and academic institutions which have bnefited from more benign financial and structural environments abroad. The individual members of hte Defense Science Board Task Force consider the nations growing dependency on foreign sources for vital semiconductor hardware and technology to -be among the most serious matters they have had the occasion to address in their various associations with the Department of Defense. Further. there exists a considerable time urgency because of the rate at which market position and technological capability are deteriorating in this rapidly changing field. The members of the Task Force stand ready to assist in the implementation of the recommendations. Sincerely.