By John Coleman
We’ve all heard and probably participated in the bashing of the Federal government from time to time; whether it’s stimulus funding for corporate CEOs, the war in Iraq, or the latest cry about universal health care.
The sunny disposition in me tends to look for the positives in life (I like to think anyway) so this article calls out the 1980s federally funded SEMATECH project and the recent attempt to emulate its success.
In the 1970s, the United States had fallen far behind the rest of the world in the research and development of semiconductors; to the point where there were genuine concerns about our ability to remain a player in the high tech economy.
In response, the Fed pulled together a coalition of the most advanced U.S. firms in the semiconductor world and bankrolled a consortium called SEMATECH to revitalize the U.S. market. Austin, Texas landed the project back then and is now home to almost 30 semiconductor companies; including AMD, Freescale, Sun and the $3.5 billion wafer plant developed by Samsung. More importantly, the U.S. is a leader in the industry.
Today, semiconductors are a fundamental component of just about every gadget on the market, from phones to computers to hybrid vehicles, and SEMATCH consortia members make up over 50 percent of the worldwide chip market. What would the U.S. economy look like if we were not at the top of this field?
Similarly, batteries are expected to be the next semiconductor if you will. Already, we see cell phones, laptops and solar photovoltaics rely heavily on batteries. Plug-in hybrid vehicles and renewable energy installations, large and small, will depend even more on the technology in order to be successful.
Whoever cracks the code on lithium-ion or other long term storage devices will take a big step in the global economy. Wind energy could then be stored in large volumes and used to draw down peak energy demands. Laptops, cell phones and electric bicycles could go days or weeks without being recharged. The potential is limitless and success is essential in order to draw down global carbon emissions while growing the economy.
With this in mind, the Department of Energy awarded $2.4 billion in grants in early August to go towards battery research and development and jump start the U.S. economy. Personally, I was disappointed to see so much of it go to the big three auto companies instead of rising companies like Fayetteville-based Arkansas Power Electronics International.
Nonetheless, it’s important to recognize obvious future markets like semiconductors and battery development and then be aggressive in pursuing them. In both of these instances the Fed jumped out in front of Adam Smith’s invisible hand to stake its ground. SEMATECH was incredibly successful and a decade from now we’ll be saying the same thing about the battery industry.