Strategic industries need government support

Strategic industries need government support

The United States has lost two industries of critical strategic importance: semiconductors and communications-infrastructure equipment. Only about 9% of the world's semiconductor devices are currently produced in the US and no significant telecom-equipment manufacturers remain in that country. Different reasons are responsible for these losses, but government support will be required in both cases if the United States is to keep its industrial competitiveness. Since these industries were largely pioneered in the US, we should examine how this happened, and ask further how valid are concerns about America's apparent loss of technological leadership. The invention of the transistor at AT&T Bell Labs in 1946 launched the digital age by replacing vacuum tubes with solid-state devices. Because the patents were broadly licensed, major vacuum-tube manufacturers like RCA and Sylvania became early transistor manufacturers. Others followed. Manufacturing transistors required a new production technology, which each market entrant jealously guarded as a competitive asset. Early applications replaced vacuum tubes in radios and in computers that were emerging as mass-market products. Building computers required assembling discrete transistors for specific computational requirements. This was a costly process that limited the number of commercial applications. The first such computers had military applications. The Burroughs Corporation built