The U.S. Semiconductor Industry

For over 50 years, the U.S. semiconductor industry has been at the forefront of worldwide technological development.  Faster, cheaper and smaller semiconductors have benefited all industries and services, and transformed communications, transportation and entertainment. Doubling of transistors on integrated circuits has created technological innovation and led to new products, economic growth, productivity gains and new industries.

In 2010, the U.S. semiconductor industry generated global sales of $144 billion out of a $299 billion market, an increase of 25 percent year-to-year.  Sales of semiconductors consists of direct U.S. exports and foreign sales of U.S.-owned subsidiaries overseas and take into account U.S. based R&D, creation of intellectual property, design, and other high-value added work not necessarily captured in shipment and trade data that reflects only the movement of goods.  Increasingly, semiconductor technology has become globalized through such channels as overseas patenting, licensing, and other direct forms of technology transfer, and alliance strategies and international investment.  Over 85 percent of U.S. semiconductor industry sales occur overseas and the U.S. industry share of the global market was 48 percent in 2010.[1]  

The industry has consistently ranked at the top of all U.S. exporting industries in recent years and has maintained a trade surplus.  Exports in 2010 accounted for $47 billion or 32 percent of sales, and represent a substantial 26 percent increase year-to-year.  Semiconductor industry capital spending is recovering with an estimated $9 billion or more estimated to be spent on construction, equipment and materials in the United States.[2]

International semiconductor firms investing in the United States tap into an innovation ecosystem that encourages entrepreneurialism; a business and technical environment that attracts top engineering talent worldwide; a strong intellectual property rights regime that protects patents and trademarks; and programs that support investment, training, development of human capital and research and development partnerships.  The United States also offers an advanced network of semiconductor clusters.  By connecting education, research and manufacturing, such clusters create synergies for the whole semiconductor ecosystem, from silicon technology to industrial applications.[3]  The Nanoelectronics Research Initiative (NRI) is the premier U.S. R&D semiconductor program and is managed through the Semiconductor Research Corporation (SRC). The NRI supports university research to find a replacement beyond the limits of current semiconductor technology.  The country that is first to develop the new technology will lead the nanoelectronics era much as the U.S. has led the microelectronics era for the past 50 years.  Along with industry, the National Science Foundation, National Institute of Standards and Technology and state governments and universities are in the forefront of the NRI.[4]

Industry Subsectors

Microprocessors:  These most complex and innovative semiconductors are primarily used as central processing units in computer desktop systems, notebooks, servers and workstations.  The remaining microprocessors are used in the telecommunications, industrial, medical, automotive and consumer electronics industries. 

Application-specific integrated circuits (ASICS):  These circuits are customized semiconductors usually designed for one customer and application, and are found in the computer, automotive, industrial, telecommunications and consumer electronics industries.

Digital signal processors: These processors receive, decode, process and encode data from an analog semiconductor to a digital format.  The wireless and consumer electronics industry uses these semiconductors.

Analog or linear: These semiconductors are used to handle real-world signals (sound, light, heat and pressure) and assist digital circuits to convert into digital language.  The telecommunications industry is the major consumer of analog semiconductors.

Memory: These semiconductors include non-volatile memory such as flash and volatile memory such as static random access memory (SRAM) and dynamic random access memory (DRAM). These devices are mostly used in the wireless, consumer electronics, and computer industry.

“Fabless” sector: This sector is comprised of leading U.S. firms that design chips for many applications including wireless and consumer electronic products, and whose designs are then fabricated by other companies known as semiconductor “foundries.”