With the US election FINALLY behind us, SEMI dedicated a recent installment of its free CEO Webinar Series to analyzing the impact of the US election on the microelectronics industry. The 90-minute event kicked off with presentations by Gerald Butts and Kevin Allison, both of Eurasia Group, who, respectively, provided a macro-view of the post-US election world and US-China trade, and the implications on the semiconductor and overall technology sector.
Following the presentations, moderator James Andrew Lewis, from the Center for Strategic and International Studies (CSIS) lead a panel discussion comprising C-suite executives from key semiconductor companies including:
- Mitsunobu Koshiba, Chairman of the Board, JSR
- Bertrand Loy, President, and CEO, Entegris
- Stephen Schwartz, President, and CEO, Brooks Automation
- Tien Wu, Director and CEO, ASE Group and USI
It was a great conversation, and I recommend you take the time to watch the recorded session here. Here, I captured some of the key takeaways as I understood them.
Butts and Allison talked about the overall impact of the Trump presidency and the election on the semiconductor industry and made a plea to semiconductor industry CEOs to provide guidance to our policymakers who, in reality, understand very little about the semiconductor industry.
Butts noted that unlike his post-World War II predecessors, Trump did not see prosperity around the world as a positive thing. “He thought the world was getting ripped off by everyone…we’re suckers,” he said. The resulting chaos was born by the erosion of the post-war consensus of the US.
“While Trump is gone, the underlying causes of Trumpism are alive and well,” said Butts. “Biden is inheriting a reputational deficit for the US abroad. Almost everyone was cheering for Joe Boden, but the fact that Trump happened needs to be addressed. We are not going to move back to a post-war consensus on trade issues and China issues.”
Butts said the perspective of China has changed rapidly in the US, particularly on the topics of national security and the digital economy. “What was once seen as good is now seen as a significant long-term security threat,” noted Butts. He called on CEOs in the semiconductor industry to act as diplomats. “Diplomacy will return with a vengeance in the Biden administration and all of us should be part of the discussion,” he said.
For his part, Allison focused on what these geopolitical shifts and trends mean for the semiconductor industry. “Technology is one of the best hopes we have for solving critical global challenges such as climate change and the pandemic.” He cited Industry 4.0, the internet of things (IoT), trusted AI, and 5G networks as being some of the most complex things humans have ever undertaken, and they all have geopolitical consequences. He says domestic policy technology policy, and foreign policy should be related, and the Biden administration is open to more collaboration. The problem is, most elected officials understand very little about the industry value chain, and the unintended consequences that result from the policies they put in place.
Like Butts, he urged us to become diplomats. “We know more about our industry than anyone in politics – we are the experts and know what needs to be done,” noted Allison.
During the ensuing panel discussion, Lewis (CSIS) said he was a little more “gloomy” about the impact. While we should not expect a change in US policies regarding China – and China is getting a bad reputation – but that the Biden administration is at least interested in working with the industry.
Bertrand Loy expressed a desire to approach the situation with China more optimistically. He said China is a superpower that is here to stay. China’s model is resilient and successful, and the world is taking notice of its successful handling of the pandemic and economic recession. As antagonism between the US and China has grown, he says he hopes the two super-powers find ways to collaborate in areas of shared interest, such as climate change and public health. “As the US re-earns its credibility and seat at the table, it will embrace new ways to collaborate with China,” he said. “We want to compete in a respectful way. We don’t want to treat them as enemies. I hope the new administration can do that.”
Stephen Schwartz concurred and talked about the importance of collaboration (in Europe and North America) and the global interdependence of our supply chains. “Breaking these links would be devastating for us,” he said. He urged that we adopt a united front, not to “gang up” but as a way to align ourselves and move forward. China has made commitments over the next 10 years, and we need to make sure these same investments are made in Europe and North America, he said.
One question that Lewis put forth was the viability of establishing licensing policies. This led to a complex discussion. Mitsunobu Koshiba said he believes what the US government is trying to do with a licensing policy is to protect advanced communication technology, namely 5G. The US is asking for fair competition between all countries involved by establishing “fair and reciprocal common ground.”
Tien Wu noted that protectionism is real and that a shift to a “multiple parallel universes” is a real scenario that is gradually taking place. But Wu said he doesn’t think licensing policies work because these policies apply to the past, not the future. Competing in the future requires investment, co-design collaboration, new product introductions, and future growth. “Licensing policies might ease the pain, but in any practical sense, it doesn’t define the industry,” he explained. “the industry is defined by innovation, time-to-market, and how you scale.”
The main takeaway from this discussion is that with the Biden administration, there is now an opportunity for SEMI members to re-engage and help shape better public policies that are fair, practical multilateral, and specific. For a more in-depth understanding, the recording of the webinar is available here.