Semiconductor Capacity Decline Will Have Impact

A sharp drop in the United States' leading edge semiconductor capacity over the past five years could be a harbinger of bad times to come, says a report by the Semiconductor Industry Association (SIA).

SIA representatives say the recent drop in leading edge capacity could ultimately result in a reduction in high-end engineering jobs, domestic semiconductor research and engineering college enrollments in the U.S. if the trend doesn't change.

"You're not going to have bright students enrolling in engineering programs, nor will you have universities investing heavily in research if there's not a job at the end of the tunnel," says John Greenagel, a spokesman for the SIA.

Statistics gathered by the organization show that the U.S. leading edge capacity has declined from 35 percent of world capacity in 2001 to 11 percent today as the majority of new 300-mm wafer fabrication facilities have moved offshore. SIA attributes the five-year change to aggressive assistance programs offered by other countries in Europe and Asia. Typically, those countries have extended offers of direct grants, loan guarantees, trading programs and facility site preparations. As a result, fab builders in other countries often can cut $1 billion from the $3.5 billion cost of building and maintaining a new semiconductor fabrication facility.

The trend is of particular concern for engineers because many of the four- and six-inch wafer facilities in the U.S. will reach obsolescence over the next few years, while the 12-inch wafer fabs in other countries will remain. As a result, SIA says, design and research facilities will follow to those other countries, ultimately reducing the number of engineering jobs here.

"Technology development is really best done in close proximity to a fab," Greenagel says. "If the facility is nearby, you can tweak the process and see the wafers very quickly." Greenagel says that the U.S. doesn't necessarily need to return to its dominant level of 35 percent, but he argues the country should maintain a 20-25 percent level if it wants to be technically competitive. The current level of 11 percent, he argues, is not enough to maintain technical competitiveness.

"If we lose more fabs, we're not only going to lose engineering jobs," he says. "We're going to lose all the jobs that go with the fabs."