Microchip industry fights for research and development funding

The U.S. microchip industry has experience battling for scarce research-and-development funds, but this year the fight has intensified as the industry’s technological progress hinges on funding decisions appropriators will make as part of a continuing resolution for 2007.

The chip industry in recent weeks joined many others in lobbying for additional funding in a joint continuing resolution that technically would fund the government at 2006 levels.

However, the chairmen of the House and Senate appropriations committees have leeway to bump up funds where they deem necessary, prompting a lobbying scramble among a myriad of interests.

The microchip industry partnered with a large coalition of universities and other technology groups to push for increased research and science funds.

Microchip companies have been trying for several years to avert what they call a crisis: a potential inability to pack more computing power into ever-tinier chips. Company representatives say they need more money for basic research to reinvent the technology.

Modern life depends on microchips — semiconductors — in computers, cell phones, cars, weapons systems and thousands of other products.

For the last 40 years, the chip industry has lived by Moore’s Law, which states that chip power doubles every 18 to 24 months. This has meant semiconductors continually have become faster, more powerful and less expensive.

To maintain that pace, the industry needs new technology to replace current semiconductors, which are reaching their physical limits. The industry projects that the chips will not get any smaller after 2020. Given the rate of technology development, that date is not far away.

Without new technology, the U.S. semiconductor industry could lose its edge to other countries, endangering U.S. economic strength and national security, those in the industry say. Part of the answer, they say, lies in financing basic research.

“The United States is in a race with other countries on nanotechnology,” a vice president for public policy at the Semiconductor Industry Association, Daryl Hatano, said.

The industry fought last year to achieve an increase in science funding of up to 8 percent in both the House and the Senate appropriations committees, but the increase did not receive final congressional approval before Congress recessed in December.

A yearlong lag in funding would hinder research and development of new technology. “It does not help you in the race with other countries,” Hatano said.

“You can’t take a year off and still win,” a consultant with the Semiconductor Research Corporation, Chris Daverse, added.

The semiconductor industry generates about $250 billion in worldwide sales, with U.S. firms claiming half of the market. 

The U.S. industry reinvests 15 percent of revenue into research and development, but most of that goes to short-term projects to keep up with day-to-day advancement in technology. Long-term development traditionally has relied on federal funding of university research through the National Science Foundation, the National Institute of Standards and Technology, the Pentagon and the Department of Energy Office of Science.

But basic research funding in the physical sciences as a percentage of the gross domestic product has dropped by half since 1970. The industry hoped for more money than the Bush administration has requested in its 2007 budget. It was able to get an increase until the appropriation process was halted after the Republican defeat in November.

The chip industry has been working closely with NSF to co-fund university research in nanoelectronics. NIST also plays a role in ensuring accuracy, which becomes difficult as the work is being done on smaller scales. The industry’s lobbying could be paying off.

Several sources have indicated that there is talk of some additional funds as part of the continuing resolution, but it is unclear how much money will go specifically for the National Science Foundation and NIST, which are funded under the Commerce, Science and Justice appropriations subcommittees. Sources say it could be upwards of $600 million (instead of the original increase of close to $1 billion), but that number could change before the CR is finalized.

The House Rules Committee is scheduled to take on the CR today. The Senate has 10 days to take up the bill after the House approves the CR.

The chairwoman of the Senate panel, Sen. Barbara Mikulski (D-Md.), indicated that the result may come up short of expectations.

“I am deeply concerned that with the CR, science will not get what it needs,” Mikulski said in a short interview. She added that she was “disappointed” that Congress did not pass the appropriations bill through regular order after increased funds had been agreed on in a bipartisan fashion.

“There’s a better way to reach our goals for discovery and innovation” than funding through a CR, Mikulski said. “We are going to push for robust funding for science.”

If appropriators decide to fund science at 2006 levels, they will basically fund it at 2004 levels, according to an industry source. Science funding was cut in 2005 and then brought back to 2004 levels in 2006, said the source.

The chip industry is in part banking on the Democrats’ aggressive innovation agenda, which calls for doubling of basic research over five years.

The White House’s agenda calls for a doubling in 10 years. In a letter to Speaker Nancy Pelosi (D-Calif.) and Senate Majority Leader Harry Reid (D-Nev.) sent earlier this month, the Semiconductor Industry Association said that it is important to begin the doubling process this year.

“Inclusion of the already agreed upon increases for NSF, NIST and the Department of Energy Office of Science in the continuing resolution would be a strong signal that the Congress intends to address the challenges to sustaining U.S. innovation,” the letter read.