Five years on and Sematech, the joint US government and industry attempt to rescue an ailing semiconductor fabrication equipment industry, is in trouble. A report by the General Accounting Office says that the Department of Defense plans to cut funding as from next year, the Wall Street Journal reports, and given its $500m contributions over the past five years, that will leave a sizeable hole in Sematech’s finances. The problem is compounded by the fact that 10 of the 12 industrial members have said they won’t increase their contributions to compensate for the shortfall. Sematech’s supporters acknowledge that it’s a critical time and pressures are likely to intensify, but the problems, say some observers, are a product of Sematech’s success. According to VLSI Research Inc, the five largest equipment suppliers actually gained market share in 1991, and domestic chip maunfacturers that had gone to the Japanese in recent years, are now buying American. Motorola Inc say that 80% of the chip-making equipment at its Austin, Texas plant is made in the US, and Intel Corp intends to buy an additional $150m of US kit, money that would have gone to foreign suppliers in the recent past. Nonetheless, Sematech’s woes mirror those of its backers. Fierce price cutting and competition are forcing manufacturers to look to their laurels, and some are demanding that Sematech justify future finance. But the crux of the problem is the Pentagon’s decision to curtail investment. The Defense Advanced Research Projects Agency has been a strong supporter of Sematech, but according to the Congressional report, it has decided to shift focus. It intends to channel $80m a year into semiconductor manufacturing research and development, but rather than put it all into Sematech, it will split it between Sematech, individual companies and universities. The Agency’s rationale is that Sematech is no longer in its infancy and it’s time the chip industry started paying for the consortium’s research work. Most of the members praise Sematech’s achievements – developing chip-making technology that produces devices with ever-decreasing circuitry – but only 50% say that they are breaking even or seeing a return on their investment. IBM reckons that it won’t recoup its $100m investment until 1996, and Rockwell International Inc is more forthright, saying that Sematech has reached the point of sink or swim. Of course, it wouldn’t happen in Japan and the irony is that the consortium was created to match and emulate the successful Japanese model of government and industry co-operation.
