Albany Symposium On Global Semiconductor Issues Expands Perspectives On A Critical World Industry

The Albany Symposium on Global Semiconductor Issues opened this past Sept 10, here on the shores of New York's historic Lake George, with a stellar list of speakers and with an objective that was clear: to familiarize semiconductor industry attendees with economic and geopolitical issues that are now shaping the industry's future.

If attendee response is a measure, the Symposium was eminently successful. Opening session presentations included those by Albany Symposium Chairman Juri Matisoo, vp for Technology, Semiconductor Industry Association (SIA); George Scalise, SIA president and San Francisco Federal Reserve Board member; John E. Kelly III; SIA Chairman and IBM senior vice president; Bob Helms, new president and CEO of International Sematech; Prof. Dale W. Jorgenson, respected Harvard economist and director of the Program on Technology and Economic Policy at Harvard's Kennedy School of Government; and Keynote Speaker, New York Gov. George E. Pataki, who highlighted New York's efforts and 1 billion dollar program to become a center of 21st century technology. Mentioned prominently in the governor's remarks was the state designated University at Albany Center of Excellence in Nanoelectronics, one of the focus centers of the Albany NanoTech umbrella organization that co-hosted the Symposium.

No civilized human being could have imagined the profound events of the following day -- events that will have far reaching, yet to be revealed consequences for the industry, the U.S., and the world. Attendees were dismayed and shaken over the tragedy in New York City and Washington, D.C. For those who had offices in the World Trade Center, the impact was immediate and personal.

Despite the painful and deeply disturbing events that drew attention elsewhere, the Symposium pushed forward to completion and was lauded by those who attended for presenting a fresh perspective on the business dynamics that govern the semiconductor and equipment manufacturing industries. Symposium participants clearly welcomed the economic insight offered by industry leaders, technologists, economists, and Wall Street analysts. "This is a welcome change from the typical industry tech conference," was a comment heard from numerous attendees.

Broad themes emerge

Opening the Symposium, SIA president George Scalise noted the relationship between information technology (IT) and the growth of the semiconductor industry. Scalise pointed out that IT now leads economic growth in the United States and around the world, accounting for one-third of U.S. GDP growth over the last decade, even though IT enjoys only an 8% share of the economy.

Invited lecturer Harvard University Professor Dale Jorgenson observed that the rate of innovation in the semiconductor industry drives productivity growth across the economy. He noted that the spectacular growth in the latter half of the 1990s followed directly from the industry's 1994 shift from a three-year to a two-year product cycle. This rapid introduction of improved technologies into the rest of the economy, if sustainable, should fuel speedy growth through the current decade, Jorgenson said.

The Symposium confronted current market softening as some speakers pointed to a reorganization in manufacturing and management that has slowed further technology adoption. However, focusing on the positive, John Kelly III, Senior Vice President of IBM's Technology Group and this year's SIA Chairman, stressed that the industry must prepare for the surge in demand that is on the horizon. This, said Kelly, requires the industry to build capacity now in the latest technology, a position reflected by IBM's multibillion-dollar commitment to facilities in New York's Hudson Valley and its 100 million dollar support of efforts at Albany NanoTech.

Several analysts offered varying estimates of the timing of the recovery from the current downturn. Timelines ranged from 4Q01 to 3Q02. Carl Johnson of Dallas-based Infrastructure foresees weak recovery in early 2002 but observes that end use equipment manufacturers will be challenged to offer consumers really attractive selling propositions.

Many speakers attributed the persistence of current conditions to widespread excess semiconductor manufacturing capacity, and they looked to international markets to help clear inventories. Among those holding a more conservative view, Shekhar Wadekar of Dain Rauscher Wessels speculated that demand would remain limited until late in 2002, a situation created by component price collapse and excess capacity.

While there was general consensus that demand will ultimately rebound, it is unclear just now how the events of Sept 11 will impact projections.

The downturn has reminded the industry that cycles remain a permanent part of the economic landscape. In this vein, issues of cyclicality and economic modeling were addressed by Anirvan Banerji of the Economic Cycle Research Institute in New York and, in detail more specific to the semiconductor industry, by Sematech senior staffers Randy Goodall and Dave Anderson.