George ScaliseGeorge ScaliseGeorge ScaliseGeorge ScalisePresidentPresidentSemiconductor Industry AssociationSemiconductor Industry AssociationPresidentPresidentSemiconductor Industry AssociationSemiconductor Industry Association

2

Charter MembersCharter Members

*SIA Board Company

Advanced Micro Devices*Agere Systems*Altera*AMI SemiconductorAnalog Devices*Atheros CommunicationsConexant Systems*Eastman KodakFairchild SemiconductorFreescale*IBM*Integrated Device TechnologyIntel*International RectifierIntersil Corporation*Jazz Semiconductor

Lansdale SemiconductorLSI Logic* Micron Technology*National Semiconductor*NVIDIA*ON SemiconductorPixelworksPMC-SierraQP SemiconductorQUALCOMM*QuickLogicRambusRochester ElectronicsTexas Instruments*Xilinx*

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Profile of the U.S. Semiconductor IndustryProfile of the U.S. Semiconductor Industry

2005 Sales = $110 Billion

2005 World Market Share = 48.3% of $227.5 Billion Market

U.S. Jobs = 225,000*

Percent of Sales Outside U.S. Market = 77%

R&D Investment = $18 Billion, 17%*

Capital Equipment = $11 Billion, 10%*

Historically about 25-30 Percent of Revenues Invested in the Future

Source: SIA, U.S. DoL* Preliminary Numbers for 2005

4

Although 73% of U.S. chip industry sales are outside Although 73% of U.S. chip industry sales are outside the U.S. market, U.S. chip companies currently have the U.S. market, U.S. chip companies currently have most of their facilities and employment in the U.S.most of their facilities and employment in the U.S.

27% of Sales in U.S. Market

55% of U.S. Industry’s Worldwide Employment in North America

77% of U.S.-Owned Capacity in the U.S.

75 % of U.S. Industry’s Labor Compensation in North America

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Cost of 1MB DRAM: 1974-2008Cost of 1MB DRAM: 1974-2008

0.001

0.01

0.1

1

10

100

1000

100001

97

4

19

76

19

78

19

80

19

82

19

84

19

86

19

88

19

90

19

92

19

94

19

96

19

98

20

00

20

02

20

04

20

06

20

08

Source: DQ/Micron/WSTS

$/MB DRAM

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IT Producing Industries Spur GrowthIT Producing Industries Spur Growth

0

20

40

60

80

100

% of GDP % Contribution to Economic Growth

Non-IT-Intensive Industries

Intensive IT-Using Industries

IT-Producing Industries

IT Producing Industries are: Semiconductors, Computers, Communications, and Software.

(50%)

(25%)

(25%)

(72%)

(25%)

(3%)

Brian L. HallaBrian L. HallaBrian L. HallaBrian L. HallaChairman of the Board,Chairman of the Board,Chief Executive OfficerChief Executive OfficerNational Semiconductor Corp.National Semiconductor Corp.

Chairman of the Board,Chairman of the Board,Chief Executive OfficerChief Executive OfficerNational Semiconductor Corp.National Semiconductor Corp.

U.S. Competitiveness – U.S. Competitiveness – Maintaining the LeadMaintaining the Lead

U.S. Competitiveness – U.S. Competitiveness – Maintaining the LeadMaintaining the Lead

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October 4, 1957October 4, 1957

10

11

Space Race Breeds TechSpace Race Breeds Tech

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Space Race Breeds TechSpace Race Breeds Tech

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Space Race Breeds TechSpace Race Breeds TechSpace Race Breeds TechSpace Race Breeds Tech

……That’s How We Got Here!That’s How We Got Here!……That’s How We Got Here!That’s How We Got Here!

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We’ve Only Just Begun…We’ve Only Just Begun…

The Gold Rush is taking place…

in China

The next Gold Rush is coming...

in India

in Russia

The American Dream?

The Gold Rush is taking place…

in China

The next Gold Rush is coming...

in India

in Russia

The American Dream?

……Maintaining MomentumMaintaining Momentum(Not Screwing This Up)(Not Screwing This Up)

……Maintaining MomentumMaintaining Momentum(Not Screwing This Up)(Not Screwing This Up)

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The “Perfect Storm”...The “Perfect Storm”... AT&T break-up, Bell Labs’ demise

Shortened DARPA funding horizon

Declining foreign PhD candidate enrollment in U.S. universities

H1-B visa concerns limiting foreign PhD career paths in the U.S.

We have no new Sputnik threat

Emerging nations pushing R&D, taxincentives & stock options

U.S. falling behind in deployingnew technology

K-12 schools not filling the pipeline

Distracting priorities

AT&T break-up, Bell Labs’ demise

Shortened DARPA funding horizon

Declining foreign PhD candidate enrollment in U.S. universities

H1-B visa concerns limiting foreign PhD career paths in the U.S.

We have no new Sputnik threat

Emerging nations pushing R&D, taxincentives & stock options

U.S. falling behind in deployingnew technology

K-12 schools not filling the pipeline

Distracting priorities

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Competitiveness ProgramsCompetitiveness Programs Innovate America

Rising Above the Gathering Storm

TechNet Innovation Initiative

Losing Competitive Advantage

Tech Industry at an Innovation Crossroads

Tapping America’s Potential

Computational Science:Ensuring America’s Competitiveness

Sustaining the Nation’s Innovation Ecosystems

Choose to Compete

Innovate America

Rising Above the Gathering Storm

TechNet Innovation Initiative

Losing Competitive Advantage

Tech Industry at an Innovation Crossroads

Tapping America’s Potential

Computational Science:Ensuring America’s Competitiveness

Sustaining the Nation’s Innovation Ecosystems

Choose to Compete

19

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Where We Are GoingWhere We Are Going

Fabulous future for our industry

What’s needed:

Funding for basic research & universities

Access to the best & the brightest

Awareness of the role of technology

Leadership!

Fabulous future for our industry

What’s needed:

Funding for basic research & universities

Access to the best & the brightest

Awareness of the role of technology

Leadership!