CONTRIBUTIONS OF THE ELECTRONIC SEMICONDUCTOR TECHNOLOGY TO THE U.S. AND SOME OTHER PARTS OF THE WORLD ECONOMY

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CONTR.I i,:JTION5 ~~I' Z'iiE , LECTRO:~ , ~: SEMICONDUCTOR TECHNOLOGY
TO '1 Ii L?' U . S . AND SOME OTHER i'~~RTS OF TiiE WORLD ECONO:~lY*
:~}'
MICHAF..L B0~2ETSKY
INTRODUCTION
I was asked to give a brief overview of the contribstion the
electronics technology has made to the United States economy. I
was also told that whatever international comparisons I could make
would be wE.Icome. Well, electronics technology goes back to tre
turn of the century--the time Marconi invented his radia_ Ary
attempt to cover the eighty or so years that have gone by since
then would obviously require a rather heroic effort, especially
so if one were to try to do it in the time usually al1o~?;ed for a
c~resentatio:: in such conferences as this--some t~ minutes ar so.
z thi_ntc, however, .that assuming that I have 45 minutes or so
for r r presentation, I can share with yo;~ a numb~:r of, what I thin}~
are, very instructive observations regarding the contributions the
electronic semiconductor technology has made to the U.S. econo:~ly
since about 1958, that is, the time whey. the initial transitor
~.echnology was already "mas.tered," the year in which Jack Kilby of
*Text of the lecture delivered at the CESES International
Seminar on "Microelectronics and Telecommunications: East and
West" in Milan, It:~ly, on October 1, 1981_ Dr. Michael ri,~retsky
is Adviser co the Assistant Se~re~ary for International Economic
Policy in the U.S. Department of CommercE. and Research Professor
of Economics and Business at the. Catholic University of Pu~lerica
in Washington, D.C. The views e~:pressed in this lecture are
those of the authc and they are not n~:cessarily shared by the
U.S. Government or the Catholic University of America.
~~1~:~ r~frr{_3 ~; ~I~~I~=a. y'~ari?~~~r
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.Texas Instruments invented the integrated circuit, the y~ar.in
which the U.S. computer industry introduced its first second-generation
computer (PHILCO 2000), and, most importantly, the year for which
we began getting reasonably good data for the electronics-related
industries. I think I can also share with you a few observations
of how this technology seems to be diffusing throughout the world,
and, at the end, if the time permits, share with you also a few
ideas as to what is likely to happen in or around this technology
in the near future, say, in the next 5 to 10 years.
Before I start giving you these observations, however, let
me make one more introductory remark regarding the nature of the
semiconductor technology. For at least four reasons, this
technology has most probably had no precedence in the histor~~
of. mankind.
First, unlike other technologies, this technology is for all
practical purposes strictly U.S.-made. Of the 19 pivotal
innovations from which this technology evolved, all. but one
originated in the United States (see Appendix), and of the 39
"significant" innovations--a11 but two originated in the
United States.l The pivotal innovations obviously inclu3e such
things as the initial replacement of the vacuum tube by a
transistor (Bell Laboratories, 1947) integrated circuits
(Texas Instruments, 1958), and the invention of the "all-mighty"
microprocessor (Intel Corporation, 1970).
1See U.S. Department of Commerce, International Trade
Administration, Office of Producer Goods, A Report on the
Semiconductor Industry, September 1979, p. I00
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Second, unlike all other technological advances that
preceded this technology, this technology enhances not only the
human muscle and/or permits humans to move around easier, but it
also enhances the human mind.
Third, unlike all,other technological advances which have
affected only certain people and/or certain things, this technology
affects or will affect everybody and everything.
Fourth, this technology seems to have few if any bad
environmental side effects. Some people seem to think that
although this technology does not have any bad environmental side
effects, it has the potential of becoming a perfect oppression
tool of the Orwellian "big brother." So far, however, the evidence
to this effect is too scarce for a systematic analysis of this
potentiality, let alone for .the analysis of such a reality.
Bearing these qualitative characteristics in mind, let me
. turn now to the kind of impact this technology has had on the
U.S. economy.
THE CONTRIBUTIONS 0>~ THE SEMICONDUCTOR
TECHNOLOGY TO THE U.S. ECONOMY
For the purpose of assessing these contributions I assume
that the semiconductor electronics technology affects the economy
entirely, or at least almost entirely, through the suppliers of
computing, calculating and accounting machines and related
equipment, the suppliers of telecorcm~unications equipment, and
the suppliers of electronic components and accessories.
Had there been no semiconductor technology, some of those suppliers
~~o~a.lc. not have bean in the business they are in (such as suppliers
specializing in semiconductor components), and those who would
have been in this business anyway would have grown no more than
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the total private business economy. In other words, all growth
of the industries in question here, and particularly so if this
growth is hig:ner than the growth of the total private business
economy, is assumed to be the function of the semiconductor
technology and the progress made therein. For the sake of brevity
I label the set of industries so affected by the semiconductor
technology as the electronics-dependent sector.2
In making this assessment I have focussed on the sector's
contribution to the private business economy's real growth in
output and employment, growth in productivity, its
impact on the economy's inflation, and its role in the economy's
foreign trade. The timespan considered is the entire period from
1958 to 1980 and the shorter post-microprocessor period from
1972 to 1980. The results of this assessment are summarized in
considerable detail in my handout in the five page table designated
as #1. The highlights of this assessment would seem to be as
follows:
~1} From 1958 to 1980 the electronics-dependent sector grF~a
on the average by 11.2 percent per year, more than three times ss
fast as the entire business economy; and from 1972 to 1980 by
16.8 percent per year, more than six times as fast as the entire
2The alternative approach for making such estimates would be to
assume that without the progress in the semiconductor technology the
industries~in question here ("the electronics-dependent sector")
would have grown at the same rate as all other industries in the
private economy except themselves. It so happens that estimates
consistent with this assumption suggest even somewhat greater
contributions of the progress in the semiconductor technology to
the growth of the total private business economy than the estimates
based on the preceding assumption. Due to space limitations I
abstain from producing here these alternative estimates. Readers
wishing to do do, however, can readily produce them themselves by
appropriately recomputing the figures presented in Table 1.
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business economy. Looking at these growth disparities from
another angle--the increase in this sector's constant-dollar
value of output from 1958 to 1980 amounted to 13.1 percent of
the increase in similarly defined output of trie entire private
business economy and from 1972 to 1980, to 29 percent.3
Moreover, I view this huge contribution as minimum because
the data I used for its calculation ~.~ere derived from the
sector's domestic operations only. In addition to its domestic
operations, the sector has foreign-based income entering the
private economy's GNP. In 1977, the sector's net income
derived from foreign (direct) im~estments amounted ~to about
$1.9 billion, or 3.5 percent of its domestic sales net of
multiple counting, the measure I use in valuing the sector's
output.
(2} The sector's contribution to the business economy`s
growth in employment amounted to 3.0 percent in 1958-1900 and
3.7 percent in 1972-1980--when only the growth in the sector's
direct employment is considered. However, if the sector's
direct and indirect employment is considered, the sector's
contribution to the total business economy's growth in
employment amounted to 6.6 percent in 1958-1980 and to
8.4 percent in 1972-1980.
(3) The sector's most dramatic contribution to the entire
business economy would seem to~have been in the area of (labor}
productivity growth for two reasons--the sector`s own very rapid
3Relating the sector's growth in output to that of total of
manufacturing only, both defined in an identical way, the increase
in the sector's value of output from 1958 to 1980 represented
25 percent of the increase in the output of total manufacturing,
and 63 percent of the increase from 1972 to 1980.
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growth (7.5 percent per year in 1958-1980 and 11.3 percent in
1972-1984) and a very low growth in the entire business economy
(1.4 percent per year in 1958-1980 and 2/10 of one percent in
1972-1980). The result of .these growth disparities was that
from 1958 to 1980 the increase in the sector's real value of
output on~account o~ productivity amounted to 24 to~25 percent of
so defined increase of output of the entire business economy; and
From 1972 to 1980, to as much as 324 to 339 percent. Note that
such contribution, in excess of 100 percent, obviously means that
other sectors comprising the private business economy made a
negative contribution, that is, their productivity declined during
the period in question.
Please, note also that these contributions to the economy's
productivity growth represent the sector's direct contribution
only. In addition, computers and other electronics-related
equipment are believed to generate increased productivity grawth
also in the users' industries. Unfortunately, however, the extent
of this indirect or secondary impact cannot be readily ascertained.
In the communications industry, the most intensive user of computers
and other electronic devices, output per person grew in 1958-1979 by
5.9 percent per year, and in 19721979 by 6.3 percent, that is,
very much faster than in the total private economy. This suggests
that computers a.nd other electronic devices must have played a role
in the rapid productivity growth in this industry. In finance,
insurance and the real estate industry, another heavy user of
computers, however, output per person employed grew by 1 percent
per year in 1958-1979, and by only 4/10 of 1 percent in 1972-1979.
Moreover, there are many firms and, probably even major industries,
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where computers are being used only to produce "printouts" which
have no positive impact on either the quality of management.'s
decisions and increased profits, or generally greater productivity
of manpower, thus constituting a drag on rather than stimulus to
productivity growth. All of this obviously implies that the
electronics-dependent sector's indirect impact on the private
economy's productivity growth has not been as great as is generally
assumed and, in my judgment, it has most certainly been much smaller
than the direct one.
In this connection, we obviously must bear in mind that however
ereat has been this sector's total contripution to the economy's
productivity growth over the period we are discussing here, it has
been, as I recently argued elsewhere,4 unable to offset the weakness
in other segments of the economy and to prevent the drastic decline
~n the total economy's productivity growth we have been witnessing
~.ince the mid-1960'x.
(4) I estimate that in the 1958-1980 period as a whole the
sector's price deflator was increasing at an average rate of about
one-half of one percent, but the whole increase actually took
place in 1958-1972; and from 1972 to 198G this sector's price
deflator was declining at an average rate of 1.3 percent per year.
The private economy's implicit GDP deflator, however, was increasing
at an average annual rate of 4.4 percent in 1958-1980 and 7.5 percent
in 1972-1980. These disparities imply that the electronics-dependent
sector was a powerful retarder of the economy's inflation. I
estimate that from 1972 to 1980 the sector's dollar value of outpu
4See Michael Boretsky, "The Role of Innovation," Challenge,
November-December 1980, pp. 9-15.
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on account of inflation increased by a negative value of $8.4 billion
(-$8.4), whereas the dollar value of output of the entire private
business economy on account of inflation increased by $899.3 billion.
Thus~the electronics-dependent sector's retardation was equivalent
to about 9/10 of. one percent (-0.9 percent). This is tantamount
to saying that had there been no retardation of inflation by the
electronics-dependent sector, the private economy's annual rate
of inflation would have been almost one percentage paint higher
than it actually was.
(5) Finally, the electronics-dependent sector has also been
;: positive, though, comparatively speaking, somehwhat weak force
in U.S. foreign trade. Since 1967 the sector's trade surpluses
ranged from $200 million to as much as $3.3 billion, but in most
of the yearsit was less than half of the upper range. The
reason for the sector's modest performance in U.S. foreign trade
is obviously the sector's large operations, meaning production and
sales, overseas. To a degree thesE foreign operations are
substitutes for exports, but, as noted earlier, they earn profits
for the corporations and these, when repatriated, support the
country's balance of payments as well as increase national income.
In 1977, the sector's operations overseas represent about 40 percent
of the domestic operations, and net income derived from these
operations amounted to about $1.9 billion, equivalent to 3.5 percent
of the sector's domestic sales net of multiple counting_
DIFFUSION OF THE SEMICONDUCTOR TECHNOLOGY
TO THE REST OF THE WORLD
From what we know, the diffusion of the semiconductor technology
has been extremely rapid, at least in comparison caith the speed of
diffusion of other technologies, but highly uneven.
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Based on the 1980 data for production, consumption, and
apparent trade balances in semiconductor devices, compiled by
the~American Semiconductor Industry Association, summarized in
Table 2, Japan's output of electronic semiconductors constituted
about 35 percent and domestic consumption about 39 percent of the
United States. By 1980, Japan also had a foreign trade surplus
in these products amounting to about half a billion dollars.
Inasmuch as Japan's 1980 gross domestic product, valued in
purchasing power equivalents, amounted to about 35.4 percent of
the United. States, it implies that, in terms of the production
of semiconductors per dollar's worth of GDP, Japan was by 1980
on a par with the United States. Zn terms of consumption of the
devices (both for ?.~omestic and foreign customers), it was even
slightly ahead of the United States.
Europe's output of semiconductors in 1980 is estimated to
have amounted to about 19 percent of the United States and
consumption to about 46 percent. Europe was also a heavy
importer of these devises (largely from the United States.
Since Europe's GDP, properly valued, is of about the same
magnitude as that of the United States, the figures imply that
there is substantial gap i:z "mastery" of this technology
between Europe and the United States. Its output per dollar`s
worth of GDP amounts to less than 20 percent of the United
States and its consumption to less than 5G percent. i~2oreover,
since U.S. companies are heavily involved in both the production
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and consumption of semiconductors in western Europe, the genuine
European "mastery" of this technology must be even lower than
these figures nominally indicate.
The figures in the table indicate that the 1980 output of
the semiconductors in all other countries amounted to only
3.9 percent of the United States, and their consumption to only
about 16 percent. Since the aggregate GNP of these countries is
believed to be somewhat greater than that of the United States,
their "mastery" of this technology must be viewed to be in an
infancy stage, and in most uses it is probably nonexisting.
The data on comparative output of computers and related
equipment given in Table 3 imply relatively better European
mastery of this technology vis-a-vis both the United States and
Japan, but overall the gap is still there, especially so since
more than one-half of the European output of computers is known
to be accounted for by IBb1 and other U.S. companies operating in
Europe. Note that of the four European countries represented in
the table, I regret to say, Italy has the poorest performance.
Assuming the figures in this table are reasonably correct,
one must also note Japan's considerably lower standing in
.relative production of computers and, hence, "mastery" of the
whole gamut of computer-related technologies, than in the mastery
of the semiconductor technology as such (i.e., "making chips").
For the kind of broad assessment~I am trying to convey to
you, however, the most revealing data seem to be those on the
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country-origin of patents issued from 1963 to 1979 by the U.S.
Patent and Trademark Office on the area of electronic integrated
circuit structure and microelectronic processing devices (central
processing units and other systems) which the U.S. Department of
Commerce published last February. The reasons for the importance
of these data are: (1) Because of the importance of the U.S.
market for innovations in these two critical areas of
semiconductor technology, most, if not a11, important United
States and foreign inventions in these areas are being patented
in the United States. (2) A relative number of patents obtained
by a country in these two areas of technology is most probably an
accurate representation of the entire area of semiconductor
technology. (3) Patented invention s, much better than any other
indicators, reflect the respective countries' genuine effort at
improving their know-how of a particular technology. (4) The
trend in each country's effort in this respect has greater
predictive power for the future than any other data related to
this technology. These data are summarized in Table 4.
As I see it, these data warrant the following conclusions:
(1) Ir. the aggregate, foreign countries not only still lag
behir_d the United States in the application of the semiconductor
technology as was indicated in the preceding two tables, but they
also still lag in their level of effort to improve the existing
stock of know-how related to this technology.
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(2) The foreign countries' gap in the level of effort to
improve the existing technology relative to the United States,
however, is narrowing. The bulk of this narrowing is produced by
the Netherlands and, particularly, Japan.
(3) Throughout the period, however, the greatest effort tc
improve the existing technology per dollar's worth of GDP was not
that of the United States, but that of the Netherlands. By no~ti~
this U.S. effort seems to be exceeded also by Japan.
(4) In terms of per dollar's worth of GDP, all European
counrtries' level of effort at expanding the frontiers of this
technology, except for the Netherlands, would seem to be only
about 25 percent of the U.S. level, and even less than that
relative to Japan.
(5) Of all the countries specifically listed in~the tabler
with the exception of the USSR, Italy seers to be exerting both
the least effort and to be making absolutely no relative progress
as time goes by.
Final;_y, I must also ccmment, at least brisfly, on the nature
of the massive drive undertaken by Japan, and apparent in these
data, to expand the frontiers of this technology. This drive is
obviously consistent with the longrange plan to transform its
industry into a knowledge-based enterprise and to make Japan an
information-based society, and in the process of doing all of this,
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to replace the United States as the world's technological leader.
I am told that "the plan" is nothing more than a far-fetched
expression of wishful thinking on the part of MITI and of some
other Japanese agencies, and that Japan has no capacity for a
world leadership position because it is not a risk-taker and,
therefore, cannot be fundamentally innovative. To prove this
thesis, reference is usually made to the flow of hundreds of
~atents,underlying the data for Japan in Table 2, most of which
merely improve on and/or extrapolate the fundamental discoveries
produced in other countries and neither of which came so far as
to become a really pivotal innovation. Whether or not this will
be so, only history will tell. What they are doing, however,
produces for them tze kind of competitive advantage on the world
scene that most other coun~ries, especially in Europe, will never
be able to match, let alone to overcome.
WHAT'S AHEAD IN THE SEMICONDUCTOR
ELECTRONIC TECHNOLOGY?
In a lecture like this T oi~viously cannot attempt to make a
full-fledged forecast of what is going to happen in the genera
area of semiconductor technology and when. But instead of
concluding my lecture at this point I thought I would share with
SFor a brief summary of the basis thrust of this plan, see
"Vision for-the 1980s," The Oriental Economist, November 1979,
pp. 12-16
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-- "The microprocessor is free, if you buy its mer..ory
device,"
-- "The minicomputer is free, if you buy its peripherals,"
and
-- "The main frame computer is free, if you buy the
necessary software."
~ The evolution in the technology of data processing of the
past two d~::.::~des will continue in the 1980's with:
-- exponential growth in storage and reliability of the
central processing units (CPUs)- accompanied by
increasing cost effectiveness, and decreasing size of
the units;
-- exponen...ial growth in the use of microprocessors,
especially in the industrial sector (for automation,
.robots, etc.); and
-- increasing functionality of the systems built into the
hardware.
~ In telecommunications, digital transmission will be the
technology of the future. For this reason data processing and
telecommunications industries will become progressively
undistinguishable.
~ Presently such distinguishable industries as manufactures
of computers, manufacturers of office equipment, manufacturers of
communications equipment and manufacturers of semiconductor
components" will become progressively undistinguishable.
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v Japan will become progressively visible on the world scene
in the production, marketing and servicing of all the equipment
which this new integrated industry will entail.
All of these observations imply that, at the minimum, we
should expect continuation of the past trends. It is conceivable,
however, that in at least some xespect, Japan's visibility on
the world scene, might cause us to exclaim:
"YOU ATN'T SEEN NOTHING YET?"
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THE CONTRIBi1TIONS OF THE SEMICONDUCTOR ELECTRONICS
TECHNOLOGYa TO THE U.5. ECONOb1Y, 1958-1980
Item and Measure ~ Estimate
Growth of the electronics-dependent industries (sector)a
compared to the growth of total private business economy:
la. Average annual growth in real output of the electronics--
dependent sector,b $ per year
0 1958-1980 - - - - - - - - - - - - - -- - _ _ - _ _ _ _ _ _ 11.2
v 1972-1980 - - - - - - - - - - - - - - - - - - - - - - - - 16.8
lb. Average annual growth in real output (GNP) of the total
private business economy, ~ per year
4 1958-1980 _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ -- _ -- _ _ 3.6
~ 1972-1980 - - - - - - - - - - - - - - - - - - - - - - - - 2.7
lc. Difference between (la) and (lb), percentage points
? 1958-1980 - - - - - - - - - - - - - - - - - - - - - - - - +7.6
~+ 1972-1980 - - - - - - - - - - - - - - - - - - - - - - - - +I4.1
Contribution of the growth of -the electronics-dependent
sector to the growth of the total private business economy:
laa. The increase in the real annual output of the
electronics-dependent sector,b $Billion (1972)
Q From 1958 to 1980 - - - - - - - - - - - - - - - - - -- - 81.1
~ From 1972 to 1980 - - - - - - - - - ~- - - - - - - 63.8
Ibb. Increase in the private business economy's GNP,
$Billion (1972)
e From 1958 to 1980 ?- - - -- - - - - - - - - - - - - - - - 617.8
~a From 1972 to 1980 - - - - - - - - - -- - - - - - - - - - 219.7
lcc. Ratio of (1aa) to (lbb), ~
o From 158 to 1980 - - - - - - - - - - - '- - - - - - - - 13.1
? From 1972 to 1980 - - - - - - - - - - - - - - - - - - - .29.0
Growth in employment of or induced by the electronics-
dependent sector compared to the growth of employment in the
total private business economy:
2a. Average annual growth in the direct employment of the
electronics-dependent sector, ~ per year
1958-1980 - - - - - - - - - - - - - - - - - - - - - - - 3.7
~ 1972-1980 - - - - - - - - - - - - - - - - - - - - - - - 4.9
2b. Average annual growth in total employment induced by -the
electronics-dependent sector (direct plus indirect),c
~ per year
? 1958-1980 - - - - - - - - - - - - - - - - - - - - - - - 4.3
a 1972-1980 - - - - - - - - - - - - - - - - - - - - - - - 5, 7
2c. Average annual growth of employment in the private
business economy, $ per year
? 1958-1980 - - - - - - - - - - -- - _ _ _ _ _ - _ _ _ - - 2.3
c~ 1972-1980 - - - - -- - -- - - - - - - - '" '' - - - - - 2.5
2d. Difference between (2a) and (2c), percentage points
? 1958-1980 - - - - - - - - - - - -- -' - - - - - - - - - +1.4
m 1972-1980 - - - - - - - - - - - - - - - - - - - - - - - +2.4
2e. Difference between (2b) and (2c), percentage points
c~ 1958-1980 _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ +2.0
e~ 1972-1980 - - - - - - - - - - - - - - - - - - - - - - - +3.2
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Item and Measure
Contribution of the electronics-dependent sector to the growth
cf total employment. in the private business economy:
2aa. Increase in the electronics-dependent sector's direct
d
h
Estimate
employment, t
ousan _ _ _ _ _ _ _ _ _ _ _ _ _ _ 829
o From 1958 to 1980 - - - '" - _ _ _ _ _ - _ _ 474
? From 1972 to 1980 - - - - -- - - - - - -
2bb. Increase in the private business economy's employment
on account of electronics-dependent sector's business
(direct plus indirect) thousand _ _ _ _ _ _ 1,799
? From 1958 to 1980 - - - - - - - - - _ _ _ _ _ _ _ 1,074
From 1972 to 1980 - - - - - -' _ - - - -
2cc. Increase in the private business economy's total
employment, thousand _ _ _ _ _ _ _ _ _ 27,406
~ From 1958 to 1980 - - - - - - -" - _ _ _ _ _ _ _ _ 12, 801
? From 1972 to 1980 - - - - - - _ - - -
2dd. Ratio of (2aa) to (2cc), $ _ - _ _ _ _ 3.0
From 1958 to 1980 - - - - _ - _ - - - _ _ - _ 3.7
m From 1972 to 1980 - - - - - - - - - - _ -
2ee. Ratio of (2bb) to (2cc), ~ _ - - 6.6
? From 1958 to 198G - - - - -- - - - - -' - '~ - _ _ _ 8.4
? From 19 7 2 to 19 8 0 -- r ~ -- -- - - - '- '"
Growth in labor productivity in the electronics-dependent
sector compared to the productivity growth in the total
private business economy:
3a. Average annual growth in the electronics-dependent
sector's output per person employed (directly in the
sector), ~ per year _ _ _ _ _ _._ _ _ - - 7.5
e 1958-1980 - - - - - - - - _ _ ~ - - - - - - r - - _ _ 11..3
? 1972-1980 - - - - - - _ - - -
? 3b. Average annual growth in the private business economy's
output per person employed, ~ per year _ _ - _ - _ _ 1.4
1958-1980 - - - - - - - - - - - -- - - - - - - ?- - -- - -- 0.2
~ 1972-1980 - - - - _ - '~ -
3c. Difference between -(3a)w and (3b),d percentage points
~ 1958-1980 - - - - - - - - - - - - -- - - - - _ _ _ _ _ ~ +6.1
- +11 1
.
.
a 1972-1980 - - - - - - - - - - - - - - - - - -- - - .
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TH~ip~l"OA~.~f:~4HI.R~$ 2~7fd~~12S:~:~~,QB>i ~~lCA'(4~91~~~~~~16609-5
TECHNOLOGY TO THE U.S. ECONOMY, 1958-19801-Cont. (3}
~~~ Item ahd Nieasure Est
imate
Contributions pf the electronics-dependent sector to the
growth of labor productivity in the private business
economy:
3aa..Increase in electronics-dependent sector`s real output
on account of productivity growth considering the
sector's direct employment only, $Billion (1972)
? From 1958 to 1980 - - - - - - - - - - - - - - - - - - - -
70.3
m From 1972 to 1980 - - -~ - - - - - - - - - - - - - - - - -
51.8
abb. Increase in the electronics-dependent sector's real
output on account of productivity growth considerin
the sector's direct and indirect employment, Billion
`~ ~ From 1958-1980 - - - - - - - - - - - - - - ~- - - - - - -
67.9
? From 1972-1980 - - - -- - - - - - - - - - - - - - - - -
49.5
3cc. Increase in the total private business economy`s GNP
on account of productivity growth, $Billion (1972)
~ From 1958-1980 - - - - - - - - - - - - - - - - - - 284.4
From 1972-1980 -- -- - - - - - - - - - - - - - - - - - - - 15.3
add. Ratio of (3aa) to (3cc) , ~
? From 1958-1980 - - - - - - - - - - "' - - "' - - - - 24.7
e From 1972-1980 - -- - - - -- - - - - - - - - - " - - - 338.6
See. Ratio of (3bb) to (3cc), ~
~ From 1958 to 1980 ------------------------- 23.9
?From 1972 to 1980 ~--_--------------------~---- 323.5
t. Inflation in the electronics-dependent sector compared to
that in the total business economy:
4a. Estimated average annual rate of growth of deflator
for output of the electronics-dependent sector,
$ per year
? 1958-1980 - - - - - - - - - - -- _ _ _ _ _ _ _ _ _ _ _ _ _ 0.5
~ 1972-1980 - - - - - - - - - - - - - - - - - -- - -- - - - - -1.3
4b. Average annual rate of growth of deflator for the
private business economy's GNP, g per year
? 1958-1980 - - - - - - - - - - _ _ _ _ _ _ _ _ _ _ _ _ _ _ 4.4
~ 1972-198G - - -~ - - - - - - - - - - - - - - - - - - - - - 7.5
4c. Difference between (4a) and (4b), percentage points,
0 1958-1980 - _ _ _ - _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ -3,g
~ 1972-1980 _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ -8.8
4A. Contribution of the electronics-dependent sector to the
retardation of inflation in the private business economy:
4aa. Increase in the dollar value of the electronics-
dependent sector's output on account of inflation,
$Billion .
? From 1958 to 1980 - - - - - - - - - - - - - - - - - - - -6. 9
o From 1972 to 1980 - - - - - - - -- - - - - - - - - - - -8.5
4bb. Increase in the dollar value of the private business
economy's total output ors account of inflation, $Billion
? F-rom 1958 to 1980 _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ 1, 058.1
? From 1972 to 1980 - - - -~ - - -- - - - - - - - - - - - 899.3
4cc. Ratio of (4aa) to (4bb), $
e~ From 1958 to 1980 - - - - _ _ _ _ _ _ - .... .- _ _ _ _ _ -0.7
~ From 197.2 to 1980 - - - - - - - - - - - - - - - - - - -0.9
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T11131.I:: 1
THL CONTRIIiU`I'IONS OF THE SEt?9ICONDUCTOR ELECTRONICS
TECHNOLOGY TO TFiE U . S . ECONOI~IX , 19 5 8 -19 8 0 --Cont . ( 4 )
Contribution of the electronics-dependent sector to the
economy's balance of trade:
~s The electronics-dependent sector's balance of
trade,
$Billion
1967
- - - - - - - - - - - - - - - - - - - - - - - - - -
0.6
1972
- - - - - - - - - - - - - - - - - - - - - - - - - -
0.4
1977
- - - - - - - - - - - - - - - - - - - - - -- - -- - -
1.3
1978
- - - - - - - - - - - - - - - - - - - - - - - - - -
0.2
1979
- - - - - - - - - - - - - - - - - - - - - - - - - -
1.5
'~ 1980
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
3.3
aThe semiconductor electronics technology affects the economy entirely or
almost entirely through supply of computing, calculating, and
accounting equipment (industries SIC 3573 and 3574), telecommunication
equipment (SIC 3651, 3661 and 3662) and the supply of electronic
components (SIC 367). I label-the set of these industries as electronics-
dependent sector. For the purpose of the present analysis I assume that
the growth of this sector has been entirely or almost entirely a function
of the improvements or progress in the semiconductor technology.
bThe real output of the electronics-dependent sector is measured here by is
sales n_et of multiple counting valued in 1972 dollars (which from production
point of view, is equivalent to the sector's value added plus the net. cost of
raw materials, energy and other purchased supplies). The extent of multiple
counting is calculated from input/output tables (available for 1958, 1963,
1967, and 1972).
The sector's contribution to the private economy's GNP as calculated
here is somewhat understated because the data used here are derived
from the sector's domestic operations only. In addition, the sector
obtains substantial income from its large direct investments abroad.
Tn 1977 its sales abroad amounted to about 40 percent of the dornes~ic
anal its net income derived from foreign direct investment amounted to
$1.9 billion, or 3.5 percent of its domestic sales net of multiple
counting.
`~Direct employment in the sector is regularly reported in official
statistics. The indirect employment is approximated via input/output
and related employmen procedure.
dComputers and other electronics-related equipment tend to generate
increased productivity growth also in the users' industries. However,
the extent of this impact cannot be readily ascertained. In the
communications industry, the most intensive user of computers and
other electronic devices, output per person grew in 1958-1979 by
5.9 percent per year, and in 1972-1979 by 6.3 percent, that is, very
much faster than in the total private economy, and this suggests that
computers and other electronic devices played a role in this rapid
growth. In finance, insurance and real estate industry, another
heavy user of computers, however, output per person employed grew in
1958-1979 by 1 percent per year, and in 1972--1979, by 4/10 of
1 percent only. There are many firms and, probably, even major
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T~~'p~4r~x~8~.~~~ 28~'7~42 S X981 ~1~1~~8~4~9-5
TECHNOLOGY TO THE U.S. ECOt`IOMY, 1958-1980'-Cont. (S)
industries, where computers are being used only ~o produce "printouts"
with no positive impact on either the Quality of manactement's
decisions and better pxofits, or generally ctreater productivity of
manpower, thus constituting a dxag on rather than stimulus of
productivity growth.
~eIn calculating the electronics-dependent sector's deflator, I used the
relevant data from the Bureau of Economic Analysis (BEA) and the BLS
except for the deflator for computers and related peripherals. For
computers and related peripherals I used a deflator index declining
by 10 percent per year, in line with a rather persuasive evidence to
that effect, rather than the BEA index which does not change at all
(assumed to be 100 throughout the time period).
'Sources: U.S. Department of Commerce--Bureau of Economic Analysis,
Bureau of Census and Bureau of Industrial Analysis; and
Department of Labor, Bureau of Labor Statistics.
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T~'~F+Lt: 2
COMPARATIVE OUTPUT, CONSUMPTION AND TRADE BALANCES
OF ELEERICAN) SEMICONDUCTORSINDUSTRY ASSOCIATIOND
BY (AM
Apparent
i
Balance
ade
T
Output (Producticn
on
Consumpt
.
r
1l~ona $ of
illiona
$ of
Bi
Country
$ Billiona
$ of
S
$ B
iJ.S.
Consum tion
and/or Re ion
United States
10.2
.
U .
100.0
8.0
100.0
+2.2
Europe
1.9
18.6
3.7
46.3
-1.8
48.6
-,5apan
3.6
35.3
3.1
38.8
+0.5
-"
.
Other
.4
3.9
1.3
16.3
-0.9
69.2
The World
(Western)
16.1
157.8
16.1
201.3
--
??
aThe dollar values were apparently derived by multiplying the underlying
values in foreign cur.rerisins powerfequivalentsnof these currenciesnfore
relative domestic purcha g
these products. The relative physical magnitudes of the respective
outputs, consumption and trade balances might, therefore, be somewhat
different than the percentages shown in the table.
Source: Semiconductor Industry Association, The InMarcht1~81, p. 2?
Micralectronic Challenge (Advanced Copy),
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~l'ABLI?', 3
-COMPARATIVE OUTPUT OF COMPUTERS AND RELATED EQUIPMENT (PERIPHERALS)
' VALUED IN DOLLARS OF (ECONOMY-WIDE) ROUGHLY COMPARABLE PURCHASING
POWER, SELECTED YEARS 1970-1980
Item and Country
1970
A. Comparative Absolute
Level of Output:
United States
100.0
West Germany
15.0
France
na
~ Italy
na
United Kingdom
na
Japan
26.0
B. Comparative Level
of Output Per
Dollar's Worth of
GDP:
0
100
United States
.
West Germany
68.5
France
na
Italy
na
United Kingdom
na
Japan
91.5
P = Preliminary
p
p
1975
1976
1977
1978
1979
1980
100.0
100.0
100.0
100.0
100.0
100.0
1.26
12.7
13.7
12.0
10.6
10.0
na
na
21.1
19.2
17.5
16.1
na
na
na
4.5
4.4
3.9
17,8
13.1
11.3
10.3
9.4
7.5
25.7
24.7
.22.6
23.7
25.1
25.1
100.0
100.0
100.0
100.0
100..0
100.0
59.2
59.9
66.2
58.5
50.7
46.9
na
na
112.2
103.2
93.6
84.7
na
na
na
37.5
35.8
30.5
83.6
82.9
72.9
69.1
63.9
51.7
80.6
76.5
70.0
72.5
74.5
70.5
Sources: Bureau of Industrial Economics, Bureau of Labor Statistics and
individual country data
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CO~JN7:=R1'-ORIGIN OF PA'FEf~TS ISSUED BY U.S. PATENT AAJD TRADEM.~.RK OFFICE
?. N' ^1 HE AREA OF ELECTRONIC IP4TE`GRATED CIRCUIT STRUCTURE AND MICRO-
ELECTRONIC PROCESSING DEVICES (CPU's AND OTHER SXSTE2?IS) IN 1963-1979
1963-1979
1975-1979
Number of Patents
Gauntry to Which
Nun;ber of
~ of
Number of
g of
Per Dollar's ~ti~orth
i'atents ~Aere Issued
-
Patents
U.S.
Patents
U.S.
of GDP Relative
to U.S.
1963-1979
1975-1979
United States
1,841
100.0
636
100.0
100
100
Al1.Foreign Countries
811
44.0
400
62.9
NA
NA
--~ West Germany
.150
8.1
63
9.9
39
47
--- France
69
3.7
25
3.9
21
21
--- Netherlands
105
5.7
46
7.2
143
175
-- Italy
9
0.5
4
0.6
5
5
-- United Kingdom
71
3.9
27
4.2
23
27
-- Japan
380
20.6
215
33.8
80
106
-- USSR
5
0.3
5
0.8
...
...
--- All Other
22
1.2
15
2.3
NA
NA
= Insignificant
Source: U.S. Department of Commerce, Patent and Trademar}e Office, and
U.S. Bureau of Labor Statistics
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GDi~PRY-0RiGIN l?F PIVO'I~L ADVAIS..`'?S IN ;,L'~LTQ~II~X.iCJR ELE?X.TI2CNTCS SL's: 1947
Gauntry- Year
Oriq in
U. S.
1947
U.S.
1948
ij. S.
1949/50
U.S.
1951
U.S.
19`1/59
U.S.
1951
U.S.
1954
Transistr~r
Effect
Junction
Transistor
Crystal
?~l~?
Alloy Junction
TectuLiques
Field-Effect
Transistor
Zone Refining
Diffusion
III-V Ca~paurh'ls
Theznnoxtl~ress ion
Bonding
Integrateri
Circuits
Planar
Transistor
Ion
Implantation
Light-IInitting
Diodes (LID'S)
C1-urge-Coupled
Devices
ElectrorBeam
Exposure Sys teen
Basic discovery '-,hat a crystal of scsnicorrluctor
material can replace a vacu~xn tube
Transistor whose crystal has "j~ct-ions" -planes
where the type of elect?ical oorw'uctivity changes
frrsn positive to rx'gative
Technique for grcxaing a single crystal of
transistor cp~ality from a molten material
Ca~mescial process of forming ' 7tuicti-o::s" on
crystals - of significance in the early
transistor era
Type of transistor in which motion of electrazic
ctrarcles is oaritrolled by an i.rc~sed elec`~.rical field
Technique for rESnovirx~ urcwant~ irrgurities from a
crystal
Technique for i**.~lanting desirable impurities into
a crystal
Comprising el~.nts fzrxn groups III arx7 IV of
periodic table; used in solid-state lasers, I.ID's,
micn~ave devices
Ir~ortant process for making integrated circuits:
a crystal is o~~ere3 with an oxide layer unto Bch U.S. 1956
a pattern is etched
Precision tec3ulique for attaching wises to
semiconductor surfaces
TecYuiique for printing microscopic patterns on
f^uctars to form circuits aril
surface of sertuoan~ U.S, 1957
devices
Camrising nary transistors azd other circuit U,S. 1;33
elc~~ts - cortain~ in semioonch~tor "chips"
Transistor whose ~stal is dated with?oxide - tY~
fabrication process proved irapartant in development
of integrated circuits U. S. 1959
Process for "building" a crystal of ire electrani.c
type onto a crystal of another type U.S. 1960
Technique for irrplantinq ele~reirts into a crystal by
?~~ardmn~~' wztl'r the ionic forms of the eler,~errts L'.S. biid-1460's
Devices that provide light for illumination or spots U S 1965
of light for generating display ct>