Semiconductor technology and the newly industrializing countries: The diffusion of ASICs (Application Specific Integrated Circuits)

Abstract

Within the complex of information technology (IT) industries, the semiconductor (SC) industry plays an extremely important role as provider of the building blocks for IT products and systems. During the mid-1980s, a new revolution was heralded in SCs—the shift to so-called application specific integrated circuits (ASICs). According to some, ASICs represent a move from mass production to flexible specialization in SCs. This paper examines international market and technological trends in ASICs, arguing that the main feature of ASICs is a gradual technological decoupling of SC circuit design technology from manufacturing (or fabrication) technology. One of the effects of decoupling is likely to be the emergence of an important independent design sector which serves the downstream users of SCs. With ASIC technology the crucial SC design task is no longer the sole prerogative of the small oligopoly of large international SC manufacturers. For the more dynamic and well-developed newly industrializing countries (NICs), reductions in the barriers to the design and application of SCs may well improve market opportunities in IT industries such as consumer electronics, computing and telecommunications. Failure to acquire SC design capabilities could lead to competitive disadvantage among IT industries in the NICs. The paper provides an analysis of the likely industrial impact of ASICs at the international level and explores possibilities for policy responses within the NICs.