US Semiconductor Industry Research Articles

Time is the enemy: The speed of proximity‐based knowledge diffusion

AbstractDoes knowledge spread more quickly when firms are geographically closer? Focusing on knowledge diffusion from multinational enterprises (MNEs) subsidiaries in the context of the US semiconductor industry, our analysis suggests that the broader MNE patents are, in terms of the knowledge sources they draw on, the slower the speed of knowledge diffusion to more spatially proximate firms, compared to more distant ones. Moreover, our findings suggest that this outcome could be attributed to a greater reliance on knowledge sources that are internal to the MNE network or located geographically distant. We provide interpretative cues for these findings and provide policy recommendations in line with our results.

Article: The US CHIPS Act and Its Impacts on the WTO and China

In 2022 the US enacted the Creating Helpful Incentives to Produce Semiconductors (CHIPS) Act, providing USD 52.7 billion in subsidies to enhance the chip manufacturing capacity of the US semiconductor industry, attract American businesses back and encourage foreign investments. The CHIPS Act utilizes subsidies as a countermeasure against foreign subsidies in order to secure US leadership of the global semiconductor industry and advanced technology. This represents a significant policy change for the US semiconductor industry. The Act includes a guardrail clause aimed at restricting the investment in or export of advanced chips to China and this may potentially result in the fragmentation of the global chip value chain and in heightened geopolitical tensions. This paper discusses the objectives, subsidies, guardrail clause and clawback mechanism in the CHIPS Act, and their legality under the WTO. It also explores the impact of the CHIPS Act on the WTO and China. The US CHIPS Act is a politically sensitive issue of economic importance and legal complexity in the US-China relationship. It will also reshape the geopolitics of the global chip value chain. Subsidy poses a challenge for the WTO, and a more effective discipline on both subsidies and export restrictions should be an urgent need in a future WTO reform agenda.

The Impact of Federal Reserve’s Interest Rate Policy on US Semiconductor Industry

The Federal Reserve raised interest rates by 75BP in June. In the meantime, the American government has enacted laws and orders to promote the growth of the semiconductor sector [4]. The purpose of this essay is to assess how the Federal Reserve's interest rate policy has affected the US semiconductor industry. To determine whether it has a beneficial or negative impact on the industry, this research uses the VAR model. This study projects the yield and volatility of semiconductors using the ARMA-GARCH model. The findings demonstrate that raising interest rates encourages greater investment in the stock market, which is advantageous for the semiconductor sector. But as time passes, the yield's volatility rises as well. This paper provides the reason that since the US chip sector has long had a dominant position, chip demand is not price elastic, and the strengthening of the currency is insufficient to reduce chip demand. The outcome is dominated by net capital inflows.

Does Hiring Star Employees Influences Entrepreneurial Orientation?

Prior studies argue that entrepreneurial orientation (EO) pervades across various levels of the organization and that non-managerial employees may be instrumental in influencing firm’s EO. The assumption is that autonomous non-managers may have the ability to influence strategic decision making and resource allocation decisions which may influence firm’s EO. We theorize that in high-tech industries characterized by heightened employee mobility, incoming star scientists play a key role in influencing the EO of the firm. Findings suggest that hiring stars negatively influences the EO of the hiring firm and that hired stars’ knowledge depth is negatively associated with the firm’s EO. In contrast, knowledge breadth and knowledge dissimilarity of the hired stars are positively associated with the firm’s EO. Our study based on a sample of 1916 firm-year observations in the US semiconductor industry between 1986 and 2013, provides a nuanced understanding of hiring star scientists and their influence on firm’s EO.

M&A successes: Breadth, depth, and deal completion time in the US semiconductor industry

Most previous studies examining M&As (mergers and acquisitions) have focused on the post-merger integration process. While there have been studies that have partially investigated the importance of deal completion, we argue that firms could learn to increase their deal completions by leveraging their experience from prior successful acquisitions and that their cumulative success could reduce the deal completion time; that is, the time from the announcement of the deal to its resolution. To address this unexplored issue about M&As, we investigated whether prior intra- and/or inter-industry acquisition experiences helped accelerate subsequent focal acquisitions in the semiconductor industry, which is characterized by rapid technological innovation. We tested our hypotheses on data consisting of 323 acquisition deals in the US semiconductor industry between 2000 and 2013. The results showed that both prior intra- and inter-industry acquisition experiences significantly reduced deal completion time. JEL CLASSIFICATION M10

The Effects of Employee Stock Options on Employee Mobility and Employee Entrepreneurship

Many knowledge-intensive sectors are home to employees that frequently change employers or quit to become entrepreneurs. Such sectors are also home to firms that widely use stock options to compensate rank-and-file employees. One rationale for stock option grants to the rank-and-file suggests that they support employee retention. Another rationale suggests that they promote goal alignment and innovation. We draw on these rationales to explain the effect of nonexecutive stock option grants on mobility and employee entrepreneurship. The retention logic plainly implies a binding effect that limits mobility and entrepreneurship. Alternatively, we build on the incentive logic to argue that stock option grants can trigger mobility and encourage employee entrepreneurship because the experimentation and risk-taking they induce can also contribute to learning about employment fit and new opportunities. We analyze these effects by examining the distribution of and the risk-taking incentives embedded in stock options grants to rank-and-file employees on their movement to existing firms as well as to entrepreneurship in the US semiconductor industry. We find that stock options grants to rank-and-file employees negatively affect employee mobility to other firms, but positively impact employee entrepreneurship. We also find that risk-inducing stock option plans drive employees’ transition to entrepreneurship. Our findings suggest that long-term equity-linked compensation practices designed to support innovation may drive employees to become entrepreneurs.

Between promise and performance: Science and technology policy implementation through network governance

AbstractThis research analyzes the effects of US science and technology policy on the technological performance of organizations in a global strategic alliance network. During the mid-1980s, the US semiconductor industry appeared to be collapsing. Industry leaders and policymakers moved to support and protect US firms by creating a program called Sematech. While many scholars regard Sematech as a success, how the program succeeded remains unclear. This study re-contextualizes Sematech as a network administrative organization which lowered cooperation costs and enhanced resource combination for innovation at the cutting edge. This study combines network analysis and longitudinal regression techniques to test the effects of public policy on organizational network position and technological performance in an unbalanced panel of semiconductor firms between 1986 and 2001. This research suggests that governments might achieve policy through inter-organizational innovations aimed at the development and administration of robust governance networks.

JSR plans big facility in US

The US semiconductor industry may be mature, but don’t tell that to Japan’s JSR and several other foreign chemical companies that are investing in new US facilities to produce key raw materials for the electronics industry. JSR says it will spend about $100 million to build a facility in Hillsboro, Oregon, that produces advanced formulated cleaning products used to clean circuit-covered silicon wafers between production steps such as lithography and etching. Set to open in 2020, the facility will mark JSR’s entry into the “advanced cleans” market, says Mark Slezak, president of JSR Micro. Today, JSR Micro mainly produces materials for photolithography, but Slezak says the firm’s US semiconductor industry customers asked it to bring its quality-management and technical skills to the advanced cleans market as well. Doing that locally will allow the company to have more control over logistics and raw material supply. Hillsboro is home to Intel’s largest

Effects of Innovation Characteristics on Spillover: An Empirical Evidence from US Semiconductor Industry

Effects of Innovation Characteristics on Spillover: An Empirical Evidence from US Semiconductor Industry

Identity and initial structure in inter-firm alliances: a social identity perspective

Purpose– The purpose of this paper is to examine how firms use the identities of their alliance partners in choosing initial governance structures in strategic alliances. It proposes that social identity from the perspective of an established firm participating in an inter-firm alliance can be constructed on the basis of ownership categories and market categories of the firm’s alliance partners.Design/methodology/approach– The study focusses on a sample of 478 alliances involving 36 focal firms in the US semiconductor industry over a nine-year period (1995-2003). The sample is analyzed using logistic regression methods.Findings– The author finds evidence suggesting that joint venture (JV) structures are more likely when an alliance has more partners that identify as privately held firms or subsidiaries of other firms. The results also suggest that JV structures are more likely when an alliance involves strong product market identity with partners and less likely when an alliance involves strong geographic identity with partners.Originality/value– These findings provide some novel insights into potential heuristics that alliance managers use in making initial alliance structure decisions. In particular, this paper contributes to a growing stream of research that considers the optimal alliance structures for different partner configurations by showing the potential influence of partners’ identities in simplifying these important decisions.

Does a strong patent regime discourage innovation?

ABSTRACTDoes a strengthening of the patent regime impact R&D expenditure? For the US semiconductor industry, a strengthening of the patent regime in the 1980s was followed by a sharp increase in patenting but had almost no impact on R&D expenditure. This paper attempts to understand this patent paradox by taking some of the industry features into account. We present a model of invention and product development in complex industries where product development involves putting together a large number of inventions and where licensing of patentable inventions is common. While a stronger patent regime leads to higher patenting in both in presence and absence of licensing, the positive relationship between patenting and R&D is weakened in presence of licensing since licensing provides an alternative way of accessing inventions. A stronger patent regime, therefore, may only create weak incentives to increase R&D, while strongly increasing patenting activities in such an industry.

"Successful M&A experiences: Breadth, depth, and deal duration in the US semiconductor industry"

The majority of previous studies regarding M&As have focused on the Post-Merger Integration process. However, these past studies have neglected the importance of deal completion. Based on the organ...

Managing economic and technological competitiveness in the US semiconductor industry: short– and long–term strategies

The US semiconductor industry has been losing ground to the Japanese industry in the international market. Swift advances in Japanese economic and technological competitiveness have generated fears for the future of US manufacturers of chips. The USA is being forced to look for ways to counteract the present trends and, effectively, to manage the short– and long–term economic and technological development of the industry. In the short–term. defensive measures are being implemented which centre on the US–Japan chip agreement. In the longer term, Americans are betting on a military–backed programme aimed at wiping out the lead Japan has in semiconductor manufacturing technology. The involvement of the military in the international economic context of the 1980s raises several problems for the development of the US semiconductor industry. It remains to be seen whether the success of the military–backed semiconductor development of the 1950s and 1960s can be repeated.

Organizational Scope and Innovation Performance: Evidence from the US Semiconductor Industry

While the knowledge-based view highlights the advantages of vertical integration for internal knowledge sharing, less is known about whether such advantages also extend to the leveraging of external knowledge spillovers for innovation performance. We study how a firm’s vertical scope affects its ability to leverage external knowledge spillovers associated with geographic clusters for innovation performance. Building on knowledge-based arguments we suggest that whether vertically specialized firms or vertically integrated firms benefit more from external knowledge spillovers in geographic clusters may depend on the cluster’s characteristics. Using a sample of 247 firms in the semiconductor industry between 1989 and 2002, we find that vertically specialized design firms are better than vertically integrated firms (design and fabrication) at leveraging external knowledge spillovers in clusters for innovation performance. We find that while vertically integrated firms benefit from the presence of other vertic...

The relationship between corporate social responsibility and corporate performance: evidence from the US semiconductor industry

This study adopts a two-stage approach to explore the relationship between corporate social responsibility (CSR) and semiconductor companies’ performance during 2004–2008. In the first stage, dynamic data envelopment analysis is adopted to explore whether CSR affects US semiconductor firms’ performance, and the difference in performance between CSR firms and non-CSR firms is analysed; in the second stage, panel data regression is used to determine which quantitative indicators of CSR significantly affect the performance of US semiconductor firms. The empirical results show that social responsibility investment by US semiconductor firms has positive effects on their performance. This study thus suggests that the US semiconductor companies should pay more attention to the CSR quantitative indicators, including human rights, employee relationships, and environment issues in order to enhance their corporate efficiency.

Broad Cross‐License Negotiations

In many industries, broad cross‐license agreements are considered a useful method to obtain freedom to operate and to avoid patent litigation. In this paper, I study firm incentives to sign a broad cross‐license as well as the duration of broad cross‐license negotiations. I develop a model of bargaining with learning, which predicts that two firms will enter a broad cross‐license agreement only if their capital intensities are large enough. The model also predicts faster negotiations when firms have high capital intensities and when the frequency of future disputes is low. I confirm these predictions empirically using a novel data set on cross‐licensing and litigation in the US semiconductor industry.

Cancer Mortality Among US Workers Employed in Semiconductor Wafer Fabrication

To evaluate potential cancer risks in the US semiconductor wafer fabrication industry. A cohort of 100,081 semiconductor workers employed between 1968 and 2002 was studied. Standardized mortality ratios and relative risks (RRs) were estimated. Standardized mortality ratios were similar and significantly low among fabrication and nonfabrication workers for all causes (0.54 and 0.54) and all cancers (0.74 and 0.72). Internal comparisons also showed similar overall cancer risks among fabrication workers (RR = 0.98), including process equipment operators and process equipment service technicians (OP/EST) employed in cleanrooms (RR = 0.97), compared with nonfabrication workers. Nonsignificantly elevated RRs were observed for a few cancer sites among OP/EST workers, but the numbers of deaths were small and there were no trends of increasing risk with duration of employment. Work in the US semiconductor industry, including semiconductor wafer fabrication in cleanrooms, was not associated with increased cancer mortality overall or mortality from any specific form of cancer. However, due to the young average age of this cohort and its associated relatively low numbers of deaths, regular mortality updates of this semiconductor worker cohort are warranted.

The US semiconductor industry in the 1990s: strategies and outcomes

The semiconductor industry was one of the chief beneficiaries and drivers of globalization in the 1990s. The competitive environment of that decade provided opportunities for multinational enterprises (MNEs) and domestic firms operating in the US marketplace. The purpose of this paper is to identify whether there are relationships between certain business-level strategies and firm-level performance in the US semiconductor sector. Also, we investigate whether MNEs outperform their domestic-oriented rivals. Using objective measures, we uncover that a low-cost strategy is associated with performance, while focus and differentiation strategies have negative relationships with performance. Also, firm size is strongly related to performance. Our study contributes to our understanding of business-level strategies with its development of new objective measures, while our findings question whether being a MNE is necessarily an advantage in the semiconductor industry. Copyright © 2009 John Wiley & Sons, Ltd.

The US semiconductor industry in the 1990s: strategies and outcomes

Abstract The semiconductor industry was one of the chief beneficiaries and drivers of globalization in the 1990s. The competitive environment of that decade provided opportunities for multinational enterprises (MNEs) and domestic firms operating in the US marketplace. The purpose of this paper is to identify whether there are relationships between certain business‐level strategies and firm‐level performance in the US semiconductor sector. Also, we investigate whether MNEs outperform their domestic‐oriented rivals. Using objective measures, we uncover that a low‐cost strategy is associated with performance, while focus and differentiation strategies have negative relationships with performance. Also, firm size is strongly related to performance. Our study contributes to our understanding of business‐level strategies with its development of new objective measures, while our findings question whether being a MNE is necessarily an advantage in the semiconductor industry. Copyright © 2009 John Wiley & Sons, Ltd.

Analysis: The greening of Silicon Valley

The US semiconductor industry is waking up to the impact of its activities on the environment, writes Luke Collins.