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THURSDAY, APRIL 30, 1992.

TESTIMONY OF MEMBERS OF CONGRESS AND OTHER INTERESTED INDIVIDUALS AND ORGANIZATIONS

SEMICONDUCTOR MANUFACTURING TECHNOLOGY
WITNESS

HON. J.J. PICKLE, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF
TEXAS

INTRODUCTION

Mr. MURTHA. The Committee will come to order.

Today we will hear testimony of public witnesses and several members of Congress will also testify. We appreciate all of you coming today. Our first witness today is the Honorable Jake Pickle.

I want to welcome the distinguished Member from Texas who is a dynamic, enthusiastic, influential Member who protects all of Texas, and not only works for his district, but the entire State of Texas.

We are limiting everyone to five minutes today.

Mr. Pickle.

STATEMENT OF CONGRESSMAN PICKLE

Mr. PICKLE. You are very generous. After that very complimentary introduction, I would like to have 10 minutes to respond, but I want to comply with your rules.

I am very pleased that the Committee would invite me to testify this morning. I am here on behalf of SEMATECH and the appropriations for this coming year.

Mr. Chairman, I am here to request a $100 million appropriation for SEMATECH in 1993. That is the same amount we have had for the last five years. SEMATECH members have already pledged their $100 million for the next five years. They have enjoyed that relationship with the DARPA defense agencies for the last five years. We are asking for the same amount.

The President's budget was $80 million. We feel strongly that that ought to be raised to $100 million and I am encouraged by responses we have received from various Members of the Congress in furtherance of full funding for 1993.

This organization, SEMATECH, was established in 1987. It is a government industry cooperative effort. I have two summations: SEMATECH has been successful in its primary mission over the past five years. That is, to help the semiconductor equipment manufacturing industry.

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Secondly, SEMATECH has been successful. There is a continued need for government to join with industry to help semiconductor technology.

For example, one, the VLSI Research Company of San Jose, California, which is a leading world market analyst, said that the world market share of American semiconductor equipment industry has increased by nearly three percent this last year. Its report says that development has occurred as a noteworthy milestone for SEMATECH which has been working closely with all these companies to improve American manufacturing. That is a world research organization who made the survey saying for the first time in 20 years our semiconductor equipment has been going down. Now it has made a turn and is going up and credit for that goes to SEMATECH.

For example, Motorola in Austin has just built a new $650 million MOS laboratory. When they started out, it was estimated they were going to have to buy approximately 75 percent foreign equipment in order to build that $650 million plant. With the help of SEMATECH, they reversed that percentage so that they ended up buying 80 percent of that equipment from American companies rather than foreign companies-concrete evidence that the effectiveness of the organization has been helpful to them.

The National Semiconductor Corporation recently opened a chip fabrication market that would be the one piece of Japanese equipment, the rest all American equipment. That shows that we are doing it.

Intel says improvement has led to a vast increase in domestic expenditures. For five years we have had a cooperative effort with industry and government. It has been a success. The member companies are strong for renewal. They are willing to commit their $100 million a year in cooperation with the government. They have found successes. The big companies and the little companies are working together. That is tremendously important, Mr. Chairman, because for the first time we have seen the little companies can honestly discuss and have communication with the big companies. The lions and the lambs haven't laid down together yet, but they are talking.

This government must have some kind of a cooperative effort. Government has to have joint ventures, has to be a partner with high tech. That is about the only program that has that full cooperation. It should be expanded in every way possible.

Mr. MURTHA. Let me interrupt and say if it were not for youand this Committee has discussed that at great length-this program would not have been funded. We are pleased to hear the results have been so favorable. We will do everything we can to continue the appropriation at $100 million. Thank you very much, Jake.

Mr. PICKLE. I have high hopes for your generosity.

[The statement of Mr. Pickle follows:]

TESTIMONY OF CONGRESSMAN JAKE PICKLE
ON SEMATECH FUNDING

SUBCOMMITTEE ON DEFENSE APPROPRIATIONS
APRIL 30, 1992

I am pleased to appear before this Subcommittee and its distinguished Chairman today in support of SEMATECH, a program which has been a successful example of government-industry collaboration not just to protect a crucial part of our defense industrial base, but also to save and help create American jobs. SEMATECH was formed in 1987 by 14 American semiconductor and computer firms and the Defense Department to ensure that the United States would not become dependent on foreign sources of supply for semiconductor chips, an indispensable component to many of our weapons systems. Today every major weapons system, from F-18 fighters to Tomahawk cruise missiles to military communications systems to weapons guidance systems, uses technology which has been benefitted from SEMATECH. Industry has provided $100 million in each of the last five years for SEMATECH, money that has been matched by $100 million each year from the Defense Advanced Research Projects Agency (DARPA).

It is fair to say that there was another reason that SEMATECH was founded: to bring government resources to bear on a sector of our economy which is vital to our economic well-being. SEMATECH was envisioned as a bold experiment in cooperation between government and industry, and was given a five year charter to produce results. While SEMATECH has indeed produced results, the consortium has also come to understand that the challenges facing the U.S. semiconductor industry cannot be met in the relatively short time horizon of five years. For that reason, SEMATECH is seeking funding beyond its initial five year charter. I believe there is bipartisan support for continued support for SEMATECH: the President's budget includes $80 million for SEMATECH for FY 1993 and there has been consistent and vocal support for SEMATECH from Democrats and Republicans in Congress.

I am here today to ask for continued support for SEMATECH from this Subcommittee and request that SEMATECH be given $100 million in appropriations this year, which is equal to what it has received in each of the last five years. SEMATECH's member companies have already pledged $100 million in industry support for next year.

When evaluating the successes of SEMATECH after five years, it is important to recognize that SEMATECH was not given the overly-ambitious mission of reviving the American electronics industry. It was instead given specific goals and has been resoundingly successful in meeting them. For

example, a primary goal of SEMATECH has been to improve the health of the companies which manufacture the equipment which makes semiconductor chips. One of the things that our Japanese competitors do well is foster communication between chip manufacturers and the companies which build the highly specialized equipment that chip manufacturing requires. This kind of communication and cooperation is something in which the American chip industry has historically been lacking. SEMATECH brings these small semiconductor manufacturing equipment makers -- like Applied Materials -together with the larger chip makers like Advanced Micro Devices -- to ensure that the right technical challenges to chip manufacturing are being addressed in the right way.

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What have been the fruits of SEMATECH's efforts in this area? After years of decline, U.S. semiconductor equipment suppliers staged a comeback in 1991. According to VLSI Research Inc. of San Jose, U.S. chip equipment suppliers increased their world market share by nearly 3 percent last year, growing from 38.0 percent in 1990 to 40.8 percent in 1991. In its report, VLSI Research stated that this increase is "a noteworthy milestone for SEMATECH, which has been working closely with all of these companies to improve American manufacturing."

In addition to this important data, there are plenty of examples of American chip producers turning to U.S. chip equipment makers for their needs. Last year, Motorola opened up its new $650 million MOS-11 semiconductor fabrication facility in Austin, Texas. Early in the planning stages, Motorola thought that it would have to use 75 percent foreign equipment in the facility and only 25 percent American equipment. By the time the plant opened, MOS-11 had 80 percent American equipment and only 20 percent foreign equipment. Motorola has said that this dramatic turnaround would not have been possible without SEMATECH. Similarly, National Semiconductor Corporation has said that the quality of American semiconductor manufacturing equipment has improved to the point that only one piece of Japanese equipment will be needed in its new plant in Texas. Intel Corporation, one of America's most successful chip companies, has cited improved quality among chip equipment suppliers as its reason for increasing purchases of American-made equipment by roughly $150 million. Both National Semiconductor and Intel give SEMATECH credit for their additional purchases of American equipment. This means that, because of SEMATECH, American jobs and tax revenue are staying in the U.S. and not going overseas.

On other fronts, SEMATECH has made outstanding strides in lithography, the technology needed to pack more circuits on chips and thus create more powerful and valuable chips. With SEMATECH's help, current lithography technology produces circuit linewidths of 0.8 micron (one micron

is 1/100 the width of a human hair). In laboratory tests, SEMATECH has demonstrated manufacturing technology able to yield 0.5 micron linewidths. By the end of this year, SEMATECH plans to be at the 0.35 micron level. Developing technology to make more powerful chips in higher-efficiency production runs is key to keeping America on the cutting edge in the semiconductor industry. SEMATECH is leading the way in this effort.

As impressive as these accomplishments have been, Congress needs to know what SEMATECH plans to do in the future. For that I encourage Members to take a look at SEMATECH's 1991 annual report, which I have included with my testimony. Let me summarize the core of SEMATECH's future plans:

Future Factory Design: the trend in the semiconductor industry is

toward more complex and expensive chip fabrication plants. The more specialized and dense the chips, the more research- and capital-intensive the plants will cost in the future -- on the order of $2 billion by early in the 21st century, or twice today's cost. Another trend is toward flexibility and customization in bringing innovations to market quickly. Companies and their manufacturing facilities will have to adjust to changing markets very fast in order to compete. SEMATECH's new mission is to create fundamental change in manufacturing technology so that U.S. semiconductor companies have the flexibility to maintain world-class status.

With Future Factory Design as its goal, and flexibility and customization as organizing concepts, SEMATECH has identified five "technology thrusts" for its future work. These are: lithography, multi-level metal, furnaces/ implant, manufacturing systems, and contamination free manufacturing. To attain these technology goals, SEMATECH will continue to work with universities (SEMATECH now has 11 Centers of Excellence in 31 universities in 14 states), our national laboratories, and others to ensure swift technology transfer of SEMATECH's work and the highest quality in its technology programs.

I won't pretend to be able to answer technical questions about SEMATECH's plans for the future. But I think that we all know enough about the highly-competitive nature of today's economy to know that government and industry must work together to organize for quality production of goods in a rapidly-changing world marketplace. That is the essence of what SEMATECH is about -- fostering communication between our semiconductor producers and equipment makers so that industry can solve common pre-competitive technology problems and thus bring the best semiconductor chips to market ahead of the competition.

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