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Defending the IP of the US Semiconductor Industry

September 29, 2014, anysilicon

This is a guest post by Apek Mulay that was originally publish on EBN.  


Dramatic political and economic shifts are common in the Middle East. In addition to profound impact on those regions, these changes also inform the path forward for the US semiconductor industry. It is very important to understand macrohistory to help analyze the impacts of geo-political events on the operation of businesses.

 

Today, the US semiconductor industry has a huge vested interest in the Middle East. According to the Census of foreign trade, United States firms exported nearly $24.81 billion worth of goods to the United Arab Emirates (UAE).

 

Further, leading semiconductor companies are developing deep ties with the region. For example, well-known full-service semiconductor foundry GlobalFoundries is owned by Advanced Technology Investment Company (ATIC). ATIC, meanwhile, is owned by Mubadala Development Company, a wholly owned investment vehicle of the Government of Abu Dhabi, in the UAE. The ATIC is also planning to set-up a 300 mm fab in Abu Dhabi in near future.

 

As ties between the UAE and the US semiconductor industry develop, we must remain aware of the potential implications of these shifts.

 

Applying a framework 
An idea from writings on macrohistory by an Indian philosopher and spiritual leader provides a helpful framework for this discussion. The Law of Social Cycle has its source in the concepts of Macrohistory presented in Shrii Prabhat Ranjan Sarkar‘s philosophical treatise, titled Ananda Sutram, along with original concepts of metaphysics, epistemology, and ethics.

 

 

Figure 1: Law of Social Cycle explained in pictorial form. As shown in figure above, control of society keeps moving from intellectuals to acquisitors to laborers to warriors in a clockwise or anti-clockwise direction depending on the domination of intellectuals, acquisitors, warriors, or laborers.

Figure 1: Law of Social Cycle explained in pictorial form. As shown in figure above, control of society keeps moving from intellectuals to acquisitors to laborers to warriors in a clockwise or anti-clockwise direction depending on the domination of intellectuals, acquisitors, warriors, or laborers.

 

 

According to Sarkar’s writings on macrohistory, in this movement of the social cycle, one class is always dominant. The movement of the social cycle in a clockwise direction in Fig 1 (shown by blue arrows) constitutes an “evolution” if it occurs after a sufficiently long duration. If this clockwise movement occurs within a short duration, this is called “revolution.” The movement of the social cycle counter-clockwise in Fig 1 (shown by orange arrows) constitutes a “counter evolution” if it occurs after a significantly long duration. This counter-evolution is extremely short-lived. However, if this anti-clockwise movement occurs within a short duration, it is called “counter revolution.” Counter-revolution is even more short-lived than counter-evolution.

 

Professor Ravi Batra from SMU, Dallas, analyzes the successful operation of the Law of Social Cycle in his 1978 book The Downfall of Capitalism and Communism: A New Study of History. Based on this analysis, Professor Batra correctly predicted the collapse of Soviet Communism 15 years before it occurred.

 

The above concept of Macrohistory could be used to analyze the recent social and political events like the Arab Spring in the Middle East. Based on this law, as shown in Figure 2 below, the rise of fundamentalism would have grave consequences on the US semiconductor industry because the industry relies on its investments coming from the Middle East.

 

 

Figure 2: Recent Social events in Egypt complying with Shrii P.R. Sarkar's Law of Social Cycle showing different stages of Evolutions and Counter Revolution.

Figure 2: Recent Social events in Egypt complying with Shrii P.R. Sarkar’s Law of Social Cycle showing different stages of Evolutions and Counter Revolution.

 

 

We have discussed in the past how the US may be accused of transferring economic dominance to China through its trade and monetary policies. At the same time, it is clear that the UAE is also growing its economic ties with China.

 

The inability of the US congress to pass a balanced budget has forced UAE to grow its economic and political links with China and China has also signed a currency swap deal with the UAE. The growing ties between China and Abu Dhabi will influence Abu Dhabi’s decisions in the best interest of China, which may not be in the best interest of the US.

 

Abu Dhabi’s ownership of GlobalFoundries in New York will act as leverage in the transfer of advanced semiconductor manufacturing technology from its fab in New York to its upcoming fab in Abu Dhabi. Growing ties between the UAE and China could also transfer this technology to China in the future as the UAE is no way financially dependent on US.

 

Taking into consideration the threat of transfer of technology to China, the US needs to undertake major reforms to have a balanced economy. Additionally, while the US should support growth of education and infrastructure in UAE, it must also strive to ensure that the intellectual property (IP) of its semiconductor industry is protected.

 

Hence, a top-notch fab like GlobalFoundries should become financially independent of any foreign investments coming from Middle East. As a first step, wafer fabs should develop symbiotic partnerships with the US Government to ensure the sustainability of its capital investments. (Read more here.)

 

Let us know what you think about the smartest path forward for US semiconductor manufacturers in the comments section below.