R&D

SEMI has guided a proof-of-concept (POC) project since 2018 at Cornell University. Funded by the Army Research Labs to demonstrate an AI model that predicts the precise patterned features on the chip – the tinier and more precise the features, the higher the chip performance.

I recently spoke with Shi about his talk Looking Forward to the New Chip Cycle during the opening of the 2023 Design Automation Conference, collocated in July with SEMICON West in San Francisco.

The U.S. Department of Commerce on February 28 opened the application process through the CHIPS Program Office for the initial tranche of funding under the $52 billion CHIPS Program – marking the first opportunity for SEMI members and other companies in the U.S. semiconductor supply chain to apply.

Jay Vleeschhouwer, managing director of Griffin Securities, has followed the EDA industry as a leading financial analyst for 25 years and is a popular speaker at the annual Design Automation Conference. Vleeschhouwer discusses his DAC presentation The State of EDA: A View from Wall Street.

AEM Holdings Ltd, a Singapore-based multinational corporation, is listed in Forbes Asia’s 200 Best Under A Billion 2019 and 2020 spotlighting small and midsized companies in the Asia-Pacific region with sales under $1 billion. AEM clinched the Singapore Business Review Technology Excellence Award 2020 for Analytics-Semiconductor and the Singapore Business Awards Enterprise Award 2019/2020. These achievements are testament to AEM’s vision and innovation and the company’s contributions to the increasingly complex testing of chips in a rapidly evolving technological world. I spoke with AEM CEO Chandran Nair, a new Regional Advisory Board (RAB) member of SEMI Southeast Asia, about the company’s intelligent test and handling solutions, its role in digital transformation, the company’s key role in the smart manufacturing movement and the growth prospects for Singapore’s electronics sector. SEMI: AEM’s application-specific, intelligent system test and handling solutions for semiconductor and electronics companies serve the advanced computing, 5G and AI markets. How do you differentiate your solutions from those offered by competitors? Nair: A key differentiation for AEM is that we work closely with our customers to develop application-specific integrated test and handling solutions that meet their needs in a scalable manner from lab to production. We offer our customers customized, full-stack test and handling solutions that give them the agility to accelerate their delivery cycles and enhance product quality. Over the years, AEM has developed and acquired world-class technologies in instrumentation, test, automation, robotics, optical inspection, high-end thermal control, and software. These technology pillars, along with our deep know-how to customize test and handling solutions using the technology pillars as a platform, enable AEM to meet the fast-changing needs of our customers faced with the challenges of testing heterogeneous and complex devices. In addition to investing in technology, AEM has also invested in delivering application-specific solutions to meet customer demand. Our recently announced acquisition of CEI with its manufacturing capabilities in Vietnam and its specialization in low-volume, high-mix manufacturing increases our geographical reach and our ability to quickly turn application-specific test and handling solutions to be deployed. We have a unique and differentiated approach that enables our customers to test high-performance computing devices, automotive devices, and mobility devices with maximum test coverage, cost-effectively, in a manufacturing environment. Our experience in serving the high-performance computing market that traditionally drives advancements in thermal control also puts us at the forefront of delivering comprehensive thermal management, vision, and deep automation and test solutions for the computing, automotive, and mobility markets. AEM also has a strong instrumentation portfolio, including high-density digital instruments and mixed-signal and protocol-aware instrumentation that is well-suited for ATE solutions for SoC, high-power devices, and CMOS image sensors. Over the last few years, we have also established leadership positions in developing and deploying application-specific test solutions for MEMS devices and offering wafer and frame probing stations suitable for R D, wafer sort, and final test. We form strong partnerships with our customers, provide them with end-to-end support in product development, and take them through the entire life cycle process from concept to mass production. Chandran Nair and Goh Meng Klang, vice president of operations, at the AEM manufacturing site in Singapore. (Photo credit: AEM) SEMI: Digital transformation is powering strong growth of advanced computing, 5G and AI. Will AEM be expanding its AEM manufacturing plants in China, Malaysia and Singapore to meet rising demand for these technologies in the coming years? Nair: In regards to manufacturing, AEM currently has manufacturing facilities in Singapore, Malaysia, the U.S., Finland, and China. With our recently announced acquisition of CEI, we will add manufacturing capability in Vietnam and Indonesia. AEM will continue to expand manufacturing appropriately to give our customers cost-effective solutions while maintaining our proven track record of delivering on time and scaling rapidly in times of crises like the pandemic or geopolitical disruptions. As for advanced technologies, the three key factors that will bring the full potential of 5G to fruition are 1) cost-effective, high-powered processing devices at the edge, 2) easy access to high-bandwidth communications, and 3) cost-effective sensor technology. Semiconductors are the primary drivers of these three key success factors. As devices become more complex and our reliance on semiconductor-powered devices in all aspects of our lives deepens exponentially to include mission-critical applications, AEM’s role is to ensure that our customers' electronic and semiconductor devices are shipped thoroughly tested, safe to use, and highly reliable. It is imperative that, as a testing company, we find innovative ways to help our customers test their products with maximum coverage and minimum cost. To do this, we are focusing our R D efforts and investments to continue building on our key technology pillars to ensure that we stay ahead of the curve when it comes to test and handling solutions. We prepare our customers to test increasingly complex devices manufactured on the latest process node. SEMI: During your career you’ve driven projects in test and automation and more recently robotics solutions for ports, logistics warehouses and transport. With robotics and automation a key part of Industry 4.0, what role do AEM solutions play in powering the smart manufacturing movement? Nair: The smart manufacturing movement is powered by semiconductors, software and increasingly by artificial intelligence (AI). Test is at the heart of the process of ensuring that semiconductor and electronics devices reach the consumer well-tested for reliability. With our vision of enabling A Zero Failure World, AEM addresses the necessity for safe, highly reliable devices. The semiconductor companies themselves are adopting smart manufacturing methods. AEM’s tools are Industry 4.0-ready, and we continue to invest in machine learning and data analytics, which are integral to the future of test. Our tools are automated and feature embedded sensors to provide our customers with data about tool usage, the state of a machine’s health, and more. Our tools are connected to our customers’ manufacturing automation platforms. Additionally, we continue to invest in our ability to better slice and dice test data to understand trends and patterns to help our customers analyze data and make decisions faster. SEMI: You also have experience heading autonomous vehicle projects. With the COVID-19 pandemic hastening digital transformation, do you see an acceleration in the development of fully autonomous vehicles and smart manufacturing? Research and development efforts for autonomous vehicles (AV) continue at a fast pace worldwide. With shutdowns and restricted movement rules globally, the pandemic has hastened digital transformation in many ways. The delivery of goods and services is transforming, and AV will surely play a part, especially in secure environments for autonomous transport. The pandemic has accelerated the development of autonomous vehicles and smart manufacturing technology in automation-friendly environments like factories and ports. SEMI: At the recent Global Technology Summit hosted by SEMI, you spoke about testing innovations to meet the demands of highly complex devices. Please elaborate on innovative testing solutions versus traditional testing? Nair: AEM offers a disruptive and differentiated solution, one that is driving a paradigm shift to asynchronous, modular, highly parallel, smart testing solutions. ​ The traditional approach of ATEs to test increasingly complex devices on advanced nodes has reached a point of diminishing returns as it gets exponentially more expensive to increase test coverage to acceptable levels. Additionally, as devices get more complex and companies are rapidly adopting heterogeneous packaging technologies, the realization that System Level Test (SLT) is necessary is forcing a rethink of the entire test process. AEM’s provides asynchronous, modular, highly parallel test cell solutions that enable each test cell to run SLT, final test, or burn-in all in one system and its ability to handle hundreds of test cells independently with each test cell testing multiple devices. Our solutions suddenly make comprehensive testing of every complex device cost-effective. Freeing us from legacy ATE allows AEM to provide these innovative solutions to our customers. AEM engineering and manufacturing teams in Singapore at work on semiconductor test and handling systems for global deployment at world-class semiconductor facilities. (Photo credit: AEM) SEMI: Singapore seems to be in the sweet spot of digital transformation. Singapore’s industrial production grew 8.6% year-over-year in January 2021, an expansion driven mainly by a surge in sectors including electronics, and more growth is seen in the year ahead. Digital technologies such as 5G technology and cloud computing together with continued demand for work-from-home equipment is behind this growth. What are the growth prospects for the region’s electronics sector? Nair: Singapore is well-poised to benefit from the current digital transformation accelerated by the adoption of these technologies during the pandemic. Being a safe, well-governed country with strong IP protection, excellent infrastructure, and the rule of law, Singapore is in a great position to play a central role in cloud-based services, 5G, and the semiconductor industry. Singapore’s semiconductor sector output is at a record high, and the prospects for renewed growth in the region are very good. SEMI: As a new Regional Advisory Board member of SEMI Southeast Asia, how is your industry experience relevant to the scope of this role? What opportunities lie ahead for the region? Nair: I am honored to represent AEM in the SEMI’s Southeast Asia RAB. The SEMI RAB can influence policymakers with ideas and information on the current and future needs of the industry. I also believe that SEMI Southeast Asia can cultivate a strong innovative semiconductor ecosystem that helps regional and global growth. I look forward to working with other very experienced and accomplished board members. Bee Bee Ng is president of SEMI Southeast Asia.

The state of Penang, nestled along the northwest coast of Peninsular Malaysia, needs no introduction in the global electronics manufacturing sector. Despite its diminutive stature with just over 1,000 square kilometers of land area and a 1.8 million-strong population, Penang commanded an estimated 5% of global semiconductor exports in 2019, according to data compiled from the Department of Statistics Malaysia (DOSM) and UN Comtrade. The State’s transformation, from a traditional seaport economy into the Silicon Valley of the East, began in the 1970s, when the establishment of Malaysia’s first free trade zone in the State drew key investments from eight Multinational Corporations (MNCs). These pioneering investors – Intel Corporation, Hewlett Packard (now Keysight Technologies and Agilent Technologies), Robert Bosch, AMD, Litronix (now Osram Opto Semiconductors), Hitachi (now Renesas), Clarion and National Semiconductor[1] – sparked the development of a robust ecosystem of ancillary industries, which formed a foundation for the State’s rise as a prominent, offsite manufacturing hub. Today, Penang houses more than 350 MNCs that are supported by over 3,000 manufacturing-related SMEs. As Penang flourished as a vibrant, regional E E manufacturing hub, the local talent pool steadily accumulated a wealth of business intelligence and technical experience, enabling the robust supply chain to evolve in tandem with technology megatrends. This, in turn, enabled the State to focus on pursuing investments that have propelled the industry up the value chain, away from its beginnings as a low-cost manufacturing hub. Consequently, Penang has seen a proliferation of upstream technology-related investments in high value-added functions in recent years, ranging from research and development (R D), design and knowledge-based solutions, and downstream advanced manufacturing and testing to global business service (GBS) and Centre of Excellence (CoE) activities. Penang’s growing significance in the global E E value chain is demonstrated by its steady and resilient export performance in recent years. From 2014 to 2019, the State’s E E exports grew at a compounded annual rate (CAGR) of 12% to reach RM210 billion (US$51 billion). It has emerged as a hub for professional, scientific and controlling instruments (including medical technology), with exports of these products growing at a 5-year CAGR of 15% to reach RM23 billion (US$6 billion) in 2019. E E products, alongside professional, scientific and controlling instruments, collectively contributed between 77% and 82% of Penang’s total annual exports since 2014, and accounted for 50% of Malaysia’s exports in these two segments during the period. More impressively, despite the disruptions from the COVID-19 pandemic, Penang’s total exports continued to rise in 2020, growing 7% year-on-year to RM310 billion (US$75 billion), and a further 14% year-on-year in January and February 2021, driven by strong global demand for semiconductors. Shaping up as the destination of choice for advanced manufacturing investments As part of efforts to move Penang’s industry up the value chain, the State government has placed emphasis on attracting companies with strong commitments in implementing Industry 4.0 and sustainable investing. These efforts have yielded positive results, with the state having gained traction as a hub for advanced manufacturing investments. This is evidenced by the rising trend in investments per new job creation, which saw a six-fold jump from 2012 to 2020, as well as the number of global heavyweights announcing new investments as well as expansions of existing facilities in the State in 2019 and 2020. Penang attracted RM31 billion (US$7.5 billion) in approved direct manufacturing investment inflows in 2019 and 2020, 88% of which involved investments into the E E, equipment and medical technology industries. Prominent new investments included those from Lam Research, Bosch Group, Ultra Clean Holdings, Dexcom as well as Smith+Nephew. Together with planned expansions by a number of existing MNCs in Penang, these new investments, which are on track to commence operations between 2021 and 2023, are poised to bring Penang’s industry to greater heights and further integrate the State into the global value chain. Recent Notable Direct Manufacturing Investments in Penang Source: InvestPenang and respective companies Penang’s conducive business environment nurtures successful homegrown technology companies Penang’s conducive business environment has not only proven successful in attracting foreign direct investments (FDIs), but also successfully nurtured local E E success stories of locally employed engineers turned technopreneurs, who have founded and built companies that have successfully grown to become internationally renowned in their own right. These homegrown E E companies play crucial roles in the ecosystem, particularly in the areas of automated test equipment (ATE), automation, outsourced semiconductor assembly and testing (OSAT) services, electronics manufacturing services (EMS), precision engineering and tooling. The past five years have also seen the emergence of young, fast-growing Penang-based companies such as Experior, Oppstar Technology and Skyechip, which provide IC design and IC test design services to MNC clients globally. Public-private partnerships cultivate Penang’s talent development roadmap The state is cognisant that the development of a robust and skilled talent pool is imperative to support the growth of strategic industries in Penang. Strong public-private partnerships with concerted efforts in supporting talent development are key to Penang’s continued success. Toward this end, the State government has backed Penang Skills Development Centre’s (PSDC) industry-led training and education efforts, which have helped train over 200,000 of workers to support the industry’s needs since 1989. The State has also coordinated collaboration for industries to provide input to local institutions of higher learning on the relevance of the institutions’ courses, and rallied the industry to support State-run scholarships (Penang Future Foundation) and STEM initiatives. Holistic initiatives to make Penang a world-class investment destination for global frontier companies The dynamics of the global value chain, especially for the technology sector, have evolved rapidly since 2018, particularly amid the complex confluence of trade protectionism, COVID-19 pandemic-driven issues and disruptive technologies. The State government believes that strong, geographically localised industry clusters could help companies mitigate the risks of supply chain disruptions, in addition to improving companies’ time-to-market at a lower cost. To further increase Penang’s attractiveness for high quality investments, the State is focusing on three key strategies: Extending its competitive edge in advanced manufacturing, further strengthening Penang’s industry clusters, which include expediting SMEs’ Industry 4.0 transformation journey, and nurturing more homegrown companies to penetrate the global supply chain Embarking on a continuous drive to develop and recruit talent to the State, as well as cultivate the younger generation’s interest in STEM Enhancing Penang’s liveability with a strong focus on making Penang a smart and green city The State government is committed to continue developing Penang in a holistic manner, with the aim of creating a vibrant business and investment destination with a robust and sustainable economy and high standard of living, creating a conducive environment to “work, live, learn, play and invest.” About InvestPenang InvestPenang is the Penang State Government’s principal agency for promotion of investment. Its objectives are to develop and sustain Penang’s economy by enhancing and continuously supporting business activities in the State through foreign and local investments, including spawning viable new growth centres. To realize its objectives, InvestPenang also runs initiatives like the SMART Penang Centre (providing assistance to SMEs), Penang CAT Centre (for talent attraction and retention) and i4.0 seed fund (a catalyst for the start-up ecosystem). For more information, contact [email protected]. InvestPenang also works closely with various industry associations, including SEMI, to promote Penang’s supply chain and E E ecosystem. InvestPenang is delighted to have collaborated with SEMI on numerous occasions since 2015 and endeavours to sustain the partnership in the years to come, including for the SEMICON SEA 2022 exposition to be held in Penang. [1] No longer present in Penang following a corporate M A exercise.

Recent semiconductor supply chain constraints have drawn the attention of Washington policymakers at every level. Exasperated by the global pandemic, customers of semiconductor manufacturers have sounded the alarm about the chip shortage and the downstream consequences for end-user companies and consumers. Global automakers have suffered the brunt of the impact, shuttering factories and slashing vehicle production. Last month President Biden issued an Executive Order (EO) to review and secure America’s supply chains. The stated goals of this review are to revitalize and rebuild domestic manufacturing capacity, maintain America’s competitive edge in research and development, and create well-paying jobs. Under the EO, the U.S. will also work more closely with allies to strengthen supply chains. The EO directs supply chain reviews on several critical segments, including semiconductor manufacturing and advanced packaging. The Department of Commerce will identify risks throughout the U.S. semiconductor supply chain and make policy recommendations to address those risks within 100 days of the EO’s issuance. In coordination with the White House, Congress is contemplating a variety of measures to address supply chain issues. Recently, the Senate Finance Committee held a hearing on the effects of the U.S. tax code on domestic manufacturing. Both Chairman Ron Wyden (D-OR) and Ranking Member Mike Crapo (R-ID) highlighted their desire for bipartisan cooperation to use the economic tools within the jurisdiction of the committee to bolster domestic manufacturing. The committee discussed two pieces of legislation that would provide significant incentives to domestic manufacturing of semiconductors. The first was the investment tax credit (ITC) for semiconductor manufacturing that was included in last year’s CHIPS for America Act but not with the other semiconductor incentives in the FY2021 National Defense Authorization Act (NDAA). An ITC would provide predictability and stability in the U.S. tax code to promote large, long-term investments for the industry. The second was the American Innovation and Jobs Act, which repeals the R D amortization requirement set to go into effect in 2022 and expands the refundable tax credit for startups and small businesses. Enhancing domestic incentives for R D and manufacturing is an important step in putting the U.S. on equal footing with other countries and would promote its continued leadership in the chip industry. Senate Majority Leader Chuck Schumer (D-NY) has announced his intention to craft a package of measures to strengthen U.S. competitiveness vis-a-vis China. The package reportedly would include funding for the microelectronics R D and Commerce grant programs that were passed in the NDAA. The Senate plans to take up the legislation in April. SEMI applauds the renewed focus on incentivizing domestic manufacturing and R D for an industry that enables countless technologies, drives innovation in sectors throughout the U.S. economy, and powers the electronic systems essential to critical infrastructure and defense systems. We look forward to working with policymakers in Congress and the Administration to support the entire domestic semiconductor ecosystem. Kimberly Ekmark is director of Public Policy and Advocacy at SEMI

Over the next five years the Taiwan government plans to invest NT$1.546 billion to build the workforce direly needed for future semiconductor industry research and development. The largesse is a tribute to efforts by SEMI president and CEO Ajit Manocha to enhance the competitiveness of the semiconductor industry by stressing the importance of talent development during his annual visits with the Taiwan president. He has been instrumental in bringing together Taiwan government agencies and local industry representatives – two players in developing the talent pool of the future – to discuss workforce initiatives.As the talent gaps threatens to choke the long-term growth potential of the chip industry, Manocha has emerged as a passionate champion of workforce development. In a letter to more than 2,000 semiconductor companies worldwide, he urged to executives act together to build the workforce vital to industry growth. In 2018, he met with Taiwan President Tsai Ing-wen to discuss ideas for attracting and retaining skilled workers to help ensure Taiwan remains a top investment destination for high-tech multinationals.In early 2019, SEMI Taiwan established its SEMI Taiwan Workforce Development Council to promote talent and career development. Already, the group’s work is resonating in the global semiconductor industry. In September last year, Manocha joined executives from industry heavyweights ASE, MediaTek and TSMC in a visit to President Tsai to urge the government to pursue industry sustainability through talent development. President Tsai responded by instructing her staff to review government resources available for talent development, help drive public-private dialogue and partnerships, and form talent development projects involving the government, industry, academia and research institutes.To carry out comprehensive workforce initiatives, SEMI Taiwan continues to work with the National Security Council and the Executive Yuan (the cabinet). We also launched the Semiconductor Industry Development Council in partnership with leading high-tech companies in Taiwan including ASE, TSMC, MediaTek, PSMC, VIS, MXIC, Nanya, Etron and UMC. Focused on developing semiconductor talent and technology, localizing equipment sourcing, and improving cybersecurity, the council has formed the following seven initiatives: Make existing government talent development programs more flexible to better meet the industry’s workforce needs. Recruit outstanding scholars and leading experts in scientific research, and solicit world-class scientific research teams. Extend age restrictions and other requirements for the Einstein Program (established by the Taiwan MOST, Ministry of Science and Technology) to attract outstanding foreign scholars to Taiwan. Establish a domestic semiconductor research ecosystem and provide sufficient research funding to cultivate R D talent. Strengthen female education in STEM (science, technology, engineering, mathematics) and encourage women to re-join the workforce to help meet the industry’s workforce needs. Continue to promote MOST University-Industry Collaboration Projects (Large Alliance) to connect the upstream academic and research sector with downstream industries. Encourage cooperation between science and technology universities and the chip industry to develop the talent necessary for smart manufacturing to thrive. SEMI’s advocacy efforts with the Taiwan government, the industry and academia are clearly paying off. The Executive Yuan recently announced three major talent development strategies – expanding the talent development capabilities of higher education institutions, promoting industrial-academic cooperation and encouraging businesses to strengthen recruiting efforts and increase funding for semiconductor talent development.The building momentum includes plans by the Taiwan Ministry of Education plans to establish semiconductor technology research centers at several national universities. By passing the sandbox law and loosening regulations organizational personnel, finance and education, the government is freeing up more funding to support semiconductor industry talent development. The ministry also plans to gradually expand the number of students enrolled in STEM curriculum and continues to promote talent training programs and recruiting strategies to help close the workforce gaps and reduce related industry risks. A highly skilled workforce is indispensable to the development of the semiconductor industry and among the most strategic resources in any region. It’s only through long-term partnerships between the government, industry and academia that impactful and sustainable workforce development goals and initiatives can be developed to help the chip industry realize its full potential to innovate and solve some of the world’s greatest challenges. The programs are key to the ability of Taiwan’s semiconductor industry to sharpen its competitive edge. More importantly, they are also the center of gravity in the region’s pursuit of its position as the global semiconductor hub. Jo-Ann Su is senior director and Winnie Chang is marketing and public relations specialist at SEMI Taiwan.

While the full contours of the next normal are still unclear, semiconductor companies largely acted decisively at the beginning of the crisis to build resilience and position the sector for future growth. To plan ahead, now is the time to think about the next normal and set the strategic direction needed to emerge even stronger from this humanitarian and economic crisis.Global GDP recoveryMcKinsey has developed nine GDP recovery scenarios, and as the economic situation has developed, we surveyed more than 2,000 global executives to discover that two of those scenarios are most likely. Both of those scenarios assume that the spread of coronavirus is eventually controlled and catastrophic economic damage is avoided. In the first scenario, global GDP is expected to recover in the first quarter of 2021; in the second, recovery is forecasted to be delayed until late 2022. The geographies of recovery will vary, as some industries and regions will recover faster than others.Semiconductor Demand Forecast for 2020 and 2021The COVID-19 crisis has created an unprecedented challenge for the semiconductor industry. During the 2007/2008 recession, consumer demand stagnated. This crisis, however, has affected both demand and supply, creating dual pressures. Our demand forecast is based on the two most likely McKinsey GDP recovery scenarios as well as on extensive surveys, expert interviews and research on the recovery in China. Charts 1 and 2 (below) show that the semiconductor market as a whole is expected to decline by up to 10% in 2020 due to the COVID-19 outbreak and the resulting slowdown in the global economy. In 2021, however, most segments are expected to grow, with total market size surpassing 2019 value in the more positive scenario. The PC market segments will see the least growth, while the wireless communication and automotive segments should expect to be hit hardest by this crisis with a decline of as much as 21% and 27% respectively in 2020. However, they are expected to bounce back in 2021 with growth of up to 19% and 36% in the positive outlook scenario.It might take some time for the semiconductor market to fully recover. The timing of the industry’s recovery depends largely on the containment of the virus, government economic stabilization efforts, and the global economic recovery.1. Products include memory, micro components, logic, analog, discrete, optoelectronics, and sensors/actuators.2. 2020 estimates were calculated using 2019 baseline and percentages have been rounded.3. Gray values indicate 2020 growth forecast; blue values indicate growth forecast for 2021 only. Sources: IHS, Expert Interviews 1. Products include memory, micro components, logic, analog, discrete, optoelectronics, and sensors/actuators.2. 2020 estimates were calculated using 2019 baseline and percentages have been rounded.3. Gray values indicate 2020 growth forecast; blue values indicate growth forecast for 2021 only.Sources: IHS, Expert Interviews Emerging stronger from this crisisSemiconductor companies had already developed effective crisis-management strategies during past crisis and industry downturns. However, this situation is unique. Overall, we see three main activities that can help semiconductor players with through-cycle resilience and growth: Define the starting position: Creating a baseline can help inform future strategic decisions by providing a holistic view of the current strategy, internal capabilities and external position. Develop economic and political recovery scenarios: Developing and deciding which economic and political recovery scenarios to focus on will enable companies to create company specific scenarios. Therefore, it is important to analyze demand in the short and long terms, along with the effects of subsidies, stimulus packages and industry dynamics. Prepare for the next normal: To prepare for the next normal and emerge even stronger from this crisis, companies should focus on how to gain market share during the downturn. As competitors focus on resilience, companies who see themselves in a financially stable position can focus on increasing their company’s growth and market share. This mindset, however, is most effective when established across the entire organization. Opportunities to emerge even stronger include defining a strategic, systematic approach to investment and divestment as appropriate. This means that several smaller deals that accrue to a meaningful amount of market capitalization over the years often have a more positive impact than one large transaction. History tells us that finding pockets of growth and revising capex, R D and M A strategies are the building block to emerge stronger from a crisis. As Gordon Moore, co-founder of Intel once said, "You can't save your way out of a recession." This translates into moderate capex and R D budget cuts with the focus on future growth drivers. These approaches are supported by insights from previous crises.Although the crisis has presented a major challenge, it also offers the chance for companies to set themselves apart from competitors. The semiconductor industry as a whole has been more resilient than many other industries. The global push toward digitization has also been a major tailwind that will likely be a key element of the global economic recovery.Ondrej Burkacky is a partner with McKinsey Company based in its Munich office. He leads McKinsey’s semiconductor and software work in Europe, as well as its global COVID-19 semiconductor task force. For McKinsey’s latest insights on the business implications of the coronavirus pandemic, visit its website, which is updated daily.

The White House has released its fiscal year (FY) 2019 budget proposal just as Congress secured a two-year budget deal that will begin the process of wrapping up the rest of FY 2018 and set the government’s top line spending for FY 2019 as well. Included in both of these plans are funding levels for government agencies that are crucial to the basic research underpinning many of the building blocks for future innovation in the semiconductor industry. Funding for the National Science Foundation (NSF) and the National Institutes for Standards and Technology (NIST) are two of the biggest drivers for basic research in the U.S. government, with many other smaller agencies playing a role as well.In a bipartisan compromise, Congressional leaders agreed to a deal that would lift their self-imposed spending caps for FY 2018 and pump an additional $68 billion into non-defense discretionary spending for FY 2019. They now have until March 23 to approve a detailed spending plan for the rest of this fiscal year before moving on to complete the FY 2019 plan by the end of September. While the final spending levels for individual agencies have yet to be finalized for FY 2018, the additional funding bodes well for both NSF and NIST, which had seen cuts of between 2 percent and 9 percent in earlier drafts of spending bills.Meanwhile, the president’s FY 2019 budget plans to flat fund NSF for the next year, while making cuts to NIST of over 30 percent. Included in these cost reductions are proposals to eliminate the popular Hollings Manufacturing Extension Partnership, which provides assistance to small and medium-size manufacturers throughout the U.S. With the program providing funds to states with up to a 50 percent match, its elimination will face strong opposition from both parties in Congress. The president’s budget cuts also target the popular Advanced Research Projects Agency for Energy (ARPA-E) for elimination. Disbanding the agency would end multiple streams of funding for innovations in energy production and storage.While it is the responsibility of the president to submit his budget for the funding of the federal government, the power of the purse resides with Congress. The process of federal funding has been drawn out more than usual this year, with a short-term government shutdown even playing a small role. With the budget agreement now in place, the rest of the funding for FY 2018 should come by the upcoming deadline, with hopes that Congress can then quickly pivot to FY 2019. With the midterm elections coming in November, however, political implications will play an outsized roll in the process for the remainder of the year. SEMI strongly advocates for the position that funding of basic research is closely linked with our nation’s economic prosperity in the modern global economy. Effective research funding as a national priority should be bipartisan and must be backed up by a strong and united community of stakeholders and advocates in the business, research, and education communities. In addition, this funding must not only be robust but consistent and not subjected to the uncertainty of short-term stop gap budget measures. If you’d like to learn more about SEMI’s public policy program, please contact Jamie Girard at [email protected].