SEMATECH

1
SEMATECH Semi-Gas

• Objectives
• Explore Consortium criteria
• Examine Business RD management practices
• Lessons for effective public influence

2
Consortium Criteria

• Cost sharing
• - must motivate tradeoffs
• all qualified players must be admitted
• common objective
• - research
• - manufacturing
• long term objective -- Return on Investment

3
Consortium Criteria

• Expectations
• - do all members have to have the same
• expectations?
• - it helps!
• Working relationship between members who are also
  market competitors
• targeted market existing or expanding?

4
Consortium Criteria

• Legal implications
• - patents licenses
• - anti-trust considerations
• Consequences of Pooled RD resources
• - collective investment has greater yield than
  the sum of the parts
• - or lowest common denominator

5
Business RD Management

• Focus on
• - product innovation
• - product improvement
• - process innovation
• - process improvement
• Budgeting for RD
• - of sales expenses or revenue
• - apportioned to products or cost centers

6
Business RD Management

• Application to product/process
• National Semiconductor criteria
• - product must be 1 or 2 in market
• - gross margins of at least 40
• - product needs to generate at least 15
• times the RD cost

7
Business RD Management

• Consequences of Consortium participation
• industry contribution based on
• - number of members
• - of sales
• - assignment of personnel (cost?)

8
Public Influence

• Active participant
• - Absent government involvement, what is
• the consequence?
• - will government involvement change
• market condition?

9
Public Influence

• Active or passive participation
• clearly establish goals
• define success
• what new market demand is expected to emerge or
  will longer term public financial support be
  required

10
Public Influence

• Government as active or passive participant
• how is the level of public support determined
• -- direct funding
• -- tax advantages
• -- regulated market

11
Public Influence

• Active or passive participation
• Contractual cost sharing
• membership exemptions/criteria
• define the government role
• consortium requires industry leader how will
  the leader be selected?
• Sun-set clauses

12
Conclusion

• Consortium criteria
• Business RD Management implications
• Effective Public Influences

13
SEMATECH Epilogue

• National Semiconductor and 2 other members
  discontinued financial support
• Consortium permitted them to stay anyway
• Goals changed in SEMATECH II to semi-conductor
  manufacturing process improvements
• Public financial support ended in 1996