Halla Calls for Federal Funds

In a surprisingly nationalistic address, Brian Halla lobbied for increased funding from the U.S. government for fundamental semiconductor research. The CEO of National Semiconductor said that, to remain competitive, the industry needs assistance because there are no large think tanks left, such as AT&T Bell Labs. Most of the R&D funding that does exist today is primarily spent on development, leaving little investment in research.

Halla addressed a group of more than 300 industry professionals from 14 countries in San Jose as part of the International Symposium on Semiconductor Manufacturing (ISSM) last month. A major portion of the talk focused on the opportunities at hand "if we don't blow it," Halla said. He spoke of market developments in China, India and Russia. China alone graduates more than 400,000 engineers per year and the number of consumers there is growing daily.

Halla took the audience back to October 1957, when Russia launched Sputnik and began the space race.

Years later, when President John F. Kennedy announced to the world that the United States was going to fly a man to the moon and back, the government largely supplied the funding.

He said we are living in a similar time today, with enormous opportunities in networking, communications and medical applications, and he compared the current digital consumer age with that of the industrial revolution.

Brian Halla (Source: National Semiconductor)

Among other topics discussed, Halla reflected on a recent meeting among industry leaders who discussed this issue of research funding. "I noticed that almost every one of the participants was from California, Texas, Massachusetts and Maine," he said. "We are preaching to the choir. It's time to spread the word to people in the other states of the United States." While he admitted that his argument centered on the United States, the same could be said about other countries. Notably, however, China and India are getting their indigenous developments in electronics and semiconductors funded.

Halla credited Sematech and Albany with playing critical roles in semiconductor research, yet contended that more is needed.

This call for funding is poorly timed, with leaders in the U.S. Congress and the White House focusing their attention on the disaster relief effort for the victims of hurricane Katrina. Nonetheless, Halla and Freescale CEO Michel Mayer will address competitiveness as part of a panel at the Outlook 2006 conference sponsored by CNBC. On behalf of the Semiconductor Industry Association (SIA) , an organization dedicated to U.S. competitiveness, Halla and Mayer plan to meet with government officials while in Washington.

Halla passionately called for the lifting of visa quotas that allow a limited number of foreign-born students to remain in the United States when their education is completed. "Let these engineers live and work where they want to live and work."

Specifically, H1-B visas are granted to foreign engineers and computer programmers, allowing them to work in the United States for up to six years. A cap of 115,000 visas per year, established in the 1980s, was raised by Congress to nearly 200,000 in the year 2000, where it remained. According to the Associated Press, employers are close to meeting this year's limit three months prior to the end of 2005. The quota currently stands at 65,000 H1-B visas. However, Congress approved an additional 20,000 for foreigners with master or doctorate degrees. Bill Gates, CEO of Microsoft , joins Halla and other high-tech CEOs who believe the visa cap hurts American competitiveness.

One audience member mentioned Microsoft's opening of a research lab in China, and asked Halla how long it would take for other companies to follow suit. Halla admitted that he didn't have a good answer in this case. He noted, however, that it is often true that the first places to develop a technology tend to be the first to adopt it.

Another of Halla's concerns was that of the investment community. He said it will be interesting to see if Wall Street stands by the semiconductor industry. Foreign investment has become the latest trend.

Venture capital funding, which has been a strong source for budding young companies in the past, is not looking as favorable as it did at one time. Many people said that, while it was true that venture fund availability was a little overblown before the dot-com bubble burst a few years ago, the correction has been perhaps a little too drastic. Venture funding is often given incrementally, based on performance.

Halla then talked about how the corruption among executives at companies such as Worldcom and Enron have hurt all corporations. "CEOs are the enemy," he said.

In a separate statement, John Greenagel, director of communications at SIA, said that the SIA board is putting increased focus on U.S. competitiveness. Though everyone is well aware of the fact that the majority of chip manufacturing is moving to other countries, the recent move by Microsoft shows that research may be following. "If current trends continue, 90% of the world's engineers and scientists will be living in Asia by 2010," Greenagel said. "It will be hard to maintain our leadership in technology if that happens."

National Semiconductor spends about 18% of its revenue on research, Halla said. He quickly noted, however, that this money is mostly spent on development projects.