NEW YORK – The news that Intel is pulling out of the World Semiconductor Trade Statistics (WSTS) – after AMD took the same powder last year – should set off alarms for everyone in the industry.
Clearly, this action tends to cast doubt on the validity of all future data published by WSTS. That sort of uncertainty has a huge ripple effect. It will impact chip companies doing planning and forecasting, market research analysts who depend on WSTS numbers — interpret them and predict market trends, and broad-spectrum media outlets like EE Times.
But beyond these obvious implications, Intel deserves censure for its wrongheaded, short-sighted and arrogant desertion of WSTS – for two reasons: “disclosure” and “bargaining power.”
In my opinion, any industry, whether it’s automobiles, semiconductor or veeblefetzers, will begin — once it stops collecting data within the industry — to lose a significant measure of its economic and political power in the greater world. Without a credible trade association backed up credible industry data, the industry has no legitimate representation beyond its own membership, this compromising its bargaining power.
OK. You may say that this is just about WSTS; it’s not like Intel is leaving Semiconductor Industry Association (SIA). True. And yet, the WSTS activities do go hand in hand with SIA’s mission. In fact, we are also hearing some disturbing stories about a few companies beginning to leave SIA. (But that’s for another story)
Rank-and-file members of an industry that does not publish and distribute credible data that demonstrate its size, sales and social significance — the semiconductor industry, for example — place themselves at the mercy of the largest, loudest and most powerful companies within the industry. This usually means that only the interests of the largest, loudest and most powerful companies end up being served.
Disclosure of data among members is the basic, first step in building an industry association. Once shared, these vital statistics allow members to see where the industry is going. They help members take the necessary actions. That often forestalls problems and assures a higher level of mutual prosperity.
Without trusted data, every company is left to its own devices, to fend for itself. Of course, if your company is already the largest and the richest, you probably don’t care about that.
I can’t help recall the time of trade disputes – in the 1980’s and early 1990’s – specifically the Japan-U.S. semiconductor negotiations.
As EE Times’ Washington correspondent George Leopold called it, this was “the defining moment” for Semiconductor Industry Association (SIA) in the United States. Without all the monthly book-to-bill ratios and other stats put together by WSTS, the SIA had virtually no ammunition for the U.S. government’s negotiations with Japan.
No credible industry data and no credible industry representation equal no bargaining power.
The enemy for the U.S. semiconductor then was Japan. As Leopold said then, a trade association always needs a good enemy to thrive, and right now no “good enemy” is evident. But who’s to say that the U.S. industry will never see another enemy in the future?
Of course, in an age of “globalization,” and in an era when almost everyone is either “fab-lite” or no longer interested in “manufacturing,” the industry association seems increasingly to be a thing of the past.
I beg to differ. We are standing at a crossroads for U.S.-based companies and American policymakers, where the way lies open to restore a measure of our historic manufacturing growth. Possibly, the chip industry isn’t interested in joining such a revival. Perhaps, as I’ve heard suggested, it’s already too late for the semiconductor industry to come back.
In the face of such pessimism, however, I offer this assurance. With the first sight, on the horizon of any viable new nano-technologies, the chip industry — aided by the U.S. government and academia — is going to seize the opportunity. When that golden goose hatches, this industry will need, more than ever, a good effective trade association — rather than one big, rich, winner-take-all company — to negotiate the resulting deals and spread the wealth.