As signs of an economic slowdown pile up, electronics companies will be tempted to scale back research and development (R&D) spending for 2001. That would be a huge mistake, but it's a knee-jerk reaction many in the industry appear poised to make.
R&D spending by private U.S. companies in 2001 will grow just 6.5 percent, to $190.5 billion its lowest rise in several years, according to an annual survey from the Battelle Memorial Institute and R&D Magazine. The government's R&D budget is likewise expected to post only a modest 5.1 percent rise, to $72.1 billion, according to the report, which is based on data from the National Science Foundation.
The R&D slowdown is to be expected as companies move to protect their bottom lines. But smart electronics executives realize that this is the time to be counterintuitive and invest during the downturn.
Granted, our technology-driven economy has a whopper of a hangover. Dot-coms binged on billions in venture and Wall Street capital over the past two years, often with little return on that massive investment. But what the industry needs now is not a bitter pill but some hair of the dog: a double dose of R&D.
It's time for innovative thinkers to hammer out new Net devices and new applications to spark demand. Third-generation cellular networks for mobile Internet access, for example, will require heady investments in everything from processors for software-defined radio to low-power, high-resolution displays and lots of software.
The government could play a supporting role here. President-elect George W. Bush should move to expand federal backing for the Internet2 project, which seeks to develop broadband networks and their applications. Bush could also appoint a blue-ribbon panel to investigate the government's potential role in sparking fresh opportunities for precompetitive technology development. One rallying point might be the search for environmentally sound alternatives to today's aging power-source technologies.
Technology contributed to the prosperity that has fueled the budget surplus. It's only fitting now that some of that money be earmarked for maintaining the nation's sharp technological edge.