By all appearances, the U.S. semiconductor industry was on the ropes in the mid-1980s. After a multiyear effort to become a force in semiconductor memory chips, Japan now led the industry—both in market share and in the quality of its products. That raised fears the U.S. could lose not only a highly innovative industry but the components crucial for everything from computers to weapons systems. Yet by the early 1990s, that decline had reversed and U.S. chip makers regained the lead.
What happened? Among other things, a 1986 trade agreement that gradually reduced Japanese competition, a recession in Japan, a shift by U.S. companies to making more lucrative kinds of chips—and Sematech. Short for Semiconductor Manufacturing Technology, the consortium of 14 American chip makers such as Intel and Texas Instruments began operations in 1988 with an ambitious goal: to revitalize the U.S. semiconductor industry by finding ways to reduce manufacturing costs and product defects.
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