Valley’s Lobbying Pays Dividends

By Ed Sperling -- Electronic News, 2/1/2006

President Bush’s State of the Union speech was many things to many people, but for Silicon Valley it offered the first clear sign that years of lobbying have finally paid off.

Since Bush took office, many electronics executives have been complaining that the current administration has given short shrift to this industry, particularly in regard to research and the incentives necessary to draw the best and brightest into the high-tech world. Top executives routinely have pointed to the growth of electronics in China, the rising threat of India, and Japan’s resurgence as proof that Silicon Valley is falling behind, and have accused the Bush administration of playing politics against a state that voted against him in the previous two elections.

Bush ignored partisan politics and last night responded directly to the global competitive threat, outlining several key agendas that, if executed, will mean significant cash infusions into the electronics industry:
• A doubling of R&D at universities, which would mean $10 billion over the next 10 years and roughly $900 million in government spending in the first year;
• A commitment to clean up the immigration policy, which should make it easier for foreign students to attend universities and stay once they have degrees;
• A commitment to bolster electronic medical records, which should drive up sales of information technology systems and the electronics components within them; a
• And a focus on alternative energy sources, including research into battery technology for hybrid vehicles and further development of solar power and alternative energy sources.

President George W. Bush greets members of Congress after his State of the Union Address at the Capitol, Tuesday, Jan. 31, 2006. White House photo by Eric Draper

The President also said nanotechnology will be a critical area for research, which is defined broadly as anything less than 100 nanometers, and more specifically along the lines of new processes and technology that will become ubiquitous over the next decade.

“We feel as though they not only heard us, but understand the situation and will respond in a way to bring about new programs,” said George Scalise, president of the Semiconductor Industry Association. “What’s changed this time is a recognition of what we have to do to compete.”

The SIA has projected 10 a percent compound annual growth rate for the semiconductor industry. That should put the industry’s revenue figures at $500 billion in 7.5 years, and $1 trillion in 15. Scalise said those numbers should hold solidly with the government’s commitment and investments.

“As a nation, we are still in the lead. But to maintain that leadership we need to enhance an area where there is already great strength,” he said. “That means increasing basic research in universities and tort reform to remove the negative effects of litigation.”

Another major issue for electronics companies, stock options, will require lobbying directly to the Securities and Exchange Commission, Scalise said, noting that Bush has repeatedly said he will stand behind the SEC’s decision on this matter.