The United States Must Step Up Its Support for R&D, Education

By Arvin Patel
September 29, 2021

“Executives in the c-suite must understand that long-term investments can be more advantageous than short-term cost cutting or profit margins, and is certainly in our nation’s best interests.”

https://depositphotos.com/31248541/stock-photo-opinion-business-concept.htmlHistory is often defined by its most important technology, giving us eras such as the Bronze Age and the Industrial Revolution. Given their importance, the modern era may go down as the Semiconductor Age. But unless the United States begins making needed investments in this and other key technologies, the future may wind up being the Age of China.

The Semiconductor Spike

It is hard to overstate the importance of semiconductors. The most sophisticated of these computer chips help to control computers, airplanes, and even modern weapons systems. Less sophisticated versions are still critical components of our daily lives and power automobiles, TVs and home appliances.

From an economic and national security standpoint, controlling our supply of semiconductors should be essential. Yet, U.S. companies have spent decades outsourcing and consolidating the manufacturing of this essential technology to other countries.

While once there were 25 companies around the world that produced the most cutting-edge chips, today there are just three – and sadly only one in the United States. Seventy-five percent of global semiconductor manufacturing is now done in Asia, with just 12% done in the United States. This overreliance on foreign countries has left the United States powerless to address the current global semiconductor shortage.

During the COVID-19 pandemic, demand for electronics spiked and with it, so did the demand for semiconductors. As semiconductor firms have struggled to meet this demand, the downstream effects have been extraordinary. Americans are now faced with shortages of smartphones, dishwashers, microwaves and array of other consumer goods. The automobile industry has been hit particularly hard, with companies like General Motors shutting down production plants and an estimated 7 million units of planned vehicle construction having been lost. Right now, if you need it, we don’t have it.

Leaders and Followers

The United States should be an economic leader, but our overreliance on outsourcing has turned us into a follower. If our nation is to remain competitive, we must focus on the things that got us there in the first place: greater investments in innovation, as well as research and development.

Most importantly, the development of new technologies and innovations must go hand-in-hand with an emphasis on keeping these advancements, intellectual property, and jobs here in the United States. If we don’t, other nations will gladly take the lead role economically in the 21st century.

The Chinese government knows this and is already exploiting it. A new report from McKinsey & Company noted that China’s R&D expenditures increased threefold from 2009 to 2019. China has now overtaken Germany and Japan to become the world’s second biggest spender on R&D, after the United States, and as a result, China is now the world’s largest generator of new patents.

China understands the importance of not just creating new technologies, but of building technological independence. They are seeking to build key technologies and products without having to rely on the support of other nations. In the process, these investments will stimulate economic activity and spur greater innovation for their country. The United States must match them.

Long-Term Thinking Can Preserve U.S. Leadership

Earlier this year, the U.S. Senate passed legislation that would increase federal funding for semiconductor research, authorize hundreds of billions more into research and development, and strengthen ties between private companies and research universities. This approach is a good first step and acknowledges the growing economic threat we face from China.

As our government is seeking to take new approaches and make new investments, so must private industry here in the United States. Executives in the c-suite must understand that long-term investments can be more advantageous than short-term cost cutting or profit margins, and is certainly in our nation’s best interests.

By investing in R&D, manufacturing, and education, the United States can reverse the present course and maintain our global economic leadership. If we don’t, we will soon cede that leadership to China and any other nation willing to invest in their own future. This is something the United States must address if we wish to remain a global leader in the 21st century.


Image Source: Deposit Photos
Author: tashatuvango
Image ID: 31248541 

The Author

Arvin Patel

Arvin Patel is Chief Operating Officer of Intellectual Ventures’ Invention Investment Fund and an inventor and leading voice on entertainment innovation and policy. Patel has overseen R&D and IP for some of the world’s leading companies, driving technology investments, and creating non-traditional strategies to develop products and services.

Warning & Disclaimer: The pages, articles and comments on IPWatchdog.com do not constitute legal advice, nor do they create any attorney-client relationship. The articles published express the personal opinion and views of the author as of the time of publication and should not be attributed to the author’s employer, clients or the sponsors of IPWatchdog.com. Read more.

Discuss this

There are currently 6 Comments comments. Join the discussion.

  1. Primary Examiner September 29, 2021 1:17 pm

    “The Chinese government knows this and is already exploiting it. A new report from McKinsey & Company noted that China’s R&D expenditures increased threefold from 2009 to 2019. China has now overtaken Germany and Japan to become the world’s second biggest spender on R&D, after the United States, and as a result, China is now the world’s largest generator of new patents.China understands the importance of not just creating new technologies, but of building technological independence.”

    That’s half the story. Here’s the other half:

    https://www.business-standard.com/article/international/china-claims-more-patents-than-any-country-but-most-are-worthless-118092900783_1.html

  2. Minh Nguyen September 29, 2021 8:33 pm

    Insightful article – much needed focus and commentary on the overall geopolitical dynamics that shape the dimensions of Sino-American competing relations.

  3. Straight-shooter September 29, 2021 10:32 pm

    Mr. Patel has it all wrong. The solution is not support for R & D or education and it is not because we must do-better. His reasoning is circular–that we must do-better for the reason that we must do-better. He does not understand the problem and his solution, that we must do-better, is naive. We cannot do-better until the winners are honored and rewarded rather than taken advantage of and vilified.

    America was the world’s technological leader when those with a better mousetrap were protected and rewarded and their competitors had a difficult target to shoot at because they were protected by enforceable patents. Then the best in America struggled to do-better in order to get their share of the pot of gold, in large part because they could get patent protection that meant something. See the article and the related comments about Thomas Edison in “Thomas Edison and the Consumer Welfare Benefits of Patent Enforcement“, posted in IP Watchdog on Sept. 1, 2012.

    Education does not work in an environment where the greatest American inventors are vilified. Why would the youth study technology and take technological risks when our greatest inventors are made to look like villains. Mr. Patel looses sight of the fact that Dr. Noyce, who got the patent on the integrated circuit, was rewarded, he was a multi-billionaire, and he was honored, he was the darling of Silicon Valley: and his integrated circuit invention “makes the world go round.” But Thomas Edison was vilified, for example he was falsely called a thief . See the article and comments cited to above.

    Mr. Patel does not understand that neither Government funding nor corporate R & D can solve the problem. Government funding goes to those who are good at getting funding and those that are good at spending funding, not those that are good at making significant improvements. And it is well established that corporate R & D usually just churns old technology because risk-taking is dangerous in a corporate environment. The real solution is to protect our technology with a strong patent system to motivate the rist-takers and to reward and honor, not vilify, those who make important technological contributions.

    A significant reason, if not the main reason, that America has fallen behind and is continuing to fall further behind is that protection for American technology has been gutted in recent years by legislation, court decisions, PTAB abuses, and by the vilifying our greatest inventors. Venture capital, not Government funding and not corporate R & D, is the best gate-keeper for technology because the motive for venture capital is profits while the motive for Government funding is to get and spend funding and the motive for corporate R & D is to play it safe. It is venture capital that has the motives of big successes and profits and venture capital needs strong patent protection and return on investment to do its job.

  4. Anon September 30, 2021 4:36 pm

    The link to the Thomas Edison article could not be located with the site’s archive feature (which lists article per month dating back to before September 2012).

    Perhaps you have the date in error?

  5. B September 30, 2021 4:44 pm

    I’d be happy if the government just got out of the way of industry and demanded K-12 schools do their %$&^# jobs and educate the kids while providing a safe environment and avoiding political indoctrination.

    That said – Straight Shooter has the right of it — the big problem is the anti-patent sentiment of black-robed judicial appointees in the courts and many of the knuckleheads (not examiners) running the show at the USPTO.

    Alice Corp. is a gift to them

    The Alice Corp. claims should have been addressed under s 103 in view of KSR v. Teleflex, but the holding to Alice Corp. is still narrow and should have had a minimal impact.

    Unfortunately, the CAFC uses Alice Corp. to step on the rights of patent-holders with the zealotry of ninth-century religious fanatics who are convinced that patents are an affront to God as said patent-holders poison city wells.

  6. Jedor October 3, 2021 3:30 pm

    A significant part of semiconductor fab R&D is done in the US. Furthermore, many semi designs are done in the US and are fabbed elsewhere. Where to build a fab is a matter of economics. Not of R&D expenditures. Scarcity of chips is also an economic (and strategic) issue. Analysts have regularly raised alarm on this issue over the last decades.

    To have America maintain a leadership position in science and engineering requires technology based entrepreneurs and start-ups to make money from technology based inventions. It is really as simple as that.

    Many companies and countries have spent billions on science and R&D with little or no results to show for. Remember AT&T Bell Labs, or Kodak Research?

    The USA economy for the last 150 years has been an innovation economy. And not strictly because American inventors invented new devices. But because American inventors created new companies from those new inventions.

    You really do not need that many researchers and inventors. But you should allow those relatively few who do new inventions to have an incentive to commercialize their work and make money from it.

    The patent system is a small, but extremely important, part of an invention eco-system.

    If a government and its bureaucracy show in intent and action that it does not value economic initiatives from its private citizens, but that it favors large companies and established institutions (which fund lobbyists and PACs) then the whole system comes to a screeching halt.

    Reducing USPTO fees for independent inventors is some recognition of the need for new blood in the innovation economy. However, if the resulting patents are useless then the whole effort remains an exercise in futility.

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