...what we're trying to do is close the gaps so the decisions you would make are clear regardless of where you sit. And the decisions are to invest here and to continue to support the industry here. So everyone, given the level of the playing field in a better competitive US environment, will further invest in the US.
Is this an altruistic thing that the companies would prefer to invest in the US?
No, that's business.
If it's just the business then why do you care (where you invest)?
Because you need to do basic research. You need to get the students out. You need to do the development work, and you have to do the commercialisation work; you have to do the consortium work and on those bigger problems that need a consortium effort, and then you have to manufacture, so that you can continue that loop. That's why you want to do it here, and you want to have those things to be the best.
What portion of design is still US-based versus what happens overseas?
When Craig Barrett testified before Congress last Friday, he said 80 percent of Intel's R&D is done here, so I can't break it down exactly the way he broke it down, but I think that probably gives you the answer.
So when you're choosing to locate design elsewhere, how do you guarantee the intellectual property will be protected?
There are lots of ways to go about doing that. If you're talking about the case of these companies designing semiconductors, you can partition it in a way whereby the work being done in a given area doesn't really have enough knowledge. They know what they've got to do relative to another piece, but they don't have enough knowledge to have the IP under their control, so they can't do a lot with it. That's one way of dealing with the issue.
What can the US learn from China?
They're making huge investments in the university infrastructure. They're also increasing their funding, their basic research at these universities. We're at 0.7 percent of GDP (gross domestic product) going into basic research. They are at 1.5 percent. They have a smaller GDP right now, but that's OK. They are still a higher level, but they're going to bump that up to 2.5 percent.
The third thing they're doing is that the state is taking the entire risk in the investment so that the companies don't even have to go to the financial community and say, "We want to make a new investment and here's why we are worthy of our loan or whatever, a bond float to do this". If you're getting funded by the state and then it's being leased back to them, I mean, that's about as generous as I've ever heard of. Japan did something similar to that in the 1980s but not even as aggressive as that. So the point is, they are being very, very aggressive about all the things we were talking about that need to be done here. They're doing them already.
Today 85 percent of that market is served with imports from around the world. The vice premier told us that their objective is just to turn that around so 85 percent is delivered from within China and 15 percent from outside. If you're going to deal with an environment like that and you want to hold out in a market share, you're going to have to put some capacity out there. You may not want to do it, but you may not have a choice if you want to stay in that game. But that doesn't mean you can't do your critical mass here as well.
