BCG-半导体设计领导力面临的挑战（英）-33正式版

TheSeriesTitleGrowingChallenge

CoverTitle

ofSemiconductor

DesignSubtitleLeadership

MonthYear

ByAuthorName,AuthorName,andAuthorName

[Cover-Authorsstyle]

November2022

ByRamiroPalma,RajVaradarajan,JimmyGoodrich,

ThomasLopez,andAniketPatil

BostonConsultingGrouppartnerswithleadersinbusinessandsocietytotackletheirmostimportantchallengesandcapturetheirgreatestopportunities.BCGwasthepioneerinbusinessstrategywhenitwasfoundedin1963.Today,weworkcloselywithclientstoembraceatransformationalapproachaimedatbenefitingallstakeholders—empoweringorganizationstogrow,buildsustainablecompetitiveadvantage,anddrivepositivesocietalimpact.

Ourdiverse,globalteamsbringdeepindustryandfunctionalexpertiseandarangeofperspectivesthatquestionthestatusquoandsparkchange.BCGdeliverssolutionsthroughleading-edgemanagementconsulting,technologyanddesign,andcorporateanddigitalventures.Weworkinauniquelycollaborativemodelacrossthefirmandthroughoutalllevelsoftheclientorganization,fueledbythegoalofhelpingourclientsthriveandenablingthemtomaketheworldabetterplace.

TheSemiconductorIndustryAssociation(SIA)isthevoiceofthesemiconductorindustry,oneofAmerica’stopexportindustriesandakeydriverofAmerica’seconomicstrength,nationalsecurity,andglobalcompetitiveness.Semiconductors—thetinychipsthatenablemoderntechnologies—powerincredibleproductsandservicesthathavetransformedourlivesandoureconomy.ThesemiconductorindustrydirectlyemploysoveraquarterofamillionworkersintheUnitedStates,andUSsemiconductorcompanysalestotaled$258billionin2021.SIArepresents99%oftheU.S.semiconductorindustrybyrevenueandnearlytwo-thirdsofnon-USchipfirms.

Throughthiscoalition,SIAseekstostrengthenleadershipofsemiconductormanufacturing,design,andresearchbyworkingwithCongress,theAdministration,andkeyindustrystakeholdersaroundtheworldtoencouragepoliciesthatfuelinnovation,propelbusiness,anddriveinternationalcompetition.Learnmoreat.

ExecutiveSummary

Semiconductorsareubiquitous,poweringtechnologiesthatrangefromcellphonestotheMarsroversCuriosityandPerseverance,andeconomicallyimportant.In2021,worldwidesemiconductorsalestotaled$556billion.Semiconductordesign—whichincludesdesignofbothphysicalintegratedcircuitsandassociatedsoftware—accountsforroughlyhalfofallindustryR&Dinvestmentandvalueadd.1

UScompanieshaveplayedaleadingroleinsemiconductordesign,andasaresulttheUShasbenefitedfromavirtuouscycleofinnovation,enhancingitsabilitytoshapetechnicalstandards,strengthennationalsecurity,offerhigh-qualityemployment,andgeneratecompetitiveadvantagefororiginalequipmentmanufac­turers(OEMs)inadjacentindustries.(SeeExhibit1.)

Inrecentyears,however,theUS’sshareofdesign-relatedrevenueshasbeguntoshowsignsofadecline,droppingfromover50%in2015to46%in2020.2Otherregions,especiallySouthKoreaandChina,areseeinglocalgrowthintheirdesigncapabilities.Ouranalysisshowsthatatthecurrenttrajectory(thatis,ifplannerstakenoaction),theUSsharecouldfallto36%bytheendofthisdecadeasotherregionscapturealargershareoffuturegrowth.

ShouldtheUSaimtodefenditsleadershippositionindesign­andreaptheassociateddownstreambenefitsofdesignleadership,itwouldneedtoaddressthreechallenges.

Challenge1:DesignandR&Dinvestmentneedsarerising.Aschipshavegrownmorecomplex,developmentcostshaverisen,especiallyforchipsmadeonleading-edgemanufacturingnodes.Today,theUSprivatesectorinvestsmoreindesignR&Dthananyotherregion’sprivatesectordoes,butgovernmentsaroundtheworldoffersignificantincentivestoattractadvanceddesign,andtheUSrisksfallingbehind.Inaddition,therelativelevelofpublicsup-portforR&DintheUSlagsthatofotherregions.Theover­allshareofsemiconductor-­specificdesignandR&Dfundedbypublicinvestmentis13%intheUS,comparedtoanaver-ageof30%acrossmainlandChina,Europe,Taiwan,Japan,

andSouthKorea.BringingUSpublicinvestmentindesignandR&Dintolinewithinternationalpeers—including,forexample,directincentivessuchastaxcreditsforadvanceddesignandR&DperformedintheUS—willhelpensurealevelplayingfieldfordesignintheUSrelativetootherregions.

Challenge2:Thesupplyofdesigntalentisdwindling.Althoughmostoftheworld’ssemiconductordesignengi-neerstodayarebasedintheUS,theUSsemiconductordesignindustryfacesashortageofskilledworkersandisontracktoseethisshortageincreaseto23,000designersby2030,giventrendsinthenumberofscience,technology,engineering,andmathematics(STEM)graduatesandthenumberofexperiencedengineersleavingtheindustry.Publicandprivatesectorsmustworktogethertoencour-agemoreUSworkerstoenterthefieldofdesign,aswellastoencourageexperienceddesignersnottoleavethefieldorthecountry.Further,theprivatesectormustcontinuetoenhancetheproductivityofitsworkforcebydevelopinganddeployingnewtoolsandprioritizingthehighestvalue­-addR&Danddesign.

Challenge3:Openaccesstoglobalmarketsisunderpressure.SalesaretheultimatesourceoffundingforinvestmentinR&D,buttariffs,exportrestrictions,andotherfactorsthreatenUSsemiconductorplayers’accesstoglobalmarkets,implicitlyputtingR&Dreinvestmentatrisk.Seculartrendsmayreversesomeelementsofglobalization,butensuringthatmarketsremainasopenaspossiblewillbenefittheUS,whichgainssignificantlyfromfreetradeandhasthemosttolosefromproliferatingrestrictions.

Industryvalueaddistheamountbywhichthevalueofanarticleincreasesateachstageofitsproduction,exclusiveofinitialcosts.

Designrevenuecalculationsarebasedonfablesscompaniesandestimatedshareofintegrateddevicemanufacturer(IDM)revenuesattributabletodesign.

BOSTONCONSULTINGGROUP X THESEMICONDUCTORINDUSTRYASSOCIATION 1

TheUSprivatesectorislikelytoinvest$400billionto$500billionoverthenexttenyearsindesign-relatedactivities,includingR&Dandworkforcedevelopment.Buttomaintainleadershipoverthecomingdecade,theUSneedscomple-mentarypublic-sectorinvestmentsaimedataddressingthekeychallengeslaidoutabovetostrengthenboththedomes-ticsemiconductorindustryandthecountryasawhole.

Further,theleverageprovidedbypublic-sectorinvestmentswouldbesubstantial.OuranalysissuggeststhateachpublicdollarinvestedindesignandR&Dwouldinduceadditionalprivate-sectorinvestmentindesignandR&D,ultimatelyyielding$18to$24ofdesign-relatedsales.3

Asaresult,publicinvestmentindesignandR&Dofapprox-imately$20billionto$30billionthrough2030(includinga$15billionto$20billiondesigntaxincentive)wouldyieldincrementaldesign-relatedsalesofabout$450billionovertenyears,whilealsosupportingtrainingandemploymentforabout23,000designjobsand130,000indirectandinducedjobs,andfortifyingtheUSleadershippositioninsemiconductordesign.

Exhibit1-MarketLeadershipinSemiconductorDesignConfersMultipleAdvantages

Virtuouscycle

Abilitytoshape

Stronger

High-quality

Benefits

ofinnovation

standards

security

employment

forOEMs

Leadershipattracts

Firstmovershavean

Nationalsecurity

Theaverageannual

Closecollaboration

globaltalentand

advantageinsetting

benefitsfrom

incomeofworkers

betweenOEMsand

contributestoacycle

andleveragingthe

improveddefense

employedin

localdesignteams

ofinnovationand

benefitsofglobal

systemsatlowerrisk

semiconductordesign

createscompetitive

reinvestment

technicalstandards

oftamperingand

was$170,000,

advantage

disruption

comparedtotheUS

medianof$56,000

Source:BCGanalysis.

ThesecalculationsassumethateachpublicdollarinvestedindesignandR&Dinducesanadditional$2to$3ofprivate-sectorR&DinvestmentandthateachincrementaldollarofR&Dyields$6ofincrementalsales.

2 THEGROWINGCHALLENGEOFSEMICONDUCTORDESIGNLEADERSHIP

TheGrowingChallengeofSemiconductorDesignLeadership

Semiconductorsarecriticaltothefunctioningofthemodernworlddrivingeconomiccompetitiveness,nationalsecurity,andtechnologiesrangingfrom

moderndefensecapabilitiestoautonomousvehicles.Thesemiconductorindustryisofhighstrategicimportanceandsemiconductormanufacturingisincreasinglythefocusofindustrialpoliciesacrossmajoreconomies.

Beforesemiconductorsorchipscanbemanufactured,however,theymustbedesigned,andthisreportfocusesonthedesignofsemiconductors.

Westartbylayingoutwhatsemiconductordesignisandwhyitisimportant,andwediscusstheUS’shistoryinthisdomainaswellasthebenefitsthatdesignleadershiphasconferred.Despiteitshighvalue,leadershipindesignisnotinevitable,andtodaytheUSfacesthreekeychallengestomaintainingitspositionasamarketleader:increasingdifficultyandR&Dintensityassociatedwithsemiconductordesign;ashortageofdomestictalent;andthreatstoglobalmarketaccessthatenableongoingreinvestmentindesign.

WeestimatetheimpactofthetalentshortageonUSdesignleadershipandthepossiblebenefitsandreturnsofpotentialpoliciestheUScouldpursueifitchosetosustainleadershipinsemiconductordesign.

BOSTONCONSULTINGGROUP X THESEMICONDUCTORINDUSTRYASSOCIATION 3

DesignIsaCriticalPartoftheSemiconductorValueChain

Inbuildingahouse,architectsandbuildingengineersworktogethertodesignthehigh-levellayoutof,forexample,acolonialorpost-modernhome.Theseprofessionalsdeter-minewheretopositionroomsandwindowstocreateaspacethatmeetstheirclient’sneeds.Architectsandbuild-ingengineersmustconsiderarangeoftradeoffs—forex­ample,betweenlivingspaceandstoragespace—andlayoutthedetailedframing,plumbing,electrical,andotherconsid-erationsthatmakeahomelivable.Allofthispreparatoryworkmustoccurbeforeactualconstructioncanbegin.

Similarly,beforesemiconductorscanbemanufactured,theymustbedesigned.Andjustastradeoffsarenecessaryinhomedesign—forexample,betweenopennessandprivacy—chipdesignrequirestradeoffsbetweensuchdesirableobjectivesasperformanceandpowerefficiency,theprocessingofgeneralinstructionsandtheprocessingofhighlyspecializedinstructions,andinputsofdigitaldataandinputsofreal-worldanalogdata.

Andjustasexpertiseindesigningsingle-familyhomesdoesnotqualifyanarchitecttodesignaskyscraper,theskillsneededtodesignchipsfordifferentapplicationsareinmanycasesnotfungible.(See“KeySemiconductorDesignTechnologies,”intheAppendix.)Further,chipdesigncanbeamassiveundertakingthatrequireslargeteams—sometimesincludinghundredsofhighlyskilleddesignengineers,eachwithdifferentspecialties—tocol-laborateforyearsbeforeadesigniscompleteandreadyforproduction.Historically,theUShasledtheworldinsemiconductordesign.(SeeExhibit2.)

Well-designedchipsenableautomobilestooperatesafely,advancedmedicalequipmenttopreserveorsavelives,andmilitaryradarsystemstodetectdangers.Semiconductordesignhashelpedmakevirtuallyallsectorsoftheecono-my,fromfarmingtomanufacturing,moreeffectiveandefficient.Semiconductordesignhasalsobeenpivotalinnewinnovations,suchasartificialintelligence(AI),thataretransformingentireareasoftechnologyandtheeconomy.

Whensemiconductordesignimproves,allapplicationsthatusesemiconductorsbenefitaswell.Conversely,whensemiconductordesignstagnates,allrelatedapplicationssuffertoo.Inaddition,designinnovationisfundamentaltofuturesemiconductorimprovements.Asphysicalscalingdifficultiescontinuetoincrease,design-relatedinnovationssuchasnewarchitecturesandheterogeneousintegrationwillbeincreasinglyimportant.Heterogeneousintegrationwillimproveperformancebyallowingdesignerstochooseamongthebestpossiblemanufacturingtechnologiesfordifferentelementsofeachchip(forexample,powerman-agementonsiliconcarbide,analogfunctionson28nm,andhigh-performancelogiconleading-edgenodesizes)anddeliverlevelsofoverallperformancethatwerepreviouslyimpossible.

Designisthekeyactivitythatdifferentiatesonesemi­conductorfromanotherandguideshowrawsiliconwafersbecomestate-of-the-artchips,soit’snosurprisethatde-signrequiressignificantR&Dinvestment.(See“SummaryoftheSemiconductorValueChain”intheAppendix.)Infact,theR&Dintensityofdesignisabout20%,andtheR&DintensityofEDAandcoreIPisgreaterthan30%,comparedtoabout10%forwaferfabricationandequip-mentproduction.

4 THEGROWINGCHALLENGEOFSEMICONDUCTORDESIGNLEADERSHIP

Exhibit2-TheUSIstheLongstandingLeaderinSemiconductorDesign

Industry

R&Dintensity2

Revenueshareof2021worldwidetotal,byregion1(%)

value-add(%)

(revenue%)

Design

>10%ofrevenues

Logic

28

20

64

8

9

4

4

11

(mostlyfabless)

Memory

8

9

27

59

7

5

(mostlyIDM)

14

14

DAO3

37

18

13

6

19

4

Designsubtotal

50

17

46

9

7

21

9

8

3

34

EDAandcoreIP

72

20

3

2

2

2

US

Europe

MainlandChina

SouthKorea

Japan

Taiwan

Other

Sources:CapitalIQ;SIAFactbook2022;BCGanalysis.

Note:DAO=discrete,analog,andother;EDA=electronicdesignautomation;IP=intellectualproperty.Becauseofrounding,notallbarsegmenttotalsaddupto100%.

1Theregionalbreakdownisbasedoncompanyrevenuesandheadquarterslocation.DesignrevenuesarebasedonfablesscompaniesandestimatedshareofIDMrevenuesattributabletodesign.

2R&DintensityismeasuredasR&Ddividedbyrevenue.

3Discrete,analog,optoelectronics,sensors,andothers.

DesignIsComplexandIncludesMultipleDifferentTypesofFirmsandActivities

Semiconductordesigninvolvestwotypesofactivities:hardware­designandsoftwaredevelopmentwork.Hard-waredesignisamultistepprocessencompassingproductdefinitionandspecification,systemdesign,integratedcircuitdesign,andpost-siliconvalidation.(SeeExhibit3.)Softwaredevelopmententailsthecreationoffirmware—atypeoflower-levelsoftwarethatbypasses(forexample)theoperatingsystemofanenddevice,likealaptop,toprovideinstructionsdirectlytoachip.Asdesigngrowsmorecom-plex,itbecomesanincreasinglyiterativeprocess—­especiallyforleadingplayers—thatoccursinparallelinordertosurfaceissuesearlier,optimizeoverallsystem-levelperformance,anddecreasetimetomarket.

Hardwaredesignersusebothnewandestablishedtech­niquesinthedesignprocess.Whendrivinginnovations,designersgeneratenew,specializeddesignsthatenablespecificapplicationstoleveragethelatestadvancesindesignandrelatedtechnologies.Designerswilloftenuseexisting,reusablearchitecturalbuildingblocks(coreIP)tosimplifyandacceleratecreationoftheoveralldesign.Inallcases,designersusehighlyadvancedEDAsoftwaretoautomatethedesignprocessandensurethatchipdesignscanbemanufacturedondistinctandoftenproprietaryfabricationprocesses.Sinceasinglechipcanhousebillionsoftransistors,state-of-the-artEDAtoolsareindispensablefordesigningmodernsemiconductors.(See“TypesofSemiconductorDesignActivities”intheAppendix.)

BOSTONCONSULTINGGROUP X THESEMICONDUCTORINDUSTRYASSOCIATION 5

Manykindsofcompaniesengageinsemiconductordesign,buttheyfallintofourmaincategories:

FablessCompanies.Responsibleforroughlyhalfofdesign-relatedvalueadd,thesecompaniesfocusonchipdesign.Theypartnerwiththird-­partymerchantfoundriestofabricate(thatis,manufacture)theirchips.

IntegratedDeviceManufacturers(IDMs).Responsi-bleforabouthalfofdesign-relatedvalueadd,IDMsbothdesignandmanufacturechips.WithinIDMs,designandmanufacturingteamsworktogethertobringnewchipstomarket,usuallyatin-housefabricationfacilities.

OriginalEquipmentManufacturers(OEMs).OEMs,suchasautomakers,alsoplayaroleinsemiconductordesign.Theyusesemiconductorsasinputsforotherproducts.SomeOEMshavebeguntodesigntheirownchips,chieflyfortheirownproducts.Forexample,acloudcomputingprovidermaydesigncustomchipswithspe-cificfeaturesthatexecutespecifictasksverywell.4OEMsareagrowingpresenceinchipdesignandincreasinglyparticipateinthesameproductandtalentmarketsthatfablesscompaniesandIDMstapfortheirneeds.

EDA/IPProviders.EDAcompaniesaretrustedinter­mediariesbetweendesigncompaniesandfoundries,providingdesigntools,referenceflowsandsomeser-vices.USleadershipinEDAtoolsconferssignificantben-efitstoUSsemiconductordesign,asresearchershavegreateraccesstoautomationtools,totheengineersbe-hindthosetoolsandtosupportforexperimentationwithnewdesignconcepts.Third-partyIPprovidersdesignandlicenseIPbuildingblocks(processors,libraries,memo-ries,interfaces,sensors,andsecurity).

Inadditiontotheseplayers,designservicescompanies—whichcanbethird-partyprovidersorin-houseteamsatmanufacturers—performavaluablefunctionindevelopingandoptimizingnewdesigns.Inparticular,fablesscompa-niesoftenworkcloselywithagivenfoundry’sdesignser-vicesteamtoensurethecompatibilityofitsdesignswiththefoundry’sfabricationprocesses.(Seethesidebar“SpotlightontheFabless-FoundryEcosystem.”)Closecollaborationiscritical,asscalingupnewprocessesin-volvesinherentuncertaintiesinmodelingandreachingtargetmanufacturingyields.

Exhibit3-TheSemiconductorHardwareDesignProcessConsistsofFourMajorStages

1

2

3 4

Productdefinitionand Architecture/system

specification design

Productmanagement,system Systemarchitectsdefine

architecture,andcustomer block-levelarchitectureforthe

defineinitialproduct designandmayleverage

requirements previousIP

Integratedcircuitdesign

Multidisciplinaryeffort:

Logic:Initialanaloganddigitaldesign

Circuit:Digitalsynthesisanddesignfortest

Layout:Routingandmaskgeneration

Verification

Verificationengineersverifydesignfunctionalityandtimingthroughsimulation

Post-siliconvalidation

Validationengineersvalidatephysicaldevicefunctionalityacrossextremeworkingconditions

Sources:WhiteHouse100DaySupplyChainReviewReport;BCGanalysis.

Forexample,Graviton,afamilyofchipsdesignedbyAmazonWebServices,includesfeaturesthatallowchipstorefreshtheirfirmwaretoaddressissueswithoutdisturbingcustomersthatareusingthemachineforotherpurposes.

6 THEGROWINGCHALLENGEOFSEMICONDUCTORDESIGNLEADERSHIP

SpotlightontheFabless-FoundryEcosystem

Inthemid-1980s,largeandverticallyintegratedIDMs(integrateddevicemanufacturers)performedallsemi­conductordesignandfabrication.Seekingtooffsetthehighcapitalexpenditurerequiredforfabricationequipment,IDMsbegantomakeunusedmanufacturingcapacityavailabletosmallercompaniestokeeptheirfabsbusy.Whilethisenabledsomecompanieswithdesignexpertisetoproducechipswithoutoperatingtheirownfabs,itre-mainedasmallpartofIDMs’businesses.IDMsoftenpreferredtoownthedesignstheyfabricated,andtheyfounditdifficulttobalancetheneedsofinternalandexter-nalcustomers.

In1987,Dr.MorrisChangsensedanopportunityand—inpartnershipwiththeTaiwanesegovernmentandPhilipsSemiconductor—launchedTaiwanSemiconductorManufac-turingCompany(TSMC),theworld’sfirst“pure-play”foundry(oneinvolvedexclusivelyinmanufacturingandnotinproductdesign).TSMCassureditscustomersthatasadedicatedfoundry,itwouldnotcompetewiththemindesign.

TSMCadoptedalow-costpricingstrategythatdependedonhigh-volumeproductionforprofitability.Althoughitsacrificedearlyprofits,thecompany’smarketshareforfabricationrapidlygrew,allowingittorecoupitslargecapitalexpendituresandinvestinnext-generationtechnol-ogynodes.TSMCwasamongthecompaniesthatbenefit-edfromtheTaiwanesegovernment’sbroadsupportforthesemiconductorindustry,throughR&Dassistance,work-forcetraining,theestablishmentofhigh-techcorporateparks,andmore.

AlthoughboththeIDMmodelandthefoundrymodelhavetheiradvantages,theemergenceofpure-playfoundriesloweredbarrierstoentryfordesigncompaniesandrevolu-tionizedtheindustry,leadingtotheemergenceoffablesssemiconductordesignfirms.Freeofthelargecapitalex-pendituresofmanufacturing,fablesscompaniescouldfocustheirexpertiseandresourcesoninnovationsinde-signandpartnerwithdedicatedfoundriesforfabrication.

BOSTONCONSULTINGGROUP X THESEMICONDUCTORINDUSTRYASSOCIATION 7

Becausethetechnologyofsemiconductordesignevolvescontinually,designleadersmustleveragenewandfuturetechnologiesthatarecriticalfordesigninnovation,includingthese:

HardwareandSoftwareCo-design.Assystemsbe-comemorecomplex,designersleveragepracticessuchasdesigntechnologyco-optimization(DTCO)andsystemtechnologyco-optimization(STCO)toensurethatanimprovementinoneareadoesnotcreateproblemsforoverallsystem-levelperformance.“Shift-left”designprin-ciplespermitparallelsoftwareandhardwaredevelop-mentbyleveragingvirtualprototypinganddigitaltwins.

AI-BasedDesign.Designerscanmorequicklyandeffectivelymeetpower,performance,andareatargetsbyleveragingAI-basedtools.ReinforcementlearningandotherAIalgorithmscanautomatelessconsequentialde-signtasks,freeingengineerstofocusonmoreadvancedtasksanddecisions.

2.5D/3DDesigns,Chiplets,andHeterogeneousIntegration.Astheadoptionofnewprocesstechnolo-giesslows,designengineershavebeenmovingtonewdesign,integration,andpackagingtechnologiesthathelpimproveperformanceandreducecostandpower­consumption.Heterogeneousintegrationpermitsin-creaseduseofhighlyspecializeddesignstofurtherimproveperformance.

SecureDesign.Increasedscrutinyonthesecurityofsemiconductordesignsispromptingdesignerstoplacemoreemphasisonsecurehardwaremodulesandtodevelopenhancedtools,methods,andencryption.Designingsecurityintosemiconductorsatthehardwarelevelensuresthatsystemsbehaveasexpected,preventsfaults,andenhancescybersecurity.

ToDate,theUShasEnjoyedtheBenefitsofLeadingtheWorldinSemiconductorDesign

Asof2021,46%ofsemiconductorindustryrevenueswereattributabletothedesignactivitiesofUS-headquarteredcompanies,nearly2.5timesasmuchasanyotherindivid-ualregion.USmarketleadershipindesignismostpro-nouncedinlogic,generating64%ofdesign-relatedrevenuesinthatsector,butitalsoextendstothedesignofdiscrete,analog,andother(DAO)devices,whereUS-headquarteredcompaniesgenerate37%ofdesign-relatedrevenues.Onlyinmemory,whereSouthKoreanfirmsgenerate59%ofalldesign-­relatedrevenues,doestheUSnothaveamarketleadingposition,asdetailedinExhibit2.

8 THEGROWINGCHALLENGEOFSEMICONDUCTORDESIGNLEADERSHIP

Semiconductorshelpautomobilesoperatesafely,advancedmedicalequipmentsavelives,andmilitaryradarsystemsdetectdangers.

Marketleadershipinsemiconductordesignconfersmultipleadvantages,includingthefollowing:

AVirtuousCycleofInnovation.Leadershipindesignsupportsavirtuouscycleofinnovation.Forexample,designleadershiphasenabledfirmsintheUStoattractandtrainatalentedforeign-bornworkforce.Thecontribu-tionsandinnovationsofthisworkforcegenerateprofitsthatcompaniescanreinvestinR&Dtodrivecontinuedexpansionoftheworkforceandfutureinnovations.

GreaterAbilitytoShapeStandards.Inanytechnicaldomain,standardssupportinteroperabilityandenablecompaniestomoreeasilycollaborateacrossthesupplychain.Often,firmsthatleadindesignarethefirsttodevelopproductsthatrequirestandards(aswasthecasewithWi-Fi,Bluetooth,and5Gwireless),andthisenablesthemtoplayaleadingroleinreachingconsensusonwhatstandardsaresetandtorapidlydevelopexpertiseinoptimaldesignforagivensetofstandards.Regionswithmanyleadingdesignfirmswillbeatarelativead-vantageinsettingandleveragingthebenefitsoftechni-calstandards.

StrongerSecurity.Designleadershipoffersnationalsecurityadvantagesintwodimensions.First,regionswithdesignleadershiphaveaccesstomoreadvanced

semiconductorchipsthatcangivedefenseandweaponssystemsgreaterefficacy.Second,regionswithdesignleadershipmaybeatlowerriskofmalicioustamperingandsupplychaininterdiction—forexample,byprotect-ingcriticaldesigninformationandenablingtraceabilityandcontrolofdesignIP.

ExpandedHigh-QualityEmployment.Designleader-shipsupportshigh-qualityemploymentdirectlyviahighwagesandindirectlyviahighemploymentmultiples.

Forexample,in2020,theaverageannualincomeforUSworkersemployedinsemiconductordesignwasabout$170,000comparedtoaUSmedianofabout$56,000.

AdvantageforOEMsinAdjacentIndustries.OEMsintechnology-heavyindustriesrelyextensivelyonsemi-conductorsinthesystemstheydesign.Becausecollabo-rationwithinasharedgeographyandculturalcontextisofteneasier,OEMscancreatecompetitiveadvantagebyworkingdirectlywithmarket-leadingchipdesignersandemployingpracticessuch