Electronic Design

U.S. Innovation Feels Competitive Global Heat

The Electronic Industries Alliance (EIA) recently published a "policy playbook" that seeks to turn attention from the political debate over offshore outsourcing toward global competitiveness. The EIA points out that the rest of the world is catching up to the U.S. in its most prized intellectual asset—innovation.

"The Technology Industry At An Innovation Crossroads" discusses the issues and provides 40 recommendations for making the U.S. more competitive. The overriding question the EIA presents is how we will react to this new level of competition from the emerging innovation nations. This is especially the case because the U.S. must now adapt, compete, and innovate alongside emerging workforces in countries such as China and India.

The EIA pinpoints a variety of deteriorating situations that require fixing—a systematically weak education system, a dearth of R&D funding, a visa policy that discourages the brightest foreign minds, and a business climate heavy with regulatory and tax burdens. Its concern is well placed. A Harvard Business Review study of high-tech firms says that next-generation innovations, while representing only 14% of product launches and 38% of revenue, generate 61% of profits.

According to the National Center for Education Statistics, about half of all post-graduate U.S. degrees in math, engineering, and computer science are going to foreign students. The largest percentage of H1-B visa holders, mainly foreign workers with, by definition, "special knowledge" (like EEs), graduated from U.S. universities. The EIA's conclusion: "It is counterproductive for the U.S. to train foreign students and engineers and then send them home to compete against American businesses."

And it's working in reverse in aerospace. Utah State University's Space Dynamics Lab, a nonprofit research co-op that has produced hundreds of payloads for NASA, reports that the talent pool of U.S. aerospace engineers is shrinking. One reason is the lack of educational and research activity in American universities. As such, the U.S. is sending its best and brightest spacecraft systems engineers to the U.K. to earn doctoral and master's degrees in spacecraft-related technologies to fill the void.

The visa issue is more familiar to most American EEs—and more contentious. In April, 20 leading U.S. engineering and scientific societies, including the IEEE-USA, called on the Bush administration to fix the visa-processing crisis by adopting several recommendations that would streamline the admittance of international students and engineers.

But with more design work going offshore and the sharing of intellectual property (IP) with foreign "partners" increasing as a way to enter their markets (the EIA calls it "forced licensing"), how does the U.S. keep from losing ground? (Industry estimates put U.S. company losses in IP theft to China in 2002 at more than $1.8 billion. How much of that was lost from licensing agreements?) IEEE-USA president John Steadman says, "It's going to be difficult to remain technically competitive if we continue offshoring the jobs of our innovators at rates currently projected."

Just ask Intel's CEO Craig Barrett. About 40% of Intel's employees have been working outside the U.S. for about two decades. In a recent interview, Barrett said that more of these jobs are shifting from manufacturing to engineering.

Key technologies considered by EIA technology leaders to be drivers of the next wave of U.S. commercial innovation include WiMax, the wireless metropolitan-area standard for broadband network access; digital rights management technology; fourth-generation (4G) wireless; and convergent networks. All have roots in both federal-funded basic R&D and industry-funded applied R&D.

What's striking about the EIA's new policy document is that it calls for action by the federal government, yet it says virtually nothing about what industry can or should do to improve its competitive position in the world. There's no doubt that some of the EIA's recommendations will be adopted, such as tasking the Department of Homeland Security with maintaining statistics on H1-B and L-1 visas, including applications. The department has already indicated plans for policy changes in the near future. But the real issue is how much more U.S. companies are willing to invest in innovation in today's global environment.

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