FIGHT! Semiconductor heavyweights debate government's role, gloves come off

ISSCC At this week's normally staid International Solid-State Circuit Conference (ISSCC), during a discussion of government's role in the development of technology, voices were raised and numbers were tossed about as debate grenades.

The dispute took place during the audience Q&A of a panel session discussing the future of the semiconductor industry, after one questioner asked whether external events – such as government intervention – could help drive innovation in the technology marketplace.

But before we detail how the answers of some of the panel's participants turned into an ideological battle, let's introduce them:

• John Doerr of Kleiner Perkins Caufield & Byers, is a prominent Silicon Valley VC; ex-Intel engineer, marketeer, salesman, and manager; venture funder of such entrepreneurs as Larry Page, Sergey Brin, Eric Schmidt, Jeff Bezos, and Bill Campbell; and a member of Barack Obama's Council on Jobs and Competitiveness.
• Dado Banatao, who was introduced as "the last man standing" among US venture capitalists still investing in the semiconductor startups, is managing partner of Tallwood Venture Capital, and a Stanford-educated electrical engineer who turned entrepreneur and then venture capitalist, having invested in such companies as Marvell, along with many startups acquired by the likes of Broadcom, Level One, Ciena, and Cirrus Logic, among others.
• T.J. Rogers, founder, president, CEO, and a director of Cypress Semiconductor, was introduced by the panel's moderator as "the bad boy of Silicon Valley" for his well-known argumentative, take-no-prisoners style, and as an outspoken anti-tax crusader, promoter of free-market capitalism, and skeptic of human-caused global warming – although he's also an early hands-on investor in the successful photovoltaic company SunPower.

Doerr was first up, saying that he could think of two events that could give the industry an immediate boost. "Unfortunately," he said, "they both involve government being in the way."

His first suggestion would be for the California government to amend its California Environmental Quality Act (CEQA) – an idea that's been getting a lot of play here in the Golden State of late – to exempt companies who want to lay communications fiber.

"I know from Google that the return on investment could put gigabit fiber in people's homes for no more cost than cable," Doerr said. "The costs are in the regulatory barriers, the environmental standards, the monopolies that the cable companies have, the municipalities."

According to Doerr, it would be a "game-changer" to exempt fiber installation from environmental laws. "Property values would go up," he said. "Create more jobs. Create more competition. All good."

Doerr's second idea was more overtly political. "Don't let the politicians draw any lines anymore around congressional districts." The way congressional districts are set up today, he said, has stymied the political landscape to such a degree that only 30 to 50 seats of the 435 in the US House of Representatives remain competitive.

"And here's what that means," he said. "That means we've had a broken immigration system in this country for decades. And if we didn't have that kind of sclerosis, that kind of letting the politicians set the rules so they don't have to compete, we'd get a comprehensive immigration reform act in a year."

The current US immigration system makes it exceptionally difficult for foreign students, after their US studies are over, to remain in the country to ply their trade, create startups, or go to work for companies in need of their services.

"What kind of strategy is that? Doerr fumed. His suggestion: "Staple a green card to every one of their diplomas."

Current VC and ex-entrepreneur Banatao took a more-favorable attitude towards the government. "Sometimes governments are benevolent," he said, "meaning they can define things that are good for society."

As an example he harkened back to president John F. Kennedy, who in March 1961 famously set a US goal of "landing a man on the moon and returning him safely to the earth," which sparked a torrent of government investment in the tech sector.

"If you look at all the things that I've done and what you guys are doing now," Banatao said to both his fellow panelists and the audience of circuit designers, "it was because of that one humongous singular funding to miniaturize electronics."

Microelectronics was a result of that initiative, he said, as well as mathematical research into communications technologies and other industry-spawning developments. "And that was a very, very good initiative started by the government," he said.

He also ticked off a number of other initiatives that wouldn't have gotten off the ground without government help, such as the internet. "That was researched by a lot of universities funded by the government," he said.

"Look at GPS," he said. "Look at all the derived industries out of location-capable products. Incredible: tracking, logistics, things like that."