Spencer Made Sematech President

William J. Spencer, a Xerox Corp. veteran appointed Wednesday as chief executive of Sematech, faces a daunting task in moving the semiconductor research consortium toward the ambitious--and some say impossible--goal of restoring American leadership in chip production technology.

Critics say the 14-company consortium has accomplished little since it was founded three years ago, and they are skeptical that it will ever help American companies fight off the Japanese in the production of semiconductor chips, the tiny parts that serve as the brains of computers.

But Sematech, which receives $100 million annually from the Department of Defense and $100 million from member companies, remains a key pillar of the Semiconductor Industry Assn.’s strategy for revitalizing the U.S. chip industry.

Another crucial element in that strategy is the 1986 U.S.-Japan Semiconductor Trade Agreement, which expires next July. The SIA today will join with a group of computer companies in announcing support for a renewal of the trade pact, but without controversial provisions that had effectively fixed the price of commonly used memory chips at a high level.

Computer firms had opposed the pact because of those provisions, but they have now agreed to support a proposal for a revised trade agreement that retains U.S. demands that foreign chip companies get a 20% market share in Japan. But the proposal also adopts a new formula for preventing Japanese firms from dumping chips on the U.S. market at artificially low prices.

The selection of the relatively unknown Spencer to head Sematech was considered something of a surprise, in part because a key element of the job is persuading congressmen and other government officials to continue supporting Sematech. His first activity as chief executive, in fact, was to fly to Washington on Wednesday for meetings with congressional allies.

Spencer, 60, replaced the late Robert Noyce, an inventor of the integrated circuit and co-founder of Intel Corp., who was widely respected in both industry and government circles.

But Spencer’s strong research background--he headed Xerox’s highly respected research operations--may make him well-suited to address some of Sematech’s problems. Spencer also worked at Bell Laboratories and Sandia National Laboratories.

“In the past, the focus was on selling (Sematech) to Washington. Now the focus is on the technologies,” said Marc Elliot, chip industry analyst at Dataquest, a market research firm in San Jose. “I’m encouraged that they hired a pure researcher.”

Sematech has already changed directions once, noted Michael Borrus of the Berkeley Roundtable on the International Economy. It moved away from the development of new process technology for chip making and instead is working to support American companies that make equipment for semiconductor manufacturing.

Borrus said Sematech had made some progress in breaking down the idea that American companies could not cooperate on research, and had in fact helped strengthen American equipment companies. But he said it was too early to tell if progress was being made on the ultimate goal of catching and passing the Japanese in chip production technology.

The consortium’s critics say Sematech is little more than a cozy club of large chip companies looking for government subsidies, and that it will do nothing for U.S. competitiveness.

“If you compare their accomplishments against their business plan, it’s a colossal failure,” said T. J. Rodgers, chief executive of Cypress Semiconductor and a long-standing critic of Sematech and the SIA. “I see no substantial accomplishments, and I challenge Sematech members to say publicly that their 0.8-micron technology (an important chip-making capability) has been helped substantially by Sematech.”

Rodgers also said the dues structure for Sematech deliberately discriminates against small chip companies, which he says are responsible for the real innovations. The consortium structure, he added, cannot work because the member companies do not contribute their best employees.

Richard Shaffer, head of Technologic Partners, a New York consulting firm, agreed that Sematech suffered from “not having enough ‘A’ players on the team. That’s the biggest challenge: getting better people.” He also suggested that the United States would be better off supporting a variety of technologies for making specialized chips, rather than the mass-production technologies that the Japanese already dominate.

“It’s hard to insult such well-intentioned people,” Shaffer added, “but it’s mostly a waste of money. People in the industry regard it as irrelevant.”

Part of the original purpose of Sematech was lost when U.S. Memories, a proposed commercial consortium that would have produced chips with some of the technology developed by Sematech, failed to gain sufficient financial support from the industry to move forward.

Still, Sematech and its member companies claim the group has made significant progress in areas such as developing quality-control techniques for chip-making gear and improving cooperation between chip manufacturers and equipment vendors.

Jim Bagley, president of Applied Materials, a major chip-equipment firm, said, “I think they are making a useful contribution. Many of the things they have done have benefited the equipment industry.”

Indeed, despite all its problems, Sematech remains one of the few responses to Japan that U.S. industry has mounted.