Applied Materials in Dow Jones Op-Ed: America’s Next Great Industry

Applied Materials in Dow Jones Op-Ed: America’s Next Great Industry

Below is the extended version of an Op-Ed by Applied Materials chairman and CEO Mike Splinter which was published in Dow Jones today:

In 1960 the semiconductor industry was in its infancy. The first integrated circuits contained just a few transistors and the production costs were about $1,000 per circuit in 1960 dollars.  The only viable applications for this early technology were two programs, the Minuteman missile and the Apollo space program. And these programs bought nearly every circuit produced between 1960 and 1963.

The result of this early market creation by these government programs was that the cost per circuit dropped to an astonishing 98 percent to $25 by 1963 -- and an industry was born. This year, the world will produce about a quintillion transistors or one to the 18th power and the semiconductor industry will generate about $300 billion in revenue. As for the cost per transistor – today’s $200 MP3 player produced in 1975 would have cost about $3 billion.

Today, we are once again seeing these forces at work.  On the horizon is the next great global industry.  If we make the right decisions today, the country can be the beneficiary of what I believe will be the biggest creator of jobs and economic development this century - energy technology.  The Kerry Lieberman “American Power Act” is an important first step in making this happen.  The proposed legislation would use market based solutions to establish a price for the carbon we emit and drive a real commitment to renewable energy in this country.  

These kinds of policies would help spur the energy technology industry in the United States and build the foundation of a long term economic engine.  They will do for energy technology what the space program did for integrated circuits.  They will help create scale, which will drive down prices, expand access and ultimately create a low cost domestic energy industry that will solve the environmental, national security, economic challenges we face today.  

Worldwide demand for electricity is forecasted to rise from 18 trillion kilowatt-hours in 2006 to about 32 trillion kilowatt-hours in 2030.  The question is, will this mean the destruction of our economy, our environment and our way of life - or will it be the greatest economic opportunity in this nation's history?  According to Bloomberg New Energy Finance, spending on renewable energy assets needs to increase to $500 billion dollars annually by 2030.

Rest assured that China’s leaders are serious about dominating next generation energy markets and are moving at warp speed to establish global leadership in energy technology.  China has instituted market-making renewable energy goals, including the development of 20 gigawatts of solar energy by 2020, and has established low-cost financing at the national and provincial levels to encourage clean energy manufacturing.   Similarly, India has a mission to deploy 20 gigawatts of solar by 2022. This country must enact similar policies if we hope to compete – a national renewable electricity standard, low cost financing for renewable projects and increased federal procurement of renewable energy.

Our failure to act has consequences.  Ten years ago, the U.S. accounted for 40 percent of worldwide solar manufacturing. Today that figure is less than 10 percent.  Meanwhile, China has gone from producing five percent of the world’s solar panels in 2007 to nearly half last year.  In California, where the overwhelming majority of solar panels are deployed in the US, the share of Chinese-made solar panels has grown from two percent to 46 percent in the past three years, with China’s market share doubling in 2009 alone.

Over the next five years, China, India and Japan will out-invest the US in energy technology by at least three-to-one. That commitment is laying the groundwork for a flood of private investment.  Clean energy investments in Asia surpassed the Americas for the first time ever last year.

It’s critical that the Senate move quickly to advance the energy and climate change legislation introduced this week by Senators Kerry and Lieberman. This bill, when added to other legislative action, will help create the policy environment we need to foster and encourage the growth of a robust renewable energy industry in the U.S.

In earlier generations, this nation devoted massive resources to taming rivers to create electricity, developing railroads to open the Western frontier and building interstate highways to connect us -- creating the infrastructure needed for the world’s most vibrant economy.  These were not altruistic activities; they were investments in our economic future based on a vision of where we were going as a nation.

The choice to invest again is before us.  Are we willing to risk our previously unmatched advantage in innovation that has fueled our growth this past century or will we seize the opportunity to create the next great American industry – an industry rooted in something truly historic -- taking the environmental movement a step further and using it to drive our economy forward?

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