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Correspondence: Office of Science and Technology Policy [Climate Change, Global Change, various reports and booklets]
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Records of the Council of Economic Advisors (George H. W. Bush Administration)
Michael J. Boskin Subject Files
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Originally Processed With FOIA(s):
foia Number:
2005-0336-F
2005-0336-F
FOIA
MARKER
This is not a textual record. This is used as an
administrative marker by the George Bush Presidential
Library Staff.
Record Group/Collection: George H.W. Bush Presidential Records
Collection/Office of Origin: Economic Advisers, Council of
Series:
Boskin, Michael, Files
Subseries:
Correspondence by Agency Files
OA/ID Number:
08080
Folder ID Number:
08080-020
Folder Title:
Correspondence: Office of Science and Technology Policy [Climate Change, Global Change, various
reports and booklets]
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13
25
5
2
THE WHITE HOUSE
WASHINGTON
June 25, 1992
Dear Michael:
Recently, the President submitted a pre-print version of the
attached report on Science and Technology to the Congress. The
report is required by law and was prepared by my office, with
wide cooperation and coordination throughout the
Administration.
The President's Report on Science and Technology serves as a
summary of the accomplishments of the Bush Administration
and offers an outlook for future progress in a number of key
areas. As you look over this report, I am sure you will agree
with me that this Administration has a great story to tell in
terms of its activities in--and support of--science and technology.
Let me thank you for your strong and vigorous support in this
effort. Your help, cooperation, and advocacy have made the
President's science and technology record an historic success.
Sincerely,
Ann
D. Allan Bromley
The Assistant to the President
for Science and Technology
Attachment
Michael J. Boskin
Chairman
Council of Economic Advisers
314 EOB
Washington, D.C. 20500
M.
THE WHITE HOUSE
WASHINGTON
June 2, 1992
They Baskin Allan
MEMORANDUM FOR CLA YTON YEUTTER
FROM:
D. ALLAN BROMLEY
Alan
SUBJECT:
Cline report on Potential Damages from Climate Change
While I was on travel I received your note asking for comment on a summary of a report
by William Cline of the Institute for International Economics (IIE) on the potential
damages of climate change, and a letter to you from C. Fred Bergsten, Director of ПЕ,
suggesting a briefing on the report.
This note is to provide you with some very preliminary comments; we have not yet seen
the published report (I understand it is still in publication). We have seen an outline of
the report, and a member of my staff attended Cline's seminar presentation at
Resources for the Future (RFF) last month.
Cline's analysis
The best point in Cline's argument is that the calculation of the potential total damages
associated with potential global warming cannot stop arbitrarily at an assumed doubling
(from pre-industrial levels) of carbon dioxide (CO2) concentrations in the atmosphere.
This is because, as Cline rightly points out, any damages would be associated with the
total warming, which could theoretically proceed beyond the level of the climate
sensitivity to a CO2 doubling (i.e., 1.5-4.5 degrees centigrade) if concentrations rise
beyond a doubling. It is plausible, if current emissions trends continue, that global
concentrations will rise above a doubling of preindustrial CO2 by sometime around the
year 2100.
On this basis, Cline criticizes the damage calculations performed by Nordhaus and
others for stopping at a doubling of CO2 levels. Nordhaus estimated damages to the
U.S. economy of 0.26% of GNP lost by 2050 as a result of the 1.5-4.5 degree C warming
assumed to occur as a result of doubling CO2. Cline takes the analysis further,
projecting a tripling or higher levels of CO2, and an associated warming of 10-18
degrees C, by "late in the 23rd century." He then estimates damages of 6% of GNP by
that time, up to 20% of GNP under a more "pessimistic" scenario.
Questions about Cline's predictions
Cline's analysis is interesting from a conceptual point of view. But his specific damages
estimates are subject to criticism or question on several fronts. First, several of the
specific sub-categories are based on unusual assumptions. For example, Cline noted at
the RFF seminar that his estimate of "species loss" was derived by taking the economic
losses due to timber losses and salmon run depletions in the Pacific Northwest and
"multiplying them by 25." No rationale for this surprising method was articulated.
(Perhaps it will be explained in the final report.)
As a result of what seem to be strained assumptions like these, Cline's higher damage
estimates are not solely the product of his extending the analysis over a longer time
period and higher CO2 concentrations and temperature changes than did Nordhaus.
Even stopping at the CO2-doubling assumed by Nordhaus, Cline estimates the damages
at about 1% of GNP foregone from a 2.5 degree C warming (four times higher than
estimated by Nordhaus).
Second, Cline's extrapolation over three centuries, while fascinating, generates quite
tenuous numerical estimates. Cline appears to assume little or no progress in
knowledge and technology that could assist adaptation over these centuries. Over the
course of hundreds of years, know-how and technology would be likely to change
significantly in ways that make societies and economies (and probably ecosystems) much
more resilient to warming than they would be with current knowledge. Imagine anyone
trying to predict in 1700 what the effects of future climate would be on world agriculture
through 2000! Even assuming that this mythical forecaster knew with perfect accuracy
what the global temperature record would look like over 1700-2000, he could not
possibly foresee the dramatic improvements in agricultural output per acre that have
occurred in the past three hundred years. Forecasting damages through 2200 today is
similarly likely to overestimate future damages. Hence Cline's damage forecasts may
not be as "stunning" as Bergsten's letter remarks.
It is worth noting that when Cline estimates the cost of limiting greenhouse gas
emissions, he appears to be quite optimistic about the development of new technologies
that will lower the costs of doing so. How then can he not be at least equally optimistic
about the development of new technologies and knowledge to lower the costs of adapting
to a new climate? One answer might be that rapid short-run warming would be too fast
to adapt to, but Cline's projection is far longer-term than that.
Third, because the damages are expected to occur over several centuries, far-off losses
would need to be discounted to calculate their present value. But Cline chooses a very
low, almost negligible discount rate.
Comparing predicted damages with the costs of preventing warming: no
recommendation for stiff targets
Finally, even assuming such high damages and low discount rates, Cline concludes that
the cost of limiting emissions to prevent these damages (i.e, to prevent the increase in
CO2 concentrations that would generate the higher longer-term temperature changes on
which his damages estimates rely) would be about equal to the damages prevented.
Thus, even on Cline's analysis, limiting GHG emissions today is only barely
cost-beneficial. This is a sobering finding.
Cline therefore ends up advocating not a top-down international target and timetable
approach, but rather what he calls an "ambulatory targets approach" that begins with
research, reducing energy subsidies, and voluntary national action plans. Only if the
research reveals greater urgency would Cline advocate stiffer measures.
This is precisely consistent with U.S. policy and with the Framework Convention on
Climate Change we have just negotiated. The point about reducing energy subsidies is
one recently made by the World Bank, which estimates in its 1992 World Development
Report that eliminating world energy subsidies of $230 billion a year (especially high in
Eastern Europe and the CIS) would reduce global CO2 emissions by 10% by 2000, at a
net economic gain for those countries. This may be a point the U.S. government could
make more forcefully in the future.
These comments are, again, preliminary, as the final report has not yet been published.
THE WHITE HOUSE
WASHINGTON
February 18, 1992
MEMORANDUM FOR THE SECRETARY OF THE TREASURY*
THE SECRETARY OF DEFENSE
THE SECRETARY DESIGNATE OF COMMERCE
THE SECRETARY OF HEALTH AND HUMAN SERVICES
THE SECRETARY OF ENERGY
THE DIRECTOR OF THE OFFICE OF MANAGEMENT AND
BUDGET*
THE CHAIRMAN OF THE COUNCIL OF ECONOMIC
ADVISERS*
THE ASSISTANT TO THE PRESIDENT FOR
NATIONAL SECURITY AFFAIRS*
THE ADMINISTRATOR OF THE NATIONAL AERONAUTICS
AND SPACE ADMINISTRATION
THE DIRECTOR OF THE NATIONAL SCIENCE FOUNDATION
FROM:
D. ALLAN BROMLEY Allan
SUBJECT:
THE CRITICAL TECHNOLOGIES INSTITUTE
The Operating Committee of the Critical Technologies Institute (CTI) was established by
Public Law 102-190 on December 5, 1991. Seven of its members were specified by the
legislation and four additional members were appointed by the President on January 10;
these are indicated by asterisks in the above listing.
The Institute itself is being established as a Federally Funded Research and Development
Center (FFRDC) by the National Science Foundation. The deadline for proposals from
organizations and institutions wishing to house the CTI was January 31, 1992 and these
proposals are now under review using standard NSF procedures and a selection panel
toward whose membership many of you were requested, by NSF, to make nominations.
I enclose herewith a copy of the founding legislation for your convenience. The President
has requested that I serve as chairman of the CTI Operating Committee.
You will note that the Operating Committee members specified in the legislation may
designate persons to represent them on the Operating Committee. While I fully understand
that your other duties may make this necessary on a continuing basis I would ask that, if
at all possible, you agree to participate in the first few meetings that will establish the all
important general policies and directions of the Institute.
In order for me to schedule an initial meeting of the CTI Operating Committee I shall
much appreciate learning from you whether you are prepared to participate as a member
of this Committee, at least for its initial meetings, or whether you wish to designate an
alternate to represent your agency or department.
The legislation calls for not less than four meetings per year and you have my assurance
that we will not meet more frequently unless we have matters of real significance to
consider.
Because I am convinced that, properly managed, the CTI has the potential of providing
effective support for the President's programs directed toward more effective utilization of
technology in almost every sector of our society, I look forward to hearing from you and to
working with you to make the CTI a success.
Enclosure
November 13, 1991
CONGRESSIONAL RECORD - HOUSE
"SEC 822 CRITICAL TECHNOLOGIES INSTITUTE
formation relating to the technologies iden.
(2) The amendment made by paragraph
"(a) ESTABLISHMENT.-There shall be estab.
lished a federally funded research and devel.
lified in the most recent bicnnial report suo.
(1) shall lake effect as of November S. 1990
milled to Congress by the President pursu-
(3) The sponsoring agreement required by
opment center to be known as the Critical
ant to section 603(d) of the National Science
subsection (g) of section 822 of Public Law
Technologies Institute theretnafter in this
section referred to as the 'Institute').
and Technology Policy. Organization and
101-S10. amended by paragraph (1). shall
"(0) INCORPORATION.-As determined by the
Priorities Act of 1976 (42 U.S.C. 6683(d)).
be entered into not later than February 15.
"(2) Analysis and interprelation of the in.
1992.
chairman of the committee referred to in
formation referred to in paragraph (1) to de-
(d) FUNDING.-(1) To the extent provided
subsection (c). the Institute shall be-
termine whether such developments and
in appropriations Acts. the Secretary of De.
"(1) administered as a separate entity by
an organization currently managing an.
trends are likely to affect United States tech-
sense shall make available to the Director of
other federally funded research and develop-
nology policies
the National Science Foundation, out of
ment center. or
"(3) Initiation of studies and analyses (in-
funds appropriated for fiscal year 1991.
"(2) incorporated as a nonprofit member.
cluding systems analyses and technology as.
$5,000.000 for funding the activities of the
sessments) af:allematives available for en-
institute
ship corporation
"(c) OPERATING COMMITTEE-(1) The Insli-
suring long-term leadership by the United
(2) There is authorized to be appropriated
States in the development and application
for each fiscal year after fiscal year 1991 for
lule shall have an Operating Committee
composed of II members as follows:
of the technologies referred to in paragraph
the Institute such sums as may be necessary
"(A) The Director of the Office of Science
(1), including appropriate roles for the Fed-
for the operation of the Institute
and Technology Policy
eral Government State governments. pri-
(3) Funds appropriated to any department
"(B) The Secretary of Defense or the Secre-
vale industry. and institutions of higher
or agency for the Critical Technologics In-
tary's designce.
education in the development and applica-
stitute established under section 822 of the
"(C) The Secretary of Energy. or the Secre-
tion of such technologies.
National Defense Authorization Act for
lary's designee
"(4) Provision, upon the request of the Di-
Fiscal Year 1991. as amended by subsection
"(D) The Secretary of Health and Human
rector of the Office of Science and Technolo-
(c). for fiscal year 1992 by any Act enacted
Services, or the Secretary's designee
gy Policy. of technical support and assist.
before the date of the enactment of this Act
"(E) The Secretary of Commerce. or the
ance-
shall be transferred to the National Science
Secretary's designee
"IA) to the committees and panels of the
Foundation only for the purposes of carry-
"(F) The Administrator of the National
President's Council of Advisers on Science
ing out activities of the Institute
Aeronautics and Space Administration, or
and Technology that provide advice to the
the Administrator's designee
Executive branch on technology policy: and
"(G) The Director of the National Science
"(B) to the committees and panels of the
Foundation, or the Director's designee
Federal Coordinating Council for Science,
"(H) Four other members appointed by the
Engineering. and Technology that are Te-
President from among officials of the Erecu-
sponsible for planning and coordinating ac-
live branch (other than those referred to in
livitics of the Federal Government to ad-
subparagraphs (A) thorough (G)).
vance the development of critical technol-
"(2) The.President shall designate a chair-
ogies and sustain and strengthen the tech-
man of the committee from among the mem-
nology base of the United States.
bers of the commillee who are senior offi-
"(e) CONSULTATION ON INSTITUTE ACTIVI-
cials of the Executive Office of the Presi-
TTES.-In carrying out the duties referred to
dent
in subsection (d), personnel of the Institute
"(3)(A) The term of service of members of
shall-
the committee appointed under paragraph
"(1) consult widely with representatives
(1)(H) shall De four years. except that of the
from private industry. institutions of higher
four members first appointed, one shall be
education, and non-profit institutions; and
appointed for a term of one year. one shall
721 to the marimum extent practicable,
be appointed for a term of two years, one
incorporate information and perspectives
shall be appointed for a term of three years.
derived from such consultations in carrying
and one shall be appointed for a term of
out such duties
four years. The terms of appointment of
.."(f) ANNOXL REPORTS.-The committee shall
members appointed under this subpara-
submit to the President an annual report on
graph shall be designated by the President at
the activities of the committee under this
the time of the appointments
section..Each report shall be in accordance
"(B) A vacancy in a. membership of the
with requirements prescribed by the Prest-
commillee referred to in subparagraph (A)
dent
shall be filled in the same manner as the
(g) SPONSORSHIP.-11 The Director of the
original appointment. A member appointed
National Science Foundation shall be the
under this. subparaoraph shall serve the re-
sponsor of the Institute
mainder of the unexpired term of the prede-
1."(2) The Director of the National Science
cessor of the member.
Foundation, tn consultation with the chair-
"(CI Members of the committee referred to
man of the committee, shall enter into a
in subparagraph (A) may be reappointed.
sponsoring agreement with respect to the In-
"(4). The commillee shall meet not less
stilute: The sponsoring agreement shall re-
than four times a year.
quire that the Institute carry out such func-
"(d) DUTIES-The dulies of the Institute
tions as the chairman of the committee may
shall include the following:
specify consistent with the dulies referred to
"(1) The assembly of timely and authorita-
in subsection (d). The sponsoring agreement
lice information regarding. significant de-
shall be consistent with-the general require-
velopnients and trends in technology re-
ments prescribed for such a sponsoring
search and development in the United States
agreement by the Administrator for Federal
and abroad, with parlicular emphasis on in-
Procurement Policy.".
THE WHITE HOUSE
WASHINGTON
July 12, 1991
MEMORANDUM TO MICHAEL BOSKIN
FROM:
D. ALLAN BROMLEY
Ann
SUBJECT:
WORKSHOP IN PUERTO RICO TO DEVELOP PLANS FOR
A WESTERN HEMISPHERE GLOBAL CHANGE RESEARCH
INSTITUTE
You recall that the concept of a regional global change institute was proposed during
the White House Conference on the Science and Economics of Global Change last
April. During the President's very successful Latin American trip last December, I
had the opportunity to discuss the proposed institute, along with other science,
technology and environmental issues with senior officials in Brazil, Uruguay,
Argentina, Chile, and Venezuela. The meetings resulted in a good exchange of views
and enthusiastic support for the institute concept in each of the five countries visited.
I asked the Committee on Earth and Environmental Sciences of the Federal
Coordinating Council for Science, Engineering and Technology (FCCSET) to plan and
host a scientific workshop. It will provide a forum for discussion of the concept of a
regional global change institute by the countries in the Western Hemisphere.
The workshop will take place in San Juan, Puerto Rico from July 15 to July 19, 1991.
We have had an excellent response to the workshop from the countries in the Western
Hemisphere and expect a successful workshop. I am attaching a list of the country
participants and a copy of the agenda for your information. I shall give you a report
on the outcome of the workshop as soon as it is available.
THE WHITE HOUSE
WASHINGTON
October 8, 1991
MEMORANDUM FOR MICHAEL BOSKIN
FROM: D. ALLAN BROMLEY Aucun
SUBJECT: MEETING OF THE PRESIDENT'S COUNCIL OF ADVISORS ON
SCIENCE AND TECHNOLOGY (PCAST)
The PCAST will meet Thursday, October 10, 1991. You are most cordially invited to
attend. A draft Agenda is attached.
Please call Tom Welch, Executive Director, PCAST, X4692 by 1:00PM Wednesday,
October 9, if you plan to attend.
Attachment
October 8, 1991
PRESIDENT'S COUNCIL OF ADVISORS
ON SCIENCE AND TECHNOLOGY
OCTOBER 10, 1991
AGENDA
THURSDAY, OCTOBER 10, 1991
OPEN SESSION 9:00 AM - 10:15 AM
CONFERENCE ROOM
COUNCIL ON ENVIRONMENTAL QUALITY
722 JACKSON PLACE, NW
8:30 - 9:00
ARRIVAL AND COFFEE
9:00 - 9:15
OPENING REMARKS
DR. BROMLEY
9:15 - - 10:00
TWENTY YEAR TRENDS IN
DR. ELLIOT
THE NATIONAL ASSESSMENT OF
EDUCATIONAL PROGRESS
10:00 - 10:15
CLOSING REMARKS
DR. BROMLEY
AND MOVE TO ROOM 180,
OLD EXECUTIVE OFFICE BUILDING
THURSDAY, OCTOBER 10, 1991 Continued
CLOSED SESSION 11:30 AM - 1:00 PM
ROOM 180
OLD EXECUTIVE OFFICE BUILDING
10:15 - 10:45
PANEL PROGRESS REPORT
- Education and Human Resources
DR. LIKINS
DR. DRAKE
10:45 - 12:00
DISCUSSION OF PCAST PANEL DRAFT PAPER
- Global Environment and Natural Resources
DR. LOVEJOY
DR. BORLAUG
12:00 - 1:00
LUNCH (In Indian Treaty Room, OEOB Room 474)
CLOSED SESSION 1:00 - 3:00 PM
ROOM 180
OLD EXECUTIVE OFFICE BUILDING
1:00 - 1:30
DISCUSSION OF PCAST PANEL DRAFT PAPER
- Science, Technology and
DR. BUCHSBUAM
National Security
1:30 - - 3:00
PANEL PROGRESS REPORTS
- High Performance Computing and
DR. BUCHSBAUM
Communications
DR. GOMORY
- Bioscience and Biotechnology
DR. NATHANS
DR. BORLAUG
- Megaprojects in the Sciences
DR. MCTAGUE
DR. SHAPIRO
- International Economic Competitiveness
DR. GOMORY
DR. SHAPIRO
CLOSED SESSION 3:00 - 5:00 PM
ROOSEVELT ROOM
WEST WING
3:00 - 4:30
DISCUSSION
4:30 - 5:00
DISCUSSION OF NOVEMBER AGENDA
DR. BROMLEY
AND CLOSING REMARKS
THE WHITE HOUSE
WASHINGTON
July 9, 1991
MEMORANDUM FOR MICHAEL BOSKIN
FROM:
D. ALLAN BROMLEY Anar
SUBJECT: MEETING OF THE PRESIDENT'S COUNCIL OF ADVISERS ON
SCIENCE AND TECHNOLOGY (PCAST)
The PCAST will meet Wednesday, July 10, and Thursday, July 11, 1991. You are
most cordially invited to attend. The meeting will include some time with the
President. The meeting Agenda is attached.
Attachment
PRESIDENT'S COUNCIL OF ADVISORS
ON
SCIENCE AND TECHNOLOGY
JULY 10-11, 1991
AGENDA
WEDNESDAY, JULY 10, 1991
CLOSED SESSION 1:00 PM - 5:00 PM
ROOSEVELT ROOM
WEST WING
WHITE HOUSE
1:00 - 1:15
ARRIVAL AND COFFEE
(DR. BROMLEY'S OFFICE, ROOM 358, OEOB)
1:15 - 1:30
-- Move to Roosevelt Room --
1:30 - 1:45
OPENING REMARKS
DR. BROMLEY
1:45 - 2:00
PREPARATION FOR THIS AFTERNOON
DR. BROMLEY
2:00 - 2:30
EDUCATION AND HUMAN RESOURCES
DR. LIKINS
PANEL
- A Progress Report
2:30 - 3:00
THE FEDERAL COORDINATING COUNCIL FOR
MS. BACH
SCIENCE, ENGINEERING, AND TECHNOLOGY
- An Update on Budget Crosscuts
and Other Initiatives
3:00 - 3:30
DISCUSSION
3:30 - 3:45
BREAK
3:45 - 4:30
MEET WITH THE PRESIDENT
4:30 - 5:00
CLOSING REMARKS
DR. BROMLEY
THURSDAY, JULY 11, 1991
OPEN SESSION 9:00 AM - 11:15 AM
CONFERENCE ROOM
COUNCIL ON ENVIRONMENTAL QUALITY
722 JACKSON PLACE, NW
8:30 - 9:00
ARRIVAL AND COFFEE
9:00 - 9:15
OPENING REMARKS
DR. BROMLEY
9:15 - 10:00
THE HUMAN GENOME PROJECT
DR. WATSON
10:00 - 10:15
DISCUSSION
10:15 - 10:45
CRADAs - - COOPERATIVE RESEARCH AND
MR. ALLEN
DEVELOPMENT AGREEMENTS
- An Overview
10:45 - 11:00
DISCUSSION
11:00 -
CLOSING REMARKS
DR. BROMLEY
AND MOVE TO INDIAN TREATY ROOM,
ROOM 474, OLD EXECUTIVE OFFICE BUILDING
Note: Please use the Pennsylvania Avenue Entrance
to the OEOB.
THURSDAY, JULY 11, 1991 Continued
CLOSED SESSION 11:00 - - 1:00 PM
INDIAN TREATY ROOM
ROOM 474
OLD EXECUTIVE OFFICE BUILDING
11:15 - 12:00
NATIONAL SECURITY AND
DR. BUCHSBAUM
TECHNOLOGY PANEL
- A Progress Report
HIGH PERFORMANCE COMPUTING
DR. BUCHSBAUM
AND COMMUNICATIONS PANEL
- A Progress Report
12:00 - 12:15
BREAK FOR LUNCH SETUP
12:15 - 1:00
LUNCH
CLOSED SESSION 1:00 - 5:00 PM
ROOM 476
OLD EXECUTIVE OFFICE BUILDING
1:00 - 1:30
GLOBAL ENVIRONMENT AND NATURAL
DR. LOVEJOY
RESOURCES PANEL
- A Progress Report
1:30 - 2:00
PANEL ON MEGAPROJECTS IN THE
DR. McTAGUE
SCIENCES
DR. RATCHFORD
- A Progress Report
2:00 - 2:30
BIOSCIENCE AND BIOTECHNOLOGY
DR. NATHANS
PANEL
- A Progress Report
2:30 - 3:00
PCAST PANEL PROCEDURES
MS. VAN CLEAVE
- Legal Considerations
3:00 - 3:15
BREAK
3:15 - 3:45
THE S&T BUDGET
MR. GRADY
- FY 1992
- FY 1993
3:45 - 4:00
DISCUSSION
4:00 - 4:15
PANEL ON INTERNATIONAL ECONOMIC
DR. PHILLIPS
COMPETITIVENESS
- A Progress Report
4 15 - 4:30
UPDATE ON OMB CIRCULAR A-21
DR. HENDERSON
4:30 - 5:00
OTHER BUSINESS
DR. BROMLEY
AND CLOSING REMARKS
THE CHAIRMAN OF THE
COUNCIL OF ECONOMIC ADVISERS
WASHINGTON
June 25, 1991
MEMORANDUM FOR D. ALLAN BROMLEY
FROM:
MICHAEL J. BOSKIN mms
SUBJECT:
Draft Article for Science
Thank you for giving me the opportunity to comment on your draft article
for Science. For the most part--with several important exceptions noted on the
attached--I believe the draft provides a strong statement of views widely shared
within the Administration.
The attached markup outlines my suggested revisions. Some of the
suggested changes are minor and will improve the readability of the article. Others
will bring the text in line with Administration policy.
I assume you will find these revisions acceptable. If any questions arise,
please do not hesitate to have your staff contact Harry Broadman in my office.
Attachment
DRAFT
[June 18, 1991]
SCIENCE AND TECHNOLOGY IN THE BUSH ADMINISTRATION
by D. Allan Bromley
One of the most important policy initiatives of the Bush
Administration -- though it has gone largely unnoticed by the
general public -- has been its promotion of science and "the in tegation of
technology
If Congress enacts the President's most recent
S+T into
budget proposals, funding for federal nondefense research and
economic
and other
development will have gone up over 50 percent since George Bush's
policy
election, and defense R&D will have risen about 10 percent even
considerations"
as growth in the defense budget has slowed. Moreover, the
President has taken a number of steps to increase the
Policy making activities and
coordination of federal science and technology to consult with
the private sector on federal science and technology policies
and to more fully introduce considerations of science and
repeats technology into broader policy issues In general, the Bush
Administration has been strengthening the foundations of science
and technology in ways that will pay dividends for years to come.
Though he claims to have only a modest understanding of
science and technology, President Bush has long been interested
in these subjects. He spoke often about science and technology
during his campaign, and the personnel decisions he made after
his election reflected that interest. Chief of Staff John Sununu
is a Ph. D. mechanical engineer; Budget Director Richard Darman
has long been an advocate of federal support for science, space,
and technology programs; Council of Economic Advisors e Chairman
Michael Boskin, a Stanford economics professor, has written often
about the importance of technological development to economic
growth; Roger Porter, who is the first assistant to the President
2
with responsibility for both economic and domestic policy, has
helped develop a domestic agenda that features science and
technology; and Brent Scowcroft, the Assistant to the President
for National Security Affairs, has a great interest in the
confluence of science, technology, and national security.
Furthermore, the President has put together an executive office
in which the various individuals and agencies work together to an
unprecedented degree, at both the staff and executive levels, on
issues that extend beyond single areas of concern. Though the
science advisor may have the highest visibility in the science
and engineering communities, the progress now being made in
science and technology policy would not be possible without the efforts
and early planning of many other individuals within the Executive
Office of the President.
During his campaign, President Bush also promised to appoint
a Council of Advisors on Science and Technology, and PCAST has
been meeting monthly for over a year at the White House. The
President and other members of the White House senior staff sit
in on portions of virtually all those meetings, providing a
valuable opportunity for private sector input directly to the
highest levels of the Executive Branch. The President has also
greatly strengthened my position and that of the Office of
Science and Technology Policy, making me the Assistant to the
President for Science and Technology and nominating all four
legislatively authorized OSTP Associate Directors for the first
time in the office's history.
In addition, with the President's strong support, the
Federal Coordinating Council for Science, Engineering, and
Technology (FCCSET) has been restructured and revitalized, and
the Cabinet secretaries and Directors of the departments and
independent agencies involved with science and technology have
policy
become the Council's members. FCCSET is the internal, federal
interagency body, with roots dating back to the Eisenhower
Administration, that is charged with coordinating federal
activities in science and technology that cut across the missions
3
of more than any one federal agency. Often overlooked in the
past, FCCSET has the potential to make far-reaching changes in
the federal government's coordination and integration of science
and technology It can organize integrated multiagency plans in
specific areas -- as it has recently done for global change, for
high performance computing and communications, and for science
and mathematics education, with similar efforts under way for
biotechnology and for materials science and engineering -- while
retaining the traditional strengths of a pluralistic R&D
enterprise. It can also identify, analyze, and introduce issues
related
science and technology into other areas of federal
policymaking within the White House, in the rest of the Executive
Branch, and in Congress.
Bolstered by this strengthened science and technology policy
apparatus, the reflects federal government's approach to science and
technology has been undergoing evolutionary changes consistent
with a vision ed that President Bush and his senior advisors began
to spell out well before his election. I would propose to
illustrate such changes by looking at three broad areas of
current concern: the support of academic research, the federal
government's R&D portfolio, and the development of T a federal
technology policy.
The Academic Research Enterprise
The United States makes greater demands on its research
universities than does any other nation, and the success of our
research universities in meeting those demands has helped to
build the strongest science and technology enterprise that the
world has ever known. One measure of this success is the
influence of the academic research enterprise compared to its
overall size. According to data gathered by the National Science
account for
Foundation, colleges and universities conduct less than 10
percent of the research and development done in the United States
Lexpenditure
research conducted
at academic institutions is
4
(measured in terms of funding alones. Yet these institutions are
the primary source of the new observations, new ideas, and new
techniques that underpin the remainder of the science and
technology enterprise and contribute so heavily to economic
growth, to an improved quality of life, and to our national
security.
NSF data also indicate that academic scientists and
engineers who do research as their primary or secondary work
activity make up fewer than 5 percent of the total number of
scientists and engineers in the United States. Yet they train
virtually all future research scientists and engineers and are
also
involved in the training of a large fraction of the scientists
and engineers who become involved in activities other than
academic researchers
At the same time,
research.
The importance of the academic research enterprise to the
nation's future prosperity and security is reflected in the
funding trends of the 1980s. Total R&D expenditures at colleges
and universities rose from $6 billion in 1980 to $14 billion in
why not
1989, an increase of over 50 percent in constant dollars. Over
state in
that same period, federal funding of R&D at academic institutions
rose from about $4 billion to about $9 billion (35 percent in
terms? real
real terms) ; therefore, other sources of funding -- state and
local governments, industry, and the institutions' own funds --
rose even faster than did federal spending.
As a result of these
increases More researchers are now being supported at the
non-
nation's colleges and universities than have ever been supported
seguiter
in history.
It may seem paradoxical, given these increases in funding,
that the academic research community should consider itself to be
in a state of acute distress, with some commentators suggesting
that the future vitality of the enterprise is awk at stake. There
appear to be several interrelated factors at play. First, we are
may he
undoubtedly the victims of our own success. Progress in research
has generated an unprecedented number of opportunities in
science, and our success at training academic researchers has
produced many young people who are more than ready to grasp those
5
opportunities. Though available levels of funding have
increased, the numbers of opportunities and researchers have
increased even faster.
A number of other, interrelated factors have also increased
pressures on academic researchers. Larger numbers of researchers
are submitting multiple proposals and amended proposals, creating
a proposal pressure that has stressed the peer review system. In
addition, the decision at NIH to lengthen the duration of grants,
a decision endorsed by investigators, has created outyear
CommitmentEages that have reduced funding for new awards and new
investigators. In some areas, the costs of doing increasingly
sophisticated research have gone up faster than the usually
quoted Consumer Price Index (CPI) rate of inflation. New
organizational arrangements in research universities, such as the
greater use of nonteaching researchers and the development of the
"entrepreneurial" principal investigator, have created structural
stresses on the system. New but necessary regulations have
brought increased administrative costs, which have further
drained funds from the support of research. Obviously, given the
complexity of the issues involved, there can be no simple
solutions to these problems.
The economic and social utility of research should be kept this
was
in mind. A recent study by the distinguished economist Edwin
the 80s
Mansfield of the University of Pennsylvania calculated the social
rate of return on federal support of academic research to be in
the 25 to 40 percent range. (The social rate of return is
defined as the benefits that producers and consumers receive from
new products and processes, including those benefits not
reflected in market prices.) This economic indicator is a very
important one, and one that the science and engineering
communities have long needed.
It is essential, however, that potential or actual rate S of
returns not obscure the other important rationales for both
fundamental and applied research. Such activities -- pushing
back the frontiers of human ignorance -- are among the greatest
challenges?)
6
adventures available to our species. They are integral parts of
our culture and are part of what separates us from all other
species on our planet.
The Bush Administration, recognizing the pivotal role of
academic research, has moved forward on two broad fronts to
strengthen this component of the R&D system. First, it has
proposed substantial increases for the federal support of
university-based research, and these increases have been
structured with particular emphasis on individual investigators.
Of the 18 percent increase requested for the National Science
Foundation in the President's FY 1992 budget request, over 80
percent would go directly to individual investigators and their
research infrastructure. At the National Institutes of Health,
FY 1992 funding for research project grants is slated to grow by
9 percent while the overall NIH budget grows by 6 percent. And
at a time of declining defense budgets, the Department of
Defense's University Research Initiative has been protected from
budget cuts.
The Bush Administration is also committed to ensuring that
the mechanisms of federal support for academic research are the
most appropriate ones for the needs of the nation and the needs
of the research universities. Within the Executive Office, and
of the President
through FCCSET and PCAST, the Administration has been conducting
a broad analysis of the mechanisms of federal support for
academic research. For example, through a Working Group on the
Structure of Science Support, FCCSET has been examining
historical trends in federal R&D funding by the purpose of that
funding and the mode in which it is distributed. This analysis
will be used by FCCSET to provide input to policy discussions
concerning future directions in federal support.
One of the important distinctions being examined by the
FCCSET working group has been that between disciplinary research
and thematic research. The working group defines disciplinary
research as research driven entirely by the pursuit of knowledge
and by individual curiosity. This research typically takes place
a
7
within formal academic disciplines and is guided by the history
and traditions of that discipline.
Thematic research, on the other hand, is guided by a
particular goal or national need, such as the need to understand
global climate change, the goal of deciphering the human genome,
the economic promise of high performance computing, or the
challenge of confronting the AIDS epidemic. Thematic research is
can be either basic or applied
not necessarily applied or strategic research, since basic or
fundamental research is integral to addressing these needs But
it
is driven by factors other than the pure intellectual
curiosity of the researcher and generally cuts across a number of
scientific disciplines, including those of the social and
behavioral sciences.
According to the working group, support for thematic
research at universities has grown faster during the 1980s than
has that for disciplinary research in some areas. [We are trying
to get overall numbers from the working group, though they may
not be available for several months.] In part, this reflects the
increasing integration of science and technology into our society
and the demand that science and technology address important
regional, national, and international needs. For example, the
U.S. Global Change Research Program and the high performance
computing and communications initiative, which are both
highlights of the 1992 budget submission, constitute an
acceleration of this trend. However, the increasing role of
thematic research may also contribute to the frustration felt by
many in the disciplinary research community.
Disciplinary research remains an absolutely vital component
of the research system because it is the most fruitful source of
new knowledge in science and because it exerts very effective
quality controls on the rest of the system. At the same time,
thematic research has become an essential source of the knowledge
needed to address many of today's most pressing national and
international problems. The challenge for policymakers,
administrators, and researchers is to balance these two types of
8
activity to best serve the public interest.
The Government's R&D Portfolio
Achieving balance within the academic research community is
just one aspect of a much broader process of evaluation and
priority setting that goes on continually within the federal
government. Support for academic research and development
constitutes only about a third of the federal government's total
support for nondefense R&D (and less than a sixth of the
government's support for both civilian and defense R&D, including
about $1 billion of defense money that goes to universities).
The rest goes toward a tremendously diverse set of other
activities, from small grants for work conducted in nonacademic
settings to the work of the national laboratories to large
projects that serve broad groups of researchers, often referred
to as megaprojects.
These megaprojects are especially visible within the
scientific community and to the general public, but there are
many difficulties in using them to draw a sharp distinction
between large science and small science. Large projects include
both single facilities (the Superconducting Super Collider) and
coordinated programs of research being done by individual
investigators (the Human Genome Project). Some large projects
pursue disciplinary research (e.g., telescopes or light sources)
while others are focused on thematic research (the U.S. Global
Change Research Program).
The large projects now being undertaken will provide the
tools that individual investigators will need to reach the
frontiers of their fields five or ten years down the road. The
people who will use these facilities are typically individual
faculty members with a few assistants and/or students, and their
research will be indistinguishable from that done in other
locations. The projects are initiated from the bottom up,
9
through proposals submitted by groups of researchers to the
appropriate federal agencies.
Many people both inside and outside of the scientific
community have called for these projects, together with the
ensemble of all science R&D activities, to be judged by a given
set of criteria and assigned a priority, presumably so that items
can be cut from the bottom of the list when funding is short. In
fact, it is not meaningful to rank order these projects in any
one-dimensional linear array. Different categories of R&D
activities must be judged by different selection and evaluation
criteria. Disciplinary research projects, for example, are
selected primarily on the basis of their scientific merit to the
discipline in question, whereas thematic projects are selected
for the combined scientific merit and relevance to the overall
goals of the program.
Other large projects, such as the space station and the
Moon-Mars Initiative, have never been primarily science projects,
though for the purposes of the budget they may be categorized
entirely as research and development. Rather, they are justified
primarily on the basis of such considerations as exploring
physical frontiers, inspiring students to enter science and
technology, or maintaining national leadership in a given area.
The vast majority of defense R&D is judged by yet another
set of criteria -- the need to develop, test, and evaluate new
and improved weapons and support systems. Less than 10 percent
of the Defense Department's R&D budget goes for basic and applied
research that can be judged by many of the same criteria applied
to nondefense R&D. In this sense, it can be misleading to
compare the relative size of the defense and nondefense R&D
budgets; the more relevant question is whether each category of
support is enough to meet national needs.
In providing for the nation's security, we need a defense
research base that will guard against technological surprise and
will keep the United States in the lead in uncovering the rare
revolutionary technology breakthroughs that define tomorrow's
10
military advantage. The defense community also needs an
effective means of sustaining and exploiting evolutionary
improvements in weapons technologies.
As Desert Storm reminded us, America's tremendous scientific
and technological strength provides the qualitative edge that has
long ensured the nation's deterrent and helped preserve the
peace. The conflict in the Gulf, the dramatic developments under
way in Eastern Europe, and the continuing uncertainty in the
Soviet Union presage far-reaching changes in the international
environment and in the security needs of the West. With the
globalization of technology and the spread of weapons of mass
destruction, even a relatively undeveloped society can threaten
the United States and its allies. The development and
application of technology to support changing defense, foreign
policy, and intelligence requirements are central Bush
Administration concerns.
Currently a PCAST panel is examining the appropriate roles
of science and technology for national security in the vastly
changed international situation that has developed over the past
eighteen months. OSTP and NSC are cooperating to provide support
for this panel.
Because of the different criteria used to judge various R&D
activities, the budget submitted by the President to the Congress
each year should not be seen as a list of projects ranked by
priority (although a cascade of priority decisions enter into the
budget). Rather, it is best viewed as the Administration's
attempt to achieve the most effective and balanced R&D portfolio
possible. In the process, the Executive Office of the President
-- and particularly OMB and OSTP -- have a unique opportunity to
CEA
examine the entire R&D budget and address the critically
involved
?
important issue of overall balance among its components. Along
the way, many difficult choices must be made. Excellent projects
in worthy fields may need to be delayed or abandoned because they
do not contribute as much to the whole as does some other
project. Any one project may contribute to several objectives,
11
or a project that may not be of "high priority" by itself may
play a critical role in balancing the portfolio.
OMB, working closely with the federal agencies, clearly
bears the primary responsibility for the development of the
President's budget. OSTP provides input and advice throughout
the process in matters relating to science and technology, as
does the Council of Economic Advisors on matters relating to
economic policies. Final decisions on matters that have not been
resolved at lower levels in the system are quite properly made by
the President.
If Congress mandates a different level or allocation of R&D
funding than the President has proposed, I would argue that it
should do so in ways that maintain the overall balance of the R&D
portfolio. For example, cutting a large project from the R&D
budget can seriously skew the distribution of resources and
personnel. The Congress and Administration must work closely
together in maintaining the health and integrity of the R&D
enterprise.
Another Congressional action that can distort the
distribution of R&D resources is the unrequested appropriation of
funds for specific R&D projects or facilities -- a practice
commonly known as earmarking. According to an analysis of the FY
1991 budget conducted within my office, about $427 million was
appropriated for such projects at universities in 1991.
Earmarked projects typically do not undergo merit review, and
thus their potential for contributing to scientific progress is
often unknown. In the present era of tight budgets and spending
caps, earmarking has the effect of substituting projects of
unknown scientific merit for ones that have had careful
examination of their scientific merits and thus threatens to
weaken the nation's R&D effort.
The impossibility of prioritizing all forms of science and
technology according to a single set of criteria does not imply
that more focused prioritizations are not useful. In particular,
priority setting by the scientific and engineering communities is
12
an invaluable aid in establishing a balanced R&D portfolio. In
recent years, several subdisciplines and some disciplines within
science and engineering have been able to establish priorities
within their fields. For example, the astronomers and
astrophysicists have recently produced an excellent list of
priorities under NAS sponsorship, as did the physicists in an
earlier survey in the 1970s. Now the need is for scientists to
establish priorities within broader disciplines -- and to
contribute to the inevitably political task of setting priorities
across disciplines.
In preparing its budget, the Administration must also strike
a balance between R&D activities and the other functions of
government. Research and development now account for about one
seventh of the total domestic nondefense discretionary spending;
the President is proposing that this fraction be increased. In
the FY 1992 budget, for example, he proposed a 13 percent
increase in R&D, despite the overall domestic discretionary
spending being capped at roughly the rate of inflation by last
year's budget agreement. Frank Press, in a recent article in the
Boston Globe, described the budget as having "stronger support
for science than any in recent memory." However, in what is
effectively a zero sum game (in constant dollars), the R&D
component is very visible and very vulnerable to attack by other
strongly motivated, competing constituencies.
The shift of funds from consumption to investment that is
reflected in the Bush Administration's support of R&D represents
an important aspect of the Administration's commitment to what
the President has termed "the next American century."
Politically, such a shift will not be easy to accomplish -- as I
shall describe below -- but the commitment marks an important
step in the federal government's view of its responsibilities.
[A re-typed (heavily Technology edited)
version Federal
13
Policy of section follows P. 16
Federal Technology Policy
below ]
The federal government provides much more support for
applied research and technology development than it does for
basic research. This work is largely directed toward meeting the
federal government's own needs and the needs of the public in
such areas as defense, space, health, and environmental
protection. But this work, together with the basic research that
underlies it, is also important to the public sector in
developing the new products and processes that fuel economic
growth.
Because of the importance of technology to the goals of both
the public and private sectors, the Bush Administration has taken
a number of steps to strengthen its development and deployment.
It has sought to create a financial environment that is conducive
to longer-term investment in technology, through lowering the
federal budget deficit, proposing to cut the capital gains tax,
and protecting intellectual property through international
negotiations. It has encouraged technology transfer and research
cooperation, particularly involving small and mid-sized
companies. It has sought to remove legal and regulatory barriers
to innovation and private sector investments in research and
development. It has proposed making the research and
experimentation tax credit for private firms both permanent and nota very
more broadly applicable. And it has focused on education, which rich
is perhaps the single most important factor in ensuring the long- Statement
term competitiveness of our nation's industries.
The federal government's support of research and development
is an integral part of its technology policy. Through its
support of basic research, it helps generate the new knowledge
that will lead to future technologies and helps train the
scientists and engineers who will develop and use those
technologies. The federal government also has a role in
supporting research on generic, precompetitive technologies that
have the potential to contribute to a broad range of government
from
14
and commercial applications. The government's rationale for
investing in these technologies is essentially the same as that
₹
for investing in basic research -- namely, that while the
jov't
benefits of these technologies are widespread in society, no
argument
or consortia of firms
single firm can appropriate enough of the returns to justify
J
not
by itself an adequate level of investment.
indian mkt failure
A useful test as to whether a technology is precompetitive
alone;
is whether a company is willing to spend money on it in a
cooperative joint venture with its competitors. The results from
consortial may
precompetitive technology investigations can be shared by a group
of companies without reducing the incentives for any of them to
gor +
supplements
further develop competitive proprietary products based on the
work.
mkt leg or it toputer way:
Specific examples of precompetitive technologies can be
the initial round of awards made by the Advanced
Program, which is administered by the National
of Standards and Technology within the Department of
at
Drop
solved firm may forming be by level
Commerce. Eleven projects were selected (Table 1) out of 249
tase
proposals received (totaling $122 million in requests for the
first year). These projects were selected after a rigorous peer
review process involving both technical and commercial
without a twom
assessments. They will receive $9.2 million in federal funds
is
during the first year, with the companies contributing more than
50 percent of the total cost.
An obvious question is why the federal government should
fund even part of the cost of these projects. The answer is that
these projects would very probably not be done at all if left to
private industry. Some are too far from commercial development
for their commercial potential to be assessed. For others,
individual firms cannot capture enough of the benefits to justify
the necessary investment. With federal cost sharing, however,
the risks can be shared and the expertise of private industry can
be tapped to select promising commercial technologies.
At the same time, the federal government does not believe
that it has an appropriate role in targeting particular
this downs for gov't support
15
industries for support or particular technologies for support.
commercialization. The private sector has the principal role in
innovation and in identifying and developing technologies for
commercial products and processes. Even in meeting the
government's own needs, the government relies primarily on the
private sector to undertake the development process and
encourages these activities to be managed in such a way as to
allow commercial applications of the resulting R&D.
The Advanced Technology Program is just one element in a
wide-ranging federal approach to civilian and defense technology
development. Other elements include the Engineering Research
Centers, Science and Technology Centers, and Industry/University
declared & deslar Xr, callet Full
Cooperative Research Centers sponsored by the National Science
Foundation; support of SEMATECH, the National Center for
Manufacturing Sciences, and other partnerships led by the private
sector to advance technology development; the Regional
Manufacturing Technology Centers run by the Department of
Commerce and other outreach efforts designed to reduce the
barriers to the adoption of new technologies; and more widely
based efforts at the over 700 federal laboratories to encourage
technology transfer from the government to private industry.
In particular, the federal laboratories and their staffs
represent a unique American resource of know-how, technology, and
facilities. We have been less successful than we might have
been, however, in exploiting this resource in support of national
goals
The coupling between the laboratories and the private
sector -- particularly small and mid-sized businesses -- has been
less than would have been desirable, although substantial
progress has been made in recent years.
This is particularly the case at the input end of the
decision-making process in the laboratories. While many
laboratories have rather elaborate visiting committee mechanisms
that bring distinguished members of the academic and industrial
sectors into the laboratories to provide overall quality control
and peer review of the research products and programs, such
16
external bodies have little, if any, influence on the selection
of those research projects that are actually undertaken and those
that are, for whatever reason, passed over. If such
consultations were introduced at the outset, the probability of
external interest in, and eventual use of, the products of
research would be substantially enhanced.
What Scientists and Engineers Can Do
In general, the Bush Administration has laid out what we
believe to be a coherent and forward-looking science and
technology policy. But the Administration is just one actor
among many -- including Congress, the science and engineering
communities, and the public -- that determine the nation's
overall science and technology policy. It is in the interaction
among these constituencies that the nation's approach to science
and technology is forged.
One thing that continually amazes me about our system of
government is how truly representative the system is, at both the
executive and legislative levels. Political decisions are rarely
made without a substantial base of consensus. As Benjamin
Franklin once said, "In America the people govern -- if they want
to."
According to the National Science Foundation, there are more
than 5 million scientists and engineers in the United States --
numerically more than three times the number of American lawyers
and physicians combined. There is no reason why this group
cannot be as effective a constituency as the much smaller groups
that successfully promote other forms of federal spending. But
effective advocacy will require a fundamental shift in the
attitudes of scientists and engineers. Scientists and engineers
can no longer sit at home or in their laboratories and trust that
someone in Washington will eventually realize how important their
work is to the future of the nation. There are too many other
REPLACEMENT FOR FEDERAL TECHNOLOGY POLICY SECTION
Federal Technology Policy
Because of the importance of technology to the public and
private sectors, the Bush Administration has taken a number of
steps to strengthen its development and deployment. We believe
that the private sector has the principal role in innovation and
in identifying and developing technologies for commercial
products and processes. Therefore, technology development and
deployment is served, first and foremost, by the creation of a
economic environment that is conducive to longer term investment
in technology. Major efforts in this regard include initiatives
to lower the Federal budget deficit and to cut the capital gains
tax. We have also proposed to make the research and
experimentation tax credit for private firms permanent and to
apply this credit to a broader range of activities. Total R&E
credits provided to support technology development under current
law were $x.x billion in 19xx.
Efforts to establish economic conditions conducive to R&D
activities must be complemented by steps to improve other aspects
of the environment for investment in technology. The
Administration has vigorously pursued the protection of
intellectual rights in international negotiations. It has
encouraged technology transfer and research cooperation,
particularly involving small and mid-sized companies. It has
sought to remove legal and regulatory barriers to innovation and
private-sector investments in research and development. And it
has emphasized the need to improve education, which is perhaps
the single most important factor in ensuring the long-term
competitiveness of our nation's industries.
The Federal Government's direct support of research and
development is another integral part of its technology policy.
Through its support of basic research, government helps generate
the new knowledge that will lead to future technologies and helps
train the scientist and engineers who will develop and use those
technologies. Federal funding for basic research is supplemented
by the larger amount of resources devoted to applied research and
technology development. This work is largely directed toward
meeting the Federal Government's own needs and the needs of the
public in such areas as defense, space, health, and environmental
protection. Even in meeting the Government's own needs, the
Government relies primarily on the private sector to undertake
the development process and encourages these activities to be
managed in such a way as to allow commercial applications of the
resulting R&D. This work, together with the basic research that
underlies it, can be important to the private sector in
developing the new products and processes that fuel economic
growth.
2
The Federal Government does not believe that it has a role
in targeting particular industries or particular technologies for
support. However, the Federal Government does have a limited
role in supporting research on generic, precompetitive
technologies that have the potential to contribute to a broad
range of government and commercial applications. The
Government's rationale for investing in these technologies is
essentially the same as that for investing in basic research --
namely, that while the benefits of these technologies are
widespread in society, no single firm or consortia of firms can
appropriate enough of the returns to justify an adequate level of
investment. (In some cases, the removal of antitrust
restrictions on research cooperation alone will provide a
sufficient incentive for adequate research investment.)
A useful test as to whether a technology is precompetitive
is whether a company is willing to spend money on it in a
cooperative joint venture with its competitors. The results from
precompetitive technology investigations can be shared by a group
of companies without reducing the incentives for any of them to
further development competitive proprietary products based on the
work.
Specific examples of precompetitive technologies can be
found in the initial round of awards made by the Advanced
Technology Program, which is administered by the National
Institute of Standards and Technology within the Department of
Commerce. The projects selected will receive $9.2 million in
Federal funds during the first year, with the companies
contributing more than 50 percent of the total cost.
The Advanced Technology Program is just one element in a
wide-ranging Federal approach to technology development. Other
elements include the Engineering Research Centers, Science and
Technology Centers, and Industry/University Cooperative Research
Centers sponsored by the National Science Foundation; support of
SEMATECH, the National Center for Manufacturing Sciences, and
other partnerships led by the private sector to advance
technology development; the Regional Manufacturing Technology
Centers run by the Department of Commerce and other outreach
efforts designed to reduce the barriers to the adoption of new
technologies; and more widely based efforts at the over 700
Federal laboratories to encourage technology transfer from the
Government to private industry.
In particular, the Federal laboratories and their staffs
represent a unique American resource of know-how, technology, and
facilities. We have been less successful than we might have
been, however, in exploiting this resource. Coordination between
the laboratories and the private sector -- particularly small and
3
mid-sized businesses -- has been less than would be desirable,
although substantial progress has been made in recent years.
This is particularly the case at the input end of the
decision-making process in the laboratories. Many laboratories
have elaborate visiting committee mechanisms that bring
distinguished members of the academic and industrial sectors into
the laboratories to provide overall quality control and peer
review of the research products and programs, such external
bodies have had little, if any, influence on the selection of
those research projects that are actually undertaken. If such
consultations were introduced at the outset, the probability of
external interest in, and eventual use of, the research products
would be substantially enhanced.
17
claimants for federal funds, almost all of them with what may
well appear to be more immediate needs than those represented by
the long-term investments required for science and technology.
Congress has been extremely foresighted in funding science
and technology, and many members of Congress agree with the
Administration that this nation is underinvesting in research and
development. But Congressmen are under intense pressure from a
will they dways have
large number of groups, and in the tight budget climate of the
next few years they are going to have to make particularly difficult
to make
tough
decisions. Scientists and engineers must make their voices heard
Spending
if the promise of science and technology is to be realized.
decisions
Representative George Brown, chairman of the House Science,
Space, and Technology Committee, was once asked if scientists and
engineers tend to forget who their congressmen are at election
time. "Forget?" Brown answered. "They don't know who they are
in the first place. Any scientist or engineer who cannot pass
this simple test of political literacy has very little right to
criticize federal actions affecting science and technology.
At the same time, the federal government supports less than
half of the research and development conducted in this country,
which argues for a very broad-based approach to public outreach.
H
I believe that every scièntist, regardless of his or her
position, should view public education as part of his or her job
description. This broad civic responsibility is not expected of
necessary
other professions. But science and technology demand an unusual
measure of public involvement, both because of the public's
support for these activities and because of the broad influence
of these activities on the public.
I believe that we are about to enter a period of
unprecedented productivity for science and technology. More than
ever before, science and technology will be key elements role in
play a
addressing a broad range of national issues, from ranging defense to
health to competitiveness to education. The Bush Administration
recognizes the contributions that science and technology can make
to these problems, and it is taking steps to ensure that the
18
appropriate science and technology will be available to meet the
challenge.
19
Table 1 Initial Round of ATP Awards
Project
Applicant
Single Applicants
Precision optics for soft X-ray
AT&T Bell Laboratories
projection lithography
Computer interface for cursive
Communication Intelligence Corp.
handwriting recognition
Nonvolatile magnetoresistive
Nonvolatile Electronics, Inc.
semiconductor technology
Tunable UV/VUV solid state laser
Light Age, Inc.
Machine tool compensation techniques
Saginaw Machine Systems, Inc.
Thallium superconductor thin film
Du Pont Company
processing
Joint Ventures
Printed wiring board interconnects
National Center for
Manufacturing Sciences
Holographic mass storage
Microelectronics and Computer
Technology Corporation
Flat panel display manufacturing
Advanced Display Manufacturers of
America Research Corporation
Solid state laser technology for
Hampshire Inc., and McDonnell
point source X-ray lithography
Douglas Electronic Systems Co.
Short wavelength sources for
National Storage Industry
optical recording
Consortium
Document originally attached to following page.
THE WHITE HOUSE
WASHINGTON
6/5/91
TO: MICHAEL BOSKIN
FROM:
PHILLIP D. BRADY
Assistant to the President and
Staff Secretary
The attached has been forwarded
to the President
THE WHITE HOUSE
WASHINGTON
91 JUN -4 PM 3:41
June 4, 1991
MEMORANDUM FOR THE PRESIDENT
FROM:
D. ALLAN BROMLEY
Aman
SUBJECT:
President's Council of Advisors on Science and Technology Views
on Your Fiscal Year 1992 R&D Budget Request
Mr. President, since we were unable to meet with you at our May meeting, your
Council of Advisors on Science and Technology, would like to present you with
memoranda on their consensus views of issues of National importance.
The first of these is the research and development portion of your the Fiscal Year 1992
Budget. Council member John McTague has taken the initiative to articulate the
Council's recommendations.
The PCAST would be most pleased to discuss with you this topic and these
recommendations if you so desire.
Attachment
THE WHITE HOUSE
WASHINGTON
91 JUN -4 PM 3: 4 I
June 4, 1991
MEMORANDUM FOR THE PRESIDENT
FROM:
JOHN McTAGUE, ON BEHALF OF PCAST
SUBJECT:
Investing in the Future - Follow Through With Congress
in The Council reiterates its support for the important investment in the future proposed
your FY 1992 Budget submission, particularly in the areas of research and
constituency for research, especially individual investigator efforts. This makes all the
development. At the March PCAST meeting you noted the lack of a natural political
consideration moves to the appropriation process.
more important strong Administration follow-up with the Congress, particularly as
visible participation. If a White House meeting were called together, with both
increasingly clear that sustaining your R&D priorities will require your personal and
From the authorization hearings and budget resolutions to date, it is becoming
Republican and bipartisan Congressional leaders to highlight the priority this
investment has for the nation, it would be particularly effective. The Council
capital. recommends such an action, realizing the many demands on your time and political
?
THE WHITE HOUSE
Han's Chick
Office of the Press Secretary
For Immediate Release
May 14, 1991
STATEMENT BY
DR. D. ALLAN BROMLEY
ASSISTANT TO THE PRESIDENT FOR SCIENCE AND TECHNOLOGY AND
DIRECTOR, OFFICE OF SCIENCE AND TECHNOLOGY POLICY
Recent press reports have suggested that the
Administration's policy on Federal support of technology
development has changed. These reports have also linked this
alleged policy changes to internal disputes involving, among
others, the Chief of Staff, the Director of the Office of
Management and Budged, the Chairman of the Council of Economic
Advisors, and myself. While I am proud of the role OSTP has
played in this Administration, a role that reflects the
importance the President attaches to science and technology as
wellsprings of economic growth, these reports are simply false.
This Administration's basic policy principles in this area
were developed during the 1988 campaign and have not changed. In
February, 1989 (before I was even nominated for my current
position) the President stated (Building a Better America, p.
36):
The Federal investment in R&E should focus on basic
research and allow the private sector
to
decide
which technologies have the most potential in the
2
marketplace. The economy must provide a climate which
encourages businesses to take risks and invest in new,
bold technologies.
To these ends, the President proposed to double the budget of the
National Science Foundation and renewed his calls for making the
Research and Experimentation (R&E) Tax Credit permanent and for
cutting the capital gains tax rate. In his 1990 Economic Report
(p. 5), he stated his intention to continue to press "for
increased Federal support of research with widespread societal
benefits and that private firms would not have adequate
incentives to undertake" and reaffirmed his opposition "to any
sort of industrial policy in which the government, not the
market, would pick winners and losers."
These basic policies have been and are still supported by
all members of this Administration. They were reiterated in the
report "U.S. Technology Policy," issued in September, 1990. To
be worthy of Federal support, any research project must have
potential benefits that are so widespread that no private firm
would have an incentive to finance the project, and the project
must of course pass a careful social cost-benefit test. I have
been personally gratified by the strong support for fundamental
research that has resulted from the application of this standard
by the President's budget review committee, which includes the
3
Chief of Staff, the Director of the Office of Management and
Budget, and the Chairman of the Council of Economic Advisers.
One apparent source of this confusion in the press has been
the report of the National Critical Technologies Panel, issued on
April 25, 1991. This report was mandated by legislation passed
in 1990. The Administration does not endorse that legislation's
premise that certain technologies can be identified as
"critical," and the report itself does not reflect the views of
the Administration. The views of this independent panel will of
course be considered, along with the views of others, in making
scientific recommendations for Federal research support.
But it should be clearly understood that neither that report
nor recent press reports signal any change in the
Administration's basic policies in this area. The President
supports Federal investment in fundamental research and the
creation of a climate in which private innovation can flourish
but continues to oppose any form of industrial policy. And he
expects all members of his Administration to adhere to this
policy.
Draft 5-14-91, 9:30 AM
Proposed Letter to the Editor, Wall Street Journal
On April 25, 1991, the National Critical Technologies Panel presented to
Congress a report describing 22 technologies considered critical for national security
and economic prosperity. Since then a number of articles (e.g., Bob Davis, WSJ
5/13/91) have appeared in the news media claiming that the Administration's policies
toward Federal support of technology development have changed. In fact, if the
authors of these articles would have examined the history of the issue in more detail,
they would have found that the Administration's policies have not changed. Since the
1988 campaign the President and his Administration have highlighted the importance
of innovation and new technologies, their impact on economic growth and
improvements in the quality of life, and the importance of reducing barriers to
innovation caused by regulations.
The policies of the Administration have been entirely consistent with the view
stated by President Bush in March 1990 in an address to the American Electronics
Association: "This Administration is committed to working with you in the critical
precompetitive development stage where the basic discoveries are converted into
generic technologies that support both our economic competitiveness and our national
security. Here again we can help to level the international playing field on which you
compete." More recently, the Vice President has said that: "One of the key lessons
we learned from the Gulf War is that technology is critical to our national security.
For America to be number one in technology and commercialization of related
products, we must have a healthy entrepreneurial climate for private sector
development of technology."
Other policy statements have also pointed out that the Federal government
should participate with the private sector in precompetitive research on generic,
enabling technologies that have the potential to contribute to a broad range of
government and commercial applications. We have not departed from this position.
The Administration does not support "industrial policy" in any form, as the
article of May 13 implied. Support for precompetitive, generic technologies is
different from supporting particular industries or companies. In the latter case, the
Federal government would become a force in the marketplace and predetermine who
is going to succeed and who is not. Such actions are likely to result in reduced
efficiency, slower productivity growth and a lower standard of living. Economies in
other areas of the world have experienced such adverse effects from government
intervention and control.
The appropriate role of the Federal Government is to provide necessary
support for the development of precompetitive, generic technologies that can benefit
the entire economy but that would otherwise go undeveloped because they do not offer
sufficient return for any single company. In addition, the Federal government must
foster a stable economic environment leading to increased investments and reduced
uncertainty in the business environment. Finally, the Federal government can assist
by removing barriers to the efficient functioning of marketplaces, including legal and
regulatory barriers.
The National Critical Technologies Panel was created in response to legislation
passed in 1990 and sponsored primarily by the Senate Armed Services Committee. It
was an independent technical panel consisting of seven government and six private
sector members and not an internal White House panel. In its report, the panel did
not advocate changes in federal policy. Rather, it noted the importance of basic
scientific research as the underpinnings of technology, and pointed out that both the
public and private sectors have to place greater emphasis on the imaginative
exploitation of this country's vast knowledge base.
On the same day that the National Critical Technologies Panel made its
report, the Vice President's Council on Competitiveness issued a fact sheet which
summarizes Administration policies in support of technology development in America.
It covers a range of topics, but with more detail on the legal and regulatory climate.
The aggregate message represented by these policy statements is clear: The
Administration is committed to enhancing economic competitiveness, national security,
and the quality of life for all Americans; and it will do so by working with the
private sector. Our society possesses many strengths and assets that can be
mobilized within our basic system of free enterprise.
Report of the
National Critical
Technologies Panel
March 1991
The National Critical Technologies Panel
1101 Wilson Boulevard, Suite 1500
Arlington, Virginia 22209
March 22, 1991
The President
The White House
Washington, D.C. 20500
Dear Mr. President:
On behalf of the National Critical Technologies Panel, I have the honor to present
this first biennial report as required by Title VI of Public Law 94-282, as amended by
Section 841 of Public Law 101-189. It describes 22 technologies considered essential
for the United States to develop in the interests of the Nation's long-term security
and economic prosperity.
We most recently have been reminded, by the spectacular performance of U.S. and
coalition forces in the Persian Gulf, of the crucial role that technology plays in
military competitiveness. It is equally clear that technology plays a similar role in
the economic competitiveness among nations.
Almost all of the critical technologies identified by the Panel are essential to national
defense as well as economic prosperity. In fact, there is a substantial overlap between
these technologies and those deemed critical by the Department of Defense in its 1990
Report to Congress on this subject. Much of the research and development activity
directed toward these generic technologies will indeed serve a dual purpose.
As a follow-on to this report, subsequent panels will refine and update this analysis.
It is hoped that the report and its future editions will help to increase awareness of
the crucial role of technology in achieving our national goals.
Sincerely,
Welliam D Phillips
William D. Phillips
Chairman
National Critical Technologies Panel
Enclosure
For sale by the Superintendent of Documents, U.S. Government Printing Office
Washington, D.C. 20402
REPORT OF THE
NATIONAL CRITICAL TECHNOLOGIES PANEL
MARCH 1991
TABLE OF CONTENTS
List of Tables
vii
Abstract
ix
NATIONAL CRITICAL TECHNOLOGIES
1
MATERIALS
7
Materials Synthesis and Processing
11
Electronic and Photonic Materials
15
Ceramics
19
Composites
23
High-Performance Metals and Alloys
27
MANUFACTURING
31
Flexible Computer Integrated Manufacturing
35
Intelligent Processing Equipment
39
Micro- and Nanofabrication
43
Systems Management Technologies
47
INFORMATION AND COMMUNICATIONS
51
Software
55
Microelectronics and Optoelectronics
59
High-Performance Computing and Networking
63
High-Definition Imaging and Displays
67
Sensors and Signal Processing
69
Data Storage and Peripherals
73
Computer Simulation and Modeling
77
BIOTECHNOLOGY AND LIFE SCIENCES
81
Applied Molecular Biology
85
Medical Technology
89
AERONAUTICS AND SURFACE TRANSPORTATION
91
Aeronautics
95
Surface Transportation Technologies
99
ENERGY AND ENVIRONMENT
103
Energy Technologies
107
Pollution Minimization, Remediation, and Waste Management
113
APPENDIX A
NATIONAL CRITICAL TECHNOLOGIES:
LEGISLATION, PANEL, AND METHODOLOGY
119
APPENDIX B
ACKNOWLEDGEMENTS
123
V
LIST OF TABLES
Table 1
National Critical Technologies
3
Table 2
Comparison of National Critical Technologies with
Department of Commerce Emerging Technologies and
Department of Defense Critical Technologies
5
Table A-1 National Critical Technologies Panel: 1990-91
121
Table A-2 Criteria for Selection of Critical Technologies
122
vii
ABSTRACT
Twenty-two technologies deemed critical to the national economic prosperi-
ty and to national security have been identified. The selection of national critical
technologies was carried out by a panel appointed by the Director, Office of Science
and Technology Policy, Executive Office of the President. The study was authorized
by the Fiscal Year 1990 Defense Authorization Act and will be updated biennially
through the year 2000.
Each selected technology is discussed separately in the report with respect
to scope, basis for selection, and international trends. A major conclusion of the
study is that technology alone cannot ensure economic prosperity and national secu-
rity. Technology can make an important contribution to the future of U.S. national
interests, but only if we learn to utilize it more effectively.
ix
NATIONAL CRITICAL TECHNOLOGIES
"If America is to maintain and strengthen our competitive position, we must continue not
only to create new technologies but learn to more effectively translate those technologies into
commercial products."
President George Bush
November 13, 1990
INTRODUCTION
confidence that they constitute appropriate bases
for exploitation to satisfy many of the nation's
The timely development and deployment of
future needs. This initial report is intended to
technologies is essential to satisfy such national
highlight the importance of these critical technolo-
needs as defense, economic competitiveness, public
gies in meeting future national needs and to point
health, and energy independence. Identification of
out opportunities for public and private sector
technologies for concentration of effort becomes,
investments and actions. Future Panels will
therefore, a matter of considerable importance. In
prepare biennial updates to ensure that the
this report, 22 technologies deemed critical to the
National Critical Technologies compilation reflects
satisfaction of national needs have been identified.
current technologies and national needs. The views
expressed in this report are solely those of the
The underpinnings of technologies reside in
National Critical Technologies Panel.
the basic sciences. The unmatched science base
that the United States possesses today is the result
Technology and The Future
of patient and judicious public and private sector
investment in the basic sciences in the decades
In an environment of intensifying global
following World War II. However, the scientific
competition, deployment of technology is becoming
discoveries that spark technological development
the strategic battlefield of the international market-
are unpredictable with regard to both timing and
place. Increasingly, successful firms are not
content. Therefore, support for the basic sciences
necessarily the discoverers and developers of the
needs to be broadly based in order to maximize the
latest innovation, but are those that are able to
yield of useful advances that ultimately can be
swiftly bring associated products to market. The
translated into technologies. In contrast, technolo-
proliferation of integrated product and process
gy development and deployment, because of the
design tools only serves to reinforce the trends
time and resource commitments involved, require a
toward shorter product cycles and unceasing
greater selectivity and concentration of resources
incremental innovation.
than is appropriate for the basic sciences.
The key to future U.S. competitive success
involves a fundamental change in the way U.S.
In a study of this nature, criteria have to be
industry competes in the marketplace. U.S.
developed for selection of critical technologies
research institutions and businesses must place
based on factors such as vulnerability and perva-
greater emphasis on deployment of new technolo-
siveness (see Table A-2, Appendix A). Once this is
gies. Moreover, discovery, development, and
done, technologies can be selected to match the
deployment must be integrated and viewed as
range of defined needs, bearing in mind that any
concurrent rather than sequential activities. U.S.
finite list will contain elements of subjectivity. The
industry must be infused, from the boardroom to
"critical" technologies identified in this report are
the factory floor, with a relentless desire to
closely related to those identified in other inde-
constantly improve both product and production
pendent studies (see Table 2). The critical
methods. In selecting the National Critical
technologies identified herein are set forth with the
Technologies, the Panel has placed a special
1
emphasis on the creation of new products and on
Manufacturing processes and technologies
the processes to produce them. This entails an
that can provide the basis for industry to bring
integrated approach to manufacturing process and
a stream of innovative, cost-competitive,
product design, performance, quality, and cost.
high-quality products into the marketplace
Information and Communications technologies
This integrated approach applies equally to
which continue to evolve at a breath-taking
the defense and commercial sectors of the econo-
pace, permanently changing our approaches to
my. Technology superiority has long been recog-
communication, education, and manufacturing
nized as a fundamental element of military power.
Biotechnology and Life Sciences advances that
The recent Persian Gulf War serves as a reminder of
will permit unconventional approaches to
major problems in such diverse fields as
the important role advanced technology plays in
medicine, agriculture, manufacturing, and the
maintaining our national security. With declining
environment
defense budgets accompanying rapid increases in
Aeronautics and Surface Transportation sys-
the pace of technological innovation, the ability of
tems that enhance our civilian and military
U.S. industry to translate technology advances into
capabilities and increase the ease and safety of
affordable, high-quality, high-performance mili-
travel
tary systems will remain an important national
Energy and Environment related technologies
priority.
which have the potential to provide a safe,
secure, and enduring sources of energy and
Technology alone cannot ensure economic
ensure that a healthy environment is preserved
prosperity and national security. It can make an
for the use of future generations.
important contribution, but only if we learn to
Nearly 100 separate technologies were nomi-
utilize it more effectively in the development of
nated by the Panel for consideration. Based on
innovative, high-quality, cost-competitive prod-
selection criteria and extensive private sector and
ucts. While continuing to maintain a strong science
government input, the Panel selected the 22 they
base, the United States must place greater empha-
considered the most important. Some technologies
sis on the imaginative exploitation of its knowledge
(such as fusion energy) were not included in this list
base.
because the benefits of the technology will be realized
only in the longer term. In other cases (such as
THE NATIONAL CRITICAL
signature control), the technology is important but
TECHNOLOGIES
restricted, and it was deemed to be more appropri-
ately handled in other, more narrowly focused
The National Critical Technologies Panel,
planning efforts such as the DoD Critical Technologies
appointed by the Director, Office of Science and
Plan. The National Critical Technologies selected by
Technology Policy, Executive Office of the Presi-
the Panel are listed in Table 1.
dent, includes senior Federal agency and private
sector officials who are responsible for technology
The Panel addressed technologies directed
development and application. (Panel membership
primarily at enhancing national security and econom-
is shown in Appendix A.) The Panel identified a set
ic competitiveness. There are other national goals not
of technologies that reflects the full range of
addressed in this report for which different enabling
national technology needs. The 22 technologies
technologies may be required, for example, manned
selected fall into six broad areas:
space exploration. However, space exploration will
Materials with properties that promise signifi-
continue to stimulate a broad range of advances in
cant improvement in the performance of items
both the aerospace and non-aerospace industries,
produced and used by virtually every sector of
contributing to our ability to compete in the high
the economy
technology global marketplace.
2
Table 1. National Critical Technologies
MATERIALS
Materials synthesis and processing
Electronic and photonic materials
Ceramics
Composites
High-performance metals and alloys
MANUFACTURING
Flexible computer integrated manufacturing
Intelligent processing equipment
Micro- and nanofabrication
Systems management technologies
INFORMATION AND COMMUNICATIONS
Software
Microelectronics and optoelectronics
High-performance computing and networking
High-definition imaging and displays
Sensors and signal processing
Data storage and peripherals
Computer simulation and modeling
BIOTECHNOLOGY AND LIFE SCIENCES
Applied molecular biology
Medical technology
AERONAUTICS AND SURFACE TRANSPORTATION
Aeronautics
Surface transportation technologies
ENERGY AND ENVIRONMENT
Energy technologies
Pollution minimization, remediation, and waste management
3
Related Government and Private Sector
gy Forecast Survey, and in 1990, the European
Initiatives
Community released a list of key technologies
which, in their view, merited strong Community
In response to the Fiscal Year 1989 Defense
resource commitment and support.
Authorization Act, the Department of Defense
(DoD) published its first Critical Technologies Plan.
Although the scopes of the various "critical,"
This was revised in March 1990 and will be updated
"key," or "emerging" technology studies differ,
annually. Although the plan focuses exclusively on
there is extensive overlap among them. As has
technologies that are essential to maintaining the
already been emphasized, identification of critical
qualitative superiority of U.S. weapon systems,
technologies is not the problem. The challenge is to
many of these are "dual-use" technologies that
develop and deploy them, swiftly and strategically.
provide significant benefits to the nation's econo-
my. This effort now centers on developing
DISCUSSION
integrated plans for achieving defense technology
capabilities in priority areas. The plans will ensure
The importance of technology deployment is
that duplication is avoided and that critical
emphasized in several ways in this report. First,
technologies will receive appropriate emphasis
five of the "critical" technologies identified on the
within the DoD science and technology program.
list are process technologies, namely:
Materials synthesis and processing
The Department of Commerce (DOC) fol-
lowed in the spring of 1990 with its report Emerging
Micro- and nanofabrication
Technologies: A Survey of Technical and Economic
Intelligent processing equipment
Opportunities. This report identified 12 emerging
technologies which are expected to have the
Flexible computer integrated manufacturing
potential of contributing to the development of new
or improved products by the year 2000. The report
Systems management technologies.
assessed the relative competitive positions of the
The importance of product realization and man-
United States, Japan, and the European Communi-
ufacturing issues is also noted in the other 17 tech-
ty with respect to the development and commercial-
nology areas.
ization of these technologies.
The prior work of other Federal government
Recently, several private sector organizations
and private sector organizations that examined
have conducted studies which examine key technol-
critical technologies was taken into account. The
ogies for specific industries or sectors. The reports
DoD and DOC reports were especially useful as
prepared by the Aerospace Industries Association
source material because they addressed the issue
and the Computer Systems Policy Project are
from a Federal government perspective. The DoD
noteworthy examples. The private sector Council
focused on critical technologies for national securi-
on Competitiveness also engaged in a study of
ty and the DOC focused on emerging technologies
technology policy and priorities from the perspec-
for commercial ends, thereby covering the same
tive of U.S. industry. The Council's report was
areas of emphasis as this report (see Table 2).
released in March 1991.
However, the National Critical Technologies in-
clude surface transportation, energy, and environ-
With the central role that technology has
mental technologies, which were not addressed by
assumed in our everyday lives, technology issues
either DoD or DOC. Although all three reports
have also generated considerable interest among
include materials and manufacturing technologies,
America's trading partners, and they too have
the present report provides greater emphasis and
identified "critical" technologies based on their
more specific coverage of these technology areas
perceived national needs. Japan's Science and
which underlie and enable technology innovations
Technology Agency publishes a biennial Technolo-
across the entire economy.
4
Table 2. Comparison of National Critical Technologies with Department of Commerce
Emerging Technologies and Department of Defense Critical Technologies
NATIONAL CRITICAL
COMMERCE EMERGING
DEFENSE CRITICAL
TECHNOLOGIES
TECHNOLOGIES¹
TECHNOLOGIES²
MATERIALS
Materials synthesis and processing
Advanced materials
Composite materials
Electronic and photonic materials
Advanced semiconductor devices
Semiconductor materials and
Superconductors
microelectronic circuits
Superconductors
Ceramics
Composite materials
Composites
Advanced materials
High-performance metals and alloys
MANUFACTURING
Flexible computer integrated manufacturing
Flexible computer integrated
manufacturing
Intelligent processing equipment
Artificial intelligence
Machine intelligence and robotics
Micro- and nanofabrication
Systems management technologies
INFORMATION AND COMMUNICATIONS
Software
High-performance computing
Software producibility
Microelectronics and optoelectronics
Advanced semiconductor devices
Semiconductor materials and
Optoelectronics
microelectronic circuits
Photonics
High-performance computing and networking
High-performance computing
Parallel computer architectures
High-definition imaging and displays
Digital imaging
Data fusion
Sensors and signal processing
Sensor technology
Data fusion
Signal processing
Passive sensors
Sensitive radars
Machine intelligence and robotics
Data storage and peripherals
High-density data storage
Photonics
Computer simulation and modeling
High-performance computing
Simulation and modeling
Computational fluid dynamics
BIOTECHNOLOGY AND LIFE SCIENCES
Applied molecular biology
Biotechnology
Biotechnology materials and
processes
Medical technology
Medical devices and diagnostics
AERONAUTICS AND SURFACE
TRANSPORTATION
Aeronautics
Air-breathing propulsion
Surface transportation technologies
ENERGY AND ENVIRONMENT
Energy technologies
Pollution minimization, remediation, and waste
management
No National Critical Technologies
counterpart: High energy density
materials, Hypervelocity
projectiles, Pulsed power,
Signature control, Weapon system
environment.
U.S. Department of Commerce, Emerging Technologies: A Survey of Technical and Economic Opportunities, Spring 1990.
2U.S. Department of Defense, Critical Technologies Plan, 15 March 1990.
5
Many of the National Critical Technologies
Panel believed the primary challenges were not
support or enable other critical technologies. For
technical in nature.
example, continuing advances in computer soft-
ware are necessary to support development of
Comparisons of the National Critical Technol-
advanced capabilities in simulation and modeling,
ogies, the DOC Emerging Technologies, and the
high-performance computing, and intelligent pro-
DoD Critical Technologies in Table 2 demonstrate
cessing equipment. Technologies such as micro-
the substantial degree of overlap that exists
electronics and optoelectronics, simulation and
between those technologies essential for national
modeling, and materials and manufacturing are
security and those that contribute to economic
essential to the continued development of virtually
competitiveness. Although a small number of
all other advanced technologies. In light of this
highly defense-specific DoD Critical Technologies
interdependence, rank-ordering of the selected
(e.g., signature control, pulsed power, and high
technologies was considered to be neither feasible
energy density materials) are not included among
nor desirable.
the National Critical Technologies, most of the
DoD technologies are "dual use" in nature, and
potentially are as important for their nondefense
While the order in which the technologies are
applications as they are to DoD. Both future U.S.
listed in this report does not reflect a prioritization
national security and economic well-being rely to a
among the technologies, it does acknowledge a
substantial extent on continuing efforts in universi-
difference between the categories of technologies
ties, Federal laboratories, the private sector, and
selected. The first three categories, namely, Materi-
the government to capitalize on the technological
als, Manufacturing, and Information and Commu-
promise and realize the benefits of these technolo-
nications, include technologies that form the basic
gies.
"building blocks" for virtually all sectors of the
economy. Biotechnology and Life Sciences, Aero-
Finally, the Panel recognizes the importance of
science and mathematics education to the nation's
nautics and Surface Transportation, and Energy
and Environment are more akin to major areas for
ability to remain a world leader in technology and
technology applications. However, the common
technology application. Our ability to reap the
denominator of all 22 technologies is the Panel's
benefits of the National Critical Technologies will
belief that they represent primarily technological
depend on the generation of a technically literate
issues, the solution of which is critical to future U.S.
workforce that possesses the skills necessary to
national security and/or economic well-being. The
develop and master these and future technologies.
Panel's ground rules led it to exclude from
The following sections present brief profiles of
consideration important technological issues and
the National Critical Technologies. Each profile
challenges having insufficient direct impact on
describes the technology, highlights the reasons for
economic prosperity or national security, such as
its selection, and discusses its current status and
space exploration, and a number of issues where the
emerging trends.
6
MATERIALS
Materials Synthesis and Processing
Electronic and Photonic Materials
Ceramics
Composites
High-Performance Metals and Alloys
7
MATERIALS
The current "revolution" in the field of materials, involving the development of new and
superior metals, nonmetals, and composites together with completely new ways of producing them,
is beginning to permit design engineers to specify materials having properties that would have been
unthinkable a decade ago. Increasingly, it is possible to produce materials having essentially the
exact combination of properties (e.g., strength, light weight, temperature or corrosion resistance,
etc.) desired. The consequences include:
Lighter, more agile, and more "stealthy" aircraft structures
Higher-performance aircraft engines (permitting greater speed and
acceleration and/or improved fuel efficiency)
Novel medical applications
Advanced automobile body and propulsion system components
Stronger, lighter, and more energy efficient construction materials.
Many recent developments in materials technology were driven by the challenging require-
ments of military and aerospace systems. However, performance-cost trade-offs are much more
critical to the widespread commercial application of new materials. Consequently, the emphasis is
on efficient synthesis and processing techniques that will permit the manufacture of sophisticated
and complex materials, sometimes engineered literally an atomic layer at a time. Another trend is
towards intrinsically clean processing, with a focus on near net shape production, minimizing ma-
chining and other process steps that produce waste or consume excess amounts of energy.
The Panel highlighted an array of materials synthesis and processing technologies as well as
three advanced materials technologies - ceramics, composites, and high-performance metals and
alloys - that have important trade-offs in a wide range of structural applications. The Panel also
highlighted electronic and photonic materials, the fundamental enabling technology for virtually
all information and communications technologies. The growth and impact of both electronics and
photonics have always depended on the materials upon which they are based. Integration of elec-
tronic and photonic devices on a single circuit will lead to revolutionary new products.
9
MATERIALS SYNTHESIS AND PROCESSING
DESCRIPTION OF TECHNOLOGY
Synthesis
Synthesis underlies much of the progress in
The synthesis and processing of materials are
materials science and technology. Advances in
central to the translation of new research and
synthesis yield new materials having novel or
designs into useful products, as well as the timely
superior properties, or improvements in the prop-
and efficient introduction of advanced materials
erties of known materials. This field is an important
into the marketplace. Synthesis is the development
source of discovery of new chemical and physical
of new materials or novel techniques to produce
phenomena in solids, such as high temperature
familiar materials. Materials processing is the
superconductivity. Three important areas in the
preparation, forming, and shaping of raw materials
field of synthesis are the development of artificially
into finished objects. In practice, the distinction
structured materials, ultrapure materials, and
between synthesis and processing is blurred; it is
novel synthesis methods.
often difficult to determine precisely where synthe-
sis ends and processing begins. Synthesis and
Artificially Structured Materials. The synthe-
processing are best described as a continuous
sis of artificially structured materials represents a
spectrum of activities involving the generation and
potentially revolutionary development in materials
aggregation of atoms or molecules into useful
science. These materials are fabricated one atomic
products.
layer at a time, requiring precise and sophisticated
fabrication techniques. Through control of compo-
Synthesis and processing encompass a broad
sition and distribution at the atomic scale, specific
range of techniques and technologies including
material properties and significant improvements
rolling of sheet steel, pressing and sintering of
in performance may be achieved. Artificially
ceramic powders, creation of artificially structured
structured materials, therefore, represent a leading
materials, thermomechanical processing of alloys,
edge in the development of "designer materials."
preparation of polymers by chemical reactions,
Presently, thin films are the most widespread
coating of turbine blades for corrosion resistance,
of artificially structured materials. They are fabri-
growth of gallium arsenide crystals, and laying-up
cated by depositing a layer, sometimes only one or
of composite materials. Some of these technologies
two atoms thick, on a substrate using such
are new and have potentially revolutionary implica-
processes as molecular beam epitaxy, chemical
tions. Others are established techniques which
vapor deposition, vacuum evaporation, sputter
require continual improvements to ensure the
deposition, or chemical beam epitaxy.
future competitiveness of U.S. industry.
Artificially structured semiconductors are
Synthesis and processing research is opening
essential to the development of high-speed micro-
new horizons in materials science. Increasingly, it is
electronic devices and circuits. Progress in this field
possible to tailor new materials -- atom by atom
will permit the integration of photonic materials
to achieve a desired set of properties. To harness
with microelectronic circuitry to yield optoelec-
the potential of these revolutionary advances in
tronic integrated circuits (OEICs). To date this field
materials science, U.S. industry must strive to
has focused largely on semiconductors, but this
integrate material synthesis and product design in
approach may also permit the development of novel
the fabrication of highly specialized materials for
combinations of metals, insulators, and polymers.
specific applications. The capability to formulate
Ultrapure Materials. The synthesis of very
"designer materials" will be an important source of
pure materials is critical for microelectronics
technological progress, as well as competitive
applications and the development of emerging
advantage, in the coming years.
structural materials. The production of extremely
11
pure silicon is a prerequisite to the manufacture of
Near Net Shape Processing. In conventional
high-performance microprocessors and integrated
processing, materials are first synthesized in bulk,
circuits. Development of extremely pure and
and then machined or formed into the shape of the
flawless compound semiconductor crystals will be
final product. The transformation from bulk form
essential to the advent of optoelectronic devices.
to final shape is often expensive and time-
The preparation of high purity volatile precursors
consuming, and involves discarding significant
remains an important technical challenge in
amounts of raw material. Moreover, this approach
microelectronics. For structural materials, there is
requires that materials not only possess the
a growing appreciation of the role of carbon and
properties desired in the final product, but also be
oxygen impurities in limiting the strength and
suitable for later stage processing. This constrains
reliability of reinforcing fibers in polymer matrix
the use of a number of advanced materials. For
composites (PMCs). Impurities can cause micro-
example, the processing of ceramics by traditional
scopic cracks in advanced ceramics, and often
means is largely limited to simple shapes, since
induce the characteristic brittleness of these
their hardness and brittleness makes finishing
materials. Advances in the ability to synthesize
operations difficult and expensive.
extremely pure ceramics could determine the
ultimate success of these strategic high-tempera-
The development of near net shape processing
ture materials.
techniques represents an important step towards
realizing the full potential of many advanced
materials. In effect, these techniques integrate the
New Synthesis Methods. There is an on-going
synthesis and processing steps to produce a mass
need to develop superior new approaches to synthesis
whose shape closely approaches the dimensions of
based on understanding of the relationship between
the final product. By eliminating several intermedi-
structure, composition, and properties, and hence
ate operations and reducing scrap, near net shape
performance. Research opportunities exist for the
processing can significantly reduce fabrication
development of novel lightweight, high-temperature
costs.
structural materials for the aerospace and transpor-
tation industries; semiconductor and packaging
Some near net shape techniques are well
materials for high density microelectronic circuits;
established, while others are still in development.
magnetic materials for massive information stor-
Hot isostatic pressing (HIP) is now extensively used
age; high-temperature superconductors exhibiting
to produce a dense, near net shape product through
toughness and workability; and non-corroding bio-
the simultaneous application of high pressure and
materials for medical implants.
temperature. It is widely employed in the process-
ing of superalloys and advanced ceramics.
Processing
Metal injection molding is another novel
process with the potential for supplanting tradi-
tional metalworking techniques. In this method,
Material processing traditionally has relied on
metal in fine powder form is introduced into a
a combination of mechanical and thermal treat-
medium of wax or thermoplastic, injected into a
ments -- such as melting, casting, forging, rolling,
mold, and heated. The final product is then
pressing, and machining -- to achieve the desired
"HIPped" to increase its density. Metal injection
properties and shape. Increasing demands for
molding makes possible the production of metallic
more complex materials with superior properties
parts of complex shape without machining.
have stimulated the development of a range of
innovative processing techniques that are begin-
Superplastic forming can also be used to
ning to complement or supplant the traditional
process metals and other materials into intricate
approaches. Near net shape processing, rapid
shapes. This technique involves slow deformation
solidification, electron beam processing, and laser
of the material at a relatively high temperature.
hardening are examples of some recently intro-
Under these conditions and given a sufficiently fine
duced techniques.
microstructure, many materials exhibit extensive
12
ductility. Thus, they can be readily formed or
surface to some temperature below its melting
pressed into complex shapes. The component is
point but within the phase transformation range for
then heat treated, rapidly cooled, and aged to
this specific alloy. When the beam is turned off,
produce a strong and stable structure. While
rapid cooling occurs. The result is a more uniform
presently used primarily with titanium alloys,
and finer surface microstructure which enhances
superplastic forming has also been demonstrated
the strength and hardness of the part. An important
with ceramics, intermetallics, and high carbon
advantage of this technique is that laser hardening
steel.
affects only those areas that require additional
hardening, leaving unchanged the bulk of the metal,
Rapid Solidification Processing. In conven-
which might become brittle if exposed to similar
tional metal casting processes, alloying elements
treatment. Laser hardening is used in the produc-
sometimes "segregate" at grain boundaries. Conse-
tion of medical implants, high-performance bear-
quently, the resultant microstructure of the metal
ings, and some extrusion dies.
or alloy is not uniform. This degrades strength and
performance. In rapid solidification processing
Others. While the techniques described above
(RSP), molten metal is cooled at high rates -- up to
represent some of the most promising develop-
1,000,000° C per second --- to achieve a uniform and
ments in materials processing, many other methods
fine-grained microstructure, thereby yielding
also have important potential. Such techniques
stronger and more reliably performing alloys. RSP
include diffusion bonding, exothermic reaction
can also be used to synthesize alloys that cannot be
synthesis, dynamic compaction, and mechanical
achieved by conventional techniques. One such
alloying. Reaction-injection molding and resin-
RSP approach is splat cooling, in which droplets of
transfer molding are beginning to find application
molten metal are sprayed onto a cooled surface.
for polymer matrix composites.
Another is gas atomization, in which droplets are
cooled by an inert gas. Since RSP products must
Optimization of these new processing technol-
have a large surface-to-volume ratio to achieve the
ogies and of existing processing methodologies is
necessary cooling rates, this process is best suited
required to achieve higher quality and lower unit
for the production of powder, flakes, or ribbon.
cost. Advances on three fronts are needed here:
RSP is beginning to be used to produce high
process modeling to characterize critical variables;
temperature materials for aerospace applications.
in-situ sensors to measure these parameters during
processing; and advanced control concepts using
Electron Beam Processing. High-performance
expert systems and neural networks. Integration of
metals must be extremely "clean" - free from
these three concepts into "intelligent processing
contaminating particles - since such particles can
systems" has been demonstrated in processing
induce microscopic cracks that initiate subsequent
several advanced materials (e.g., polymer matrix
catastrophic failure. The electron beam process is
composites, gallium arsenide, and titanium alumi-
thus employed in the production of metals and alloys
nide) and will see increasing application in conven-
intended for critical structural applications. The
tional and advanced materials during the next
electron beam strikes and melts the metal, releasing
decade.
unwanted gas molecules and other impurities into the
vacuum environment. The molten metal then drips
REASONS FOR SELECTION
down onto a cold hearth. This process is used
primarily in producing titanium and nickel-based
The synthesis of novel materials is fundamen-
superalloys for jet turbine components.
tal to technological progress in many key industrial
sectors, including microelectronics, aerospace,
Laser Hardening. Industrial lasers are widely
transportation, and energy. The current challenge
used in the crystallographic transformation hard-
is the economical and efficient production of
ening of selected surface areas of metal parts. In
reliable products with predictably superior proper-
this process, the laser beam quickly heats the
ties.
13
STATUS AND INTERNATIONAL TRENDS
have exacerbated U.S. shortcomings in materials
The United States needs to accelerate the
synthesis.
development of superior synthesis and processing
technology, not only for the newer materials, but for
The outlook in materials processing is similar-
commodity materials as well. This field of study
ly clouded, particularly in high volume processes
has not been as popular in the United States as in
critical for commercial success. Many experts
Europe and Japan, and greater emphasis will be
believe that shortcomings in materials processing
required both in terms of education and applica-
have contributed significantly to the competitive
tion to maintain national competitiveness. The
problems of the U.S. microelectronics industry. In
problem is that U.S. scientists traditionally have
contrast, the Japanese in particular have developed
concentrated their studies on the properties of
a formidable capability in manufacturing and
novel materials rather than on their synthesis,
related materials processing technologies in a
which has often been left to foreign laboratories.
diverse set of industries. Other nations, such as
This approach is unsatisfactory, as foreign labora-
South Korea and Brazil, are emulating the Japanese
tories continue to develop the capabilities to study
emphasis on process technologies. However, the
the behavior of novel materials, as well as to create
United States maintains a leading position in the
and synthesize them. The decline of basic research
development and incorporation of advanced pro-
in U.S. industry and the growing focus of industrial
cessing techniques for aerospace and other
laboratories on short-term product development
high-performance applications.
14
ELECTRONIC AND PHOTONIC MATERIALS
[Semiconductor, Superconductor]
DESCRIPTION OF TECHNOLOGY
possible the mass production of high-performance,
low-cost, and reliable silicon-based microelectronic
Advances in electronic and photonic materials
devices and integrated circuits.
will set the pace of technological progress in
communications, image processing, and informa-
Despite the success of silicon, the desire for
tion processing -- key sectors for both the civilian
increased performance has spurred efforts to
economy and national security. The primary
develop improved semiconductors for microelec-
challenge is to develop materials that effectively
tronic applications. The most promising current
integrate electronics and photonics to achieve
alternative is gallium arsenide (GaAs), a compound
dramatic improvements in systems performance,
semiconductor. Electrons can move through GaAs
reliability, and cost.
crystals with greater speed than in silicon while
generating less heat, thereby making possible the
Electronic Materials
development of faster microelectronic devices with
lower cooling requirements. GaAs is also more
Semiconductors are the primary materials for
resistant to nuclear radiation -- a key advantage in
most electronic devices and integrated circuits.
many military and space applications. Already,
While other materials like polymers, ceramics,
GaAs integrated circuits have been employed in the
metals, and composites also play important roles as
most recent generation of ultra-fast supercomput-
insulators or conductors, semiconductors can be
ers.
made into transistors --- the fundamental devices of
Unfortunately, fabrication problems and high
today's information society. Although semiconduc-
costs have constrained the widespread use of
tors normally are poor conductors of electricity,
GaAs-based devices. Unlike silicon, gallium and
they can become highly conductive when "doped"
arsenic are relatively scarce elements. GaAs
with certain impurities. The controlled flow of
crystals are difficult to grow, and are much more
electric current through doped regions of the
expensive than silicon crystals. Another serious
semiconductor is fundamental to the functioning of
shortcoming of GaAs is its lack of a high-quality,
microelectronic devices.
native insulating oxide. The absence of such a
Silicon has been the dominant material in the
protective, electrically insulating layer has compli-
microelectronics revolution. Its many advantages
cated the manufacture of very large-scale inte-
include abundance, low cost, and high mechanical
grated circuits. Researchers have had difficulty
strength. Moreover, silicon crystals are easily grown
developing effective insulating layers for GaAs
and fashioned into wafers yielding millions of
which can be easily mass produced, in part because
microelectronic devices. Most importantly, silicon
of their incomplete understanding of how GaAs
forms a high-quality, native oxide which can be
interacts with other materials. While GaAs and
obtained by heating the material in the presence of
related compound semiconductor materials offer
oxygen. This oxide provides an insulating layer that is
potentially important gains in performance, mate-
an extremely important component of field effect
rials problems currently limit the use of GaAs-
transistors (FETs), fundamental devices in silicon
based devices and integrated circuits to highly
electronics. In slightly modified form, this oxide
specialized applications.
serves other important functions, such as isolating
devices from the substrate and as a protective coating
Photonic Materials
for integrated circuit components. The existence of
Photonic materials include those materials
such a high-quality, native oxide - along with highly
that generate, detect, or transmit coherent light. To
developed processing techniques - has helped make
date, photonic materials have had their greatest
15
commercial impact in the telecommunications
radiation-resistant defense systems. Photonic tech-
sector, where fiber optic cable is rapidly supplant-
nology also has been fundamental to the development
ing copper wire. Since this application is addressed
of key defense systems for communications, detec-
in High-Performance Computing and Networking, the
tion, and guidance. Semiconductor lasers and
following discussion focuses on the use of photonic
detectors are transforming telecommunications,
materials as generators and detectors of light.
consumer electronics, and image processing.
Lasers are devices that generate coherent light.
Despite such important innovations, the truly
While a variety of lasers are used in a range of
revolutionary potential of photonics and electronics
photonic devices, semiconductor lasers are most
lies in the marriage of the two fields. Electronic
compatible with microelectronic devices and there-
circuits are nearing their theoretical performance
fore are of primary interest here. The first
limits in information processing. Electrons moving
semiconductor lasers were made of GaAs and
through semiconductor materials generate heat and
aluminum gallium arsenide. A variety of innovative
electromagnetic interference. These factors limit how
lasers have been or are being developed, based on
closely microelectronic devices can be packed in a
indium gallium arsenide, indium gallium arsenide
single integrated circuit. Moreover, the electrical
phosphide, and other compound semiconductor
connections that link microelectronic devices, cir-
materials. Semiconductor lasers have important
cuits, components, and systems can carry only limited
commercial applications as the source of light for
quantities of information. As a result, the speed with
fiber optics telecommunications, compact disc
which a microprocessor can manipulate information
players, and display systems.
is greater than the rate at which that information can
In contrast, detector materials convert light
be sent to other components or the end user.
into electric current. While these devices have the
Photonics represents a promising alternative
opposite function of lasers, they operate on similar
approach for overcoming the inherent limitations of
physical principles. Light stimulates the semicon-
conventional electronics. Photonic materials can
ductor electrons, which are excited into their
transmit much greater quantities of information than
conductive state. The detector can therefore
conventional wire connectors, and do it without
translate lightwaves into electrical signals, which
generating heat or electromagnetic interference.
then are processed into information by microelec-
tronic devices. Most detectors are made of semi-
Current technology allows a relatively rudi-
conductors like silicon, GaAs, lead selenide, and
mentary level of optoelectronic integration in the
mercury cadmium telluride. Such detectors are
form of fiber optic connections between otherwise
integral components in optical communications,
independent receivers and processors (e.g. fiber
laser guidance, thermal imaging, bar code readers,
optics telecommunications). The next step will be
robotics, copy machines, video cameras, and other
photonic links between microprocessors (or be-
commercial and military systems. Advanced detec-
tween microprocessors and other components such
tor materials, such as platinum silicide and indium
as data storage units), followed by optical intercon-
gallium arsenide, are being developed for special-
nects between individual circuits. The optoelectro-
ized, high-performance applications.
nic integrated circuit (OEIC) -- which would link
microscopic photonic and electronic devices (e.g.
REASONS FOR SELECTION
detectors, lasers, transistors) in a single monolithic
circuit -- represents the most advanced expression
Innovative electronic and photonic materials
of optoelectronic integration. When developed to a
have the potential to profoundly benefit the
level that is comparable to current microelectronic
national security and economic competitiveness of
circuitry, OEICs are likely to provide major
the United States. The development of GaAs-
advances in information processing capabilities.
based integrated circuits is a pacing technology in
the development of the next generation of
Materials compatibility represents an important
high-performance supercomputers, and is central
obstacle to increased levels of optoelectronic integra-
to DoD efforts to develop more capable, nuclear
tion. Photonic materials, GaAs or related compound
16
semiconductors, are not fully compatible with silicon,
STATUS AND INTERNATIONAL TRENDS
the primary material of microelectronics. (Silicon is
not an effective photonic material, as it does not emit
The United States faces a severe competitive
coherent light and cannot detect light emitted by
challenge from Japan in the development of
many key lasers.) Since GaAs is both an efficient
advanced electronic and photonic materials, as well
photonic material and has great promise in micro-
as in optoelectronic integration. Japanese capabilities
electronic applications, this compound semiconduc-
in the fabrication of high-quality, low-cost electronic
tor has outstanding potential for optoelectronic
materials have been an important factor in the rapid
integration - if fabrication difficulties and other
growth in the Japanese share of the microelectronics
related material problems can be overcome. Alterna-
market. The Japanese private sector and government
are involved in several initiatives to develop GaAs
tive approaches include the use of a thin GaAs layer
technology for commercial use.
on a silicon substrate, and the development of silicon
superlattice crystals with improved optoelectronic
U.S. firms are about even with their European
properties.
and Japanese counterparts in the technology
needed to produce silicon wafers used in the
In theory, photonics has the potential to
production of semiconductor devices. However, the
eventually supplant not only the electronic connec-
market share of U.S.-owned companies in the
tions that link microelectronic devices, but also the
silicon wafer market fell from nearly 60 percent in
semiconductor switches that perform the logic
1985 to under 10 percent in 1989, partly as the result
functions in microprocessors. In principle, photon-
of the foreign acquisition of U.S.-based suppliers.
ic processors could manipulate information at
Given the increased foreign control of this produc-
significantly greater speeds than existing semicon-
tion base, the United States will have difficulty
maintaining technological leadership in this critical
ductors. Despite this potential, there is a strong
consensus that without dramatic technical break-
technological area. Moreover, European and Japa-
nese firms already hold a signficant lead over the
throughs, optical data processing may be several
United States in the development of GaAs-based
decades away because of the practical difficulties of
microelectronic devices and integrated circuits, not
fabricating and integrating all of the requisite
only in terms of market share but also in the
components on a microscopic scale.
superior quality of foreign-made GaAs wafers.
In the long term, the use of superconducting
The Japanese position is also very strong in
materials may lead to major improvements in speed
photonic materials and devices. Although the
and reduced power dissipation of electronic de-
semiconductor laser was first developed in the
United States, Japan is now the world leader in the
vices and components. For example, electronic
production of both low cost lasers employed in
switches can be fabricated using Josephson junc-
compact disc players as well as high-performance
tion technology that are many times faster than
conventional semiconductor switches. There are
devices used in long-distance fiber optic
communication systems. Fiber optics is the only
difficult materials problems to be overcome,
photonics component in which the United States
however, before superconducting electronics be-
has maintained its competitiveness.
comes commercially viable. Because of this, the
technology appears to be in a much earlier stage of
The Japanese advantage in electronic and
development than optoelectronics. Furthermore,
photonic materials could be a decisive edge in the
the need for refrigeration may restrict the technolo-
development of more fully integrated optoelectro-
gy to niche markets. In order to foster applications,
nic circuitry. Integration is a primary thrust of the
the U.S. government maintains an extensive re-
Optoelectronics Joint Research Laboratory, a
search and development program in superconduc-
collaborative program involving the Japanese
tivity that focuses on materials studies,
government and several industrial organizations.
superconducting wire, and electronics.
Such efforts, should they be successful, would have
17
a direct impact on the health of the U.S. micro-
electronics and computer industries, and could
jeopardize the competitiveness of the many sectors
dependent upon information processing.
18
CERAMICS
DESCRIPTION OF TECHNOLOGY
An alternative approach involves greater use
of ceramic coatings. For some applications,
Ceramics have been used by man for centuries
coatings confer many of the advantages of the
in the form of bricks, tile, and glass. In recent years,
monolithic ceramics, with fewer drawbacks. For
however, the development of sophisticated process-
example, ceramic coatings can significantly im-
ing methods and improved synthetic procedures
prove the high-temperature capability and wear
has resulted in a new generation of advanced
resistance of a superalloy component. A compo-
ceramics. These exhibit properties that offer
nent coated with a thin ceramic layer will not
potential benefits in several industrial sectors.
share the tendency of monolithic ceramics toward
brittle fracture. Moreover, the application of
The new or "advanced" ceramics are made
ceramic coatings is less expensive and complex
from pure, inorganic, nonmetallic powders of
than the fabrication of monolithic ceramic
highly uniform size and shape. These powders are
structures. Ceramic coatings are used extensively
processed at high temperatures, frequently
in high-performance aerospace bearings and
supplemented by high pressure, to form dense,
turbine components, as well as industrial cutting
hard structures. In comparison with traditional
tools. As in the case of monolithic structures,
metals, advanced ceramics generally have high
there is a need for improved toughness of ceramic
strength, low relative weight, and excellent high-
coatings.
temperature and corrosion resistance. These char-
acteristics -- particularly their ability to withstand
Ceramic materials are generally more expen-
extreme operating temperatures -- make advanced
sive than competing metals or alloys because of
ceramics candidates for structural applications in
the complexity of current fabrication methods,
advanced propulsion systems and high-perfor-
the high cost of ceramic powders, and the
mance applications.
difficulty of machining to final shape. "Near net
shape" processing has important potential to
Brittleness and poor reproducibility have been
reduce the costs of advanced ceramics. Such
the primary limiting factors in the use of advanced
methods permit the fabrication of a part in
ceramics. When exposed to stress, microscopic
dimensions that are close to the desired final
imperfections in the material can develop into cracks
shape, thereby reducing scrap and costly, time-
that can result in catastrophic failure. In recent years,
consuming machining. Hot isostatic pressing
however, researchers have developed several useful
(HIP) is a near net shape technique that is being
approaches to improving the toughness and reliabil-
used for some advanced ceramic applications. By
ity of ceramics. One promising approach is to
simultaneously applying pressure and heat to a
reinforce the ceramic matrix with high-strength
mold containing ceramic powder, HIP technology
fibers, whiskers, or particles. These composite
can produce a ceramic structure that closely
materials are known as ceramic matrix composites
approximates the shape of the final component.
(CMCs). In CMCs, the reinforcement inhibits
The development of thermoplastic ceramics
microscopic flaws in the matrix material from
which can be pressed, cast, or molded when
developing into full fledged cracks. Continuous fiber
heated to a certain temperature, may represent
CMCs exhibit superior toughness and are favored for
another promising approach. Further refine-
most high-performance applications, particularly in
ments in near net shape processing methods,
aerospace. To realize the full potential of CMCs,
including even superplasticity, are key to reduc-
further progress is needed in improving the reliability
ing the costs of advanced ceramic products and
of the matrix/reinforcement interface and in develop-
components. (See Materials Synthesis and
ing more cost-effective manufacturing techniques.
Processing.)
19
REASONS FOR SELECTION
military aircraft by the year 2000. Ceramic-based
turbine engines for missiles, drones, and other
High-performance ceramics are a key enab-
short-life applications are in the final stages of
ling technology for high-temperature applications
development. Ceramic components will also be
such as advanced engines, where potential advan-
used extensively in the propulsion systems of
tages include increased performance and fuel
advanced subsonic and hypersonic civil transport
efficiency due to higher combustion temperatures,
aircraft.
more compact and lighter designs, and the reduc-
tion or elimination of the cooling system. Ceramics
In addition to hot section components of
are also excellent materials for applications which
advanced turbine engines, ceramics have other
require extreme wear or corrosion resistance. In
important applications for military and aerospace
general, ceramics are likely to make their strongest
systems. Space shuttle tiles are made from a highly
impact in those applications where performance is
specialized ceramic material, and ceramics are
paramount. Cost considerations are likely to
being considered for high-temperature aerody-
preclude the widespread acceptance of advanced
namic surfaces and secondary structures for future
ceramics in more cost-sensitive applications, at
hypersonic vehicles, where operating temperatures
least until unit costs are reduced as the result of the
are likely to exceed the capabilities of current
development of an extensive ceramics manufactur-
metallic alloys. Because of their exceptional hard-
ing base and/or more efficient processing methods.
ness, ceramics are used for armor in military
The following discussion assesses the potential
ground vehicles and are increasingly prominent in
impact of these materials on specific sectors,
high-performance aerospace bearings.
including military/aerospace, surface transporta-
tion, manufacturing, and electronics.
Surface Transportation
Military/Aerospace
Ceramics are also having a growing impact on
the development of advanced automotive engines.
Advanced aerospace designs require dramatic
As with aerospace turbines, the use of ceramic
improvements in propulsion capabilities to achieve
components in automotive engine hot sections
desired levels of performance. Increasing combus-
results in improved performance and fuel efficien-
tion temperature is critical to achieving the needed
cy. Ceramic parts are being developed or used in a
improvement in thrust-to-weight ratios. Ceramics
variety of high-temperature engine applications,
have the potential to withstand operating tempera-
including turbocharger rotors, pistons, liners,
tures over 1600°C, far surpassing the maximum
valves, and seals for water pumps. Although cost
temperature capabilities of superalloys currently
considerations currently limit the rate of introduc-
employed in high-performance turbines. Ceramics
tion of ceramic components in the price-sensitive
are also significantly lighter than superalloys.
automobile market, ceramics nevertheless will play
According to some estimates, all-ceramic turbines
an increasing role in future automotive engine
could provide as much as 40 percent improvements
designs.
in power over current high-performance aircraft
engines, with significant fuel savings.
Manufacturing
In light of these potential benefits, efforts are
Ceramics have demonstrated important capa-
underway to develop ceramic components for
bility in cutting tools, especially in competition with
turbine hot sections in the next generation of
tungsten carbide-cobalt cermets as inserts for
high-performance military aircraft. While such
metal turning and milling operations. Ceramics
applications require continued improvements in
also have significant potential for wear parts such
the toughness and reliability of ceramics, one
as seals, valves, nozzles, wear pads, grinding wheels,
aircraft manufacturer estimates that these materi-
and liners. Heat exchangers made of advanced
als will account for approximately 30 percent of the
ceramics have the potential to greatly improve the
weight of turbine engines in high-performance
efficiency of industrial furnaces.
20
Electronics
Japan is superior to the United States in the
processing of monolithic ceramics for non-aero-
The most widespread current application of
advanced ceramics is in semiconductor electronics.
space commercial applications. Japanese firms
dominate the market in ceramic packaging for
Ceramics are used in integrated circuit packaging,
microelectronic devices, and have established a
capacitors, and, to a lesser extent, resistors.
clear lead over their U.S. counterparts in the
Important future markets for advanced ceramics
introduction of ceramic components in automobile
potentially include ceramic sensors, integrated
engines. Japanese automobile companies are work-
optic circuits, and semiconductors.
ing closely with the large, integrated Japanese
materials firms to resolve the technical obstacles to
Other Applications
the more extensive use of ceramic materials in
Bioceramics, or ceramics for medical applica-
automobile engines. One Japanese automaker has
tions such as dental or orthopedic implants,
developed an all-ceramic diesel engine prototype
represent a major market opportunity for ceramic
which functions without a cooling system. In order
materials. The high-temperature capability of
to gain additional manufacturing experience, Japa-
advanced ceramics could also enhance the per-
nese firms have incorporated ceramic materials in
formance of processing equipment in the chemical,
scissors and other consumer products.
petrochemical, and petroleum industries.
STATUS AND INTERNATIONAL TRENDS
There is concern that the Japanese may
attempt to exploit their advantage in ceramics
The United States enjoys world leadership in
processing and "leapfrog" U.S. aircraft engine
ceramics research and development. The United
manufacturers. However, current Japanese capa-
States leads in the development and manufacture of
bilities in high-performance CMCs are relatively
high-performance CMCs, partly as a result of
limited. France has demonstrated a strong commit-
Government and industry's continuing commit-
ment to develop high-temperature CMCs in
ment to aerospace R&D. However, U.S. industry
support of its ambitious aerospace program.
has been relatively slow to incorporate advanced
Germany is focusing its R&D on unreinforced
ceramics into non-aerospace applications. More-
ceramics in an attempt to fully understand these
over, U.S. industry is largely dependent upon
new materials before undertaking the development
European and Japanese firms for the supply of
of CMCs. Sweden's strength in hot isostatic
high-grade ceramic powders and fiber reinforce-
pressing techniques contributes to its significant
ments.
ceramics processing capability.
21
COMPOSITES
DESCRIPTION OF TECHNOLOGY
Polymer Matrix Composites
Composites are hybrid materials consisting of
PMCs are lighter, stronger, and stiffer than
reinforcing fibers or particles embedded in a
traditional alloys and metals. However, these
matrix. The matrix and the reinforcements work
composites can tolerate only moderate service
together to yield a material with properties that are
temperatures. While this shortcoming rules out
collectively more useful than those of the individual
their use in hot sections of jet engines, PMCs are
elements. While early composites such as plywood
ideal for aerodynamic surfaces, as well as automo-
and fiberglass have long been in widespread
bile structures and other applications in which
commercial use, recent advances in materials
weight and strength are critical to performance and
science have resulted in high-performance com-
efficiency. PMCs also offer unprecedented design
posites which are far superior to traditional metals
flexibility, since they can be tailored to each specific
and alloys.
application through the careful selection of materi-
als and arrangement of the reinforcing fibers.
High-performance composites generally are
High-performance PMCs are considerably
categorized according to the matrix material. Such
more expensive than competing metals as a result of
categories include polymer matrix composites
their complex, time-consuming fabrication pro-
(PMCs), ceramic matrix composites (CMCs), and
cesses. Thermosetting epoxy (a glue-like polymer)
metal matrix composites (MMCs). Carbon-carbon
is the matrix material used for most current
composites (C/C) constitute a specialized category
high-performance applications. Thermoset pro-
that utilizes a carbon-based matrix reinforced with
cessing is complex, time-consuming, and expen-
carbon fiber. Each category of advanced compos-
sive. Hand or automated lay-up of many layers of
ites has distinctive properties and applications.
fiber, tapes, or broad goods is normally required,
PMCs are the most mature of the advanced
followed by a lengthy autoclave curing process, to
composite technologies and, unlike other high-per-
achieve the desired strength and stiffness. Cycle
formance composites, already are in widespread
times, which are a primary cost driver, often are
use in both military and commercial applications.
measured in hours. As a result, these composites
In contrast, CMCs, MMCs, and C/C composites
are employed largely in applications where per-
are emerging technologies that currently are limited
formance is more important than price, such as
to a few highly specialized applications, mostly in
military aircraft, space, and sports equipment.
military aerospace and space structures.
Advanced PMCs have caught on more slowly in
industries that are highly cost competitive.
Reinforcing fibers are made from a variety of
materials, including carbon, high-strength liquid
The implementation of high-volume, low-cost
crystalline polymers, silicon carbide, or specialty
production methods is therefore critical to unlock-
glass. They may employ continuous fibers, short
ing the commercial potential of PMCs. Thermo-
fibers or "whiskers," or particles. Continuous fiber
plastic resins are one promising technology for
composites provide superior stiffness and strength
reducing costs and automating the fabrication
in the direction of reinforcement. These composites
process. Unlike thermosets, thermoplastic materi-
exhibit increased performance but are expensive
als can be reshaped when exposed to certain
and difficult to fabricate. In contrast, whisker and
temperatures. As a result, these composites can be
particle composites are inexpensive and are rela-
reformed from bulk material into desired final
tively easy to produce but are suitable only for less
shapes, thereby greatly simplifying processing.
demanding applications.
Moreover, these materials do not require autoclave
23
curing and, consequently, have dramatically short-
With further improvement in stamping and other
er cycle times than thermosets. Thermoplastics are
processing techniques, low-cost PMCs may in-
therefore well-suited for forming operations like
creasingly replace sheet metal in automobile
stamping and injection molding -- mass production
manufacturing. U.S. automobile manufacturers
techniques which could greatly improve the afford-
also are developing all-PMC frames for possible
ability of PMCs. However, current thermoplastics
introduction in the mid-1990s. Such applications
have lower thermal strength and corrosion resistance
would greatly simplify assembly by reducing the
than thermosets. These shortcomings must be
number of body parts, and provide improved fuel
overcome before thermoplastics can replace thermo-
efficiency, ride quality, and corrosion resistance.
sets in high-performance applications.
High-performance PMCs also have important
In the coming decades, the use of PMCs in
potential for civil engineering applications, and are
high-performance military aircraft will grow. Al-
being tested for use in bridge and highway support
ready, composites account for 26 percent of the
structures. The development of low-cost PMCs
weight of the AV-8B Harrier jump jet. For the
may be key to the development of the manufactured
Advanced Tactical Fighter (ATF), this figure is
housing industry. Finally, PMCs are used extensive-
likely to rise to 40 percent. The use of PMCs in such
ly in the sporting goods sectors in the production of
applications results in average weight savings over
tennis rackets, golf clubs, skis, and other sporting
conventional materials of 20-30 percent. Because
equipment.
of their tailorability and stiffness, PMCs also
permit the development of advanced designs with
Other Composites
smaller radar cross sections. PMCs have important
potential in other military applications, including
Although less mature than PMCs, other
aerodynamic surfaces of helicopters and missiles,
high-performance composites are finding increas-
and the structures of armored vehicles.
ing use in military and commercial applications.
C/C composites, which can tolerate higher operat-
Proficiency in producing and using PMCs will
ing temperatures than any other known composite,
also be key to improving performance and reducing
are utilized in rocket nozzles and reentry vehicle
life cycle costs of commercial aircraft. While PMCs
components. These materials have strong potential
account for only three percent of the weight of the
for high-temperature structural applications in
Boeing 757, some experts believe that the use of
hypersonic airciaft, space vehicles, and advanced
PMCs in commercial aircraft could rise to 65
propulsion systems. However, the development of
percent by the year 2000. One U.S. firm recently
C/C composites must surmount serious technical
began full-scale production of a small business
obstacles which have inhibited the widespread use
aircraft with an all-PMC airframe. Airbus, the
of these materials. Major challenges include im-
European consortium, is making extensive use of
proving the oxidation resistance of C/C composites
PMCs for primary airframe structures in its
at high temperatures, as well as the reproducibility
transport aircraft. (However, it is important to note
of C/C components.
that recent developments in Al-Li alloys, for which
strengths of > 100 kpsi are now being obtained and
As discussed in Ceramics, advanced ceramics
which can retain strengths of about 70 kpsi up to
are considered instrumental to the development of
250°C, imply that aluminum alloys will remain a
advanced propulsion systems and other high-per-
strong contender for aerospace applications for the
formance aircraft structures in light of their
foreseeable future. See High-Performance Metals
high-temperature capability and other superior
and Alloys.)
properties. The primary constraint has been their
tendency toward brittleness, which can result in
PMCs already are having an impact on the
catastrophic failure. CMCs offer a promising
automobile industry. Relatively inexpensive com-
approach to improving the toughness of ceramics.
posites, such as fiberglass, have been used in
In CMCs, the reinforcement fibers work to deflect
several automobile models for exterior surfaces.
microscopic cracks and prevent crack propagation.
24
CMCs could therefore be a primary means for
systems, and the U.S. space program. These
improving the reliability of advanced ceramics and
materials will play an increasingly prominent role
could help realize the considerable potential of
in the civil air transport industry, and are a
these revolutionary materials. In addition to high
potential source of competitive advantage in the
performance aircraft turbines, CMCs are being
automobile industry.
developed for a variety of automobile engine
components. (See Ceramics for further discussion
STATUS AND INTERNATIONAL TRENDS
of CMCs.)
The United States has a strong across-the-
MMCs exhibit dramatically superior charac-
board research and manufacturing base in advanced
teristics in comparison to unreinforced metals,
composites, and is both the world's largest producer
including lightweight strength, high specific
and consumer of these materials. In general, U.S.
stiffness, and high-temperature capability. As a
capabilities are strongest in high-performance
result, MMCs are attractive for a number of
applications, but are somewhat less competitive in
relatively high-temperature applications in hyper-
lower end composites that have potential for broad
sonic aircraft, including leading edges and other
commercialization.
hot sections of the airframe skin. MMCs are
especially appropriate for space structures, where
their high resistance to radiation provides a
Much of the pioneering work on PMCs was
decisive advantage over PMCs. (In space, PMCs
conducted in the United States, and domestic
experience "out-gassing," or the release of water
suppliers are among the most important compan-
vapor and other compounds, which can collect on
ies in the industry. Nevertheless, the position of
satellite instruments and degrade their effective-
other nations in PMC development and manufac-
ness. MMCs are not susceptible to this
turing has strengthened significantly. In recent
phenomenon.) MMCs are beginning to find use in
years, European firms have acquired more than
engine components and in a variety of vital
20 U.S.-based suppliers, including many of the
high-temperature applications in the National
industry's most prominent companies. Moreover,
Aero Space Plane and the proposed high speed
the U.S. PMC industry has been oriented toward
commercial transport. Important constraints on
high-performance applications in space and
the utilization of MMCs in these and other future
military aviation. This focus is largely the result of
applications include cost and the reliability of the
extensive DoD and NASA sponsorship of R&D
matrix/reinforcement interface. Currently, MMCs
activity in PMCs and other composites. Conse-
can be found in Space Shuttle struts and the
quently, supplier firms have focused relatively
little attention on the commercial market.
antenna boom for the Hubble Space Telescope.
Japanese automakers have pioneered the use of
reinforced aluminum in piston skirts. (See High-
In contrast, Japanese industry has sponsored
Performance Metals and Alloys for further discussion
the bulk of composites research in that country.
of MMCs.)
Because of the lack of a mature Japanese aerospace
industry, Japanese PMC firms have emphasized
REASONS FOR SELECTION
sporting goods and other commercial markets in
order to acquire experience in composites design
According to the Aerospace Industries Asso-
and manufacturing. Japanese firms are actively
ciation, worldwide PMC sales totalled almost $4
exploring the potential use of PMCs in civil
billion in 1989 alone. The Office of Technology
engineering, construction, and other fields. By
Assessment estimates that worldwide annual
concentrating on processing and commercial appli-
sales of advanced composites will climb to $20
cations, Japanese companies appear to be position-
billion annually by the year 2000. As noted above,
ing themselves to take advantage of future
advanced composites are integral to high-perfor-
non-aerospace markets. Japan is also the dominant
mance military aircraft, other key defense
supplier of carbon fiber.
25
Composites applications traditionally have
the design data base for new product forms that
consisted largely of simple replacements of metal
fully utilize the unique properties that composites
parts with composite components of essentially
can provide over traditional metallic forms.
identical shape. However, composites offer the
potential for a revolutionary synthesis of materi-
Advanced composites are a leading edge
als science and product design with the advent of
technology with profound implications for econom-
"designer materials." Innovative design and
ic competitiveness and national security. To main-
analysis methods must be developed in order to
tain world leadership in this critical technology,
realize the full potential of these new materials.
U.S. industry must continue to develop more cost
Detailed knowledge of the behavior and failure
effective processing methods and place greater
mechanisms of composite systems will provide
emphasis on expanding commercial applications.
26
HIGH-PERFORMANCE METALS AND ALLOYS
[High Hardness, High Strength and Temperature
Resistant; Includes Intermetallics]
DESCRIPTION OF TECHNOLOGY
military and space systems. Aluminum-lithium
(Al-Li) alloys, metal matrix composites (MMCs),
High-performance metals (including alloys)
and intermetallics are among the most promising of
exhibit superior strength, specific stiffness, heat
these new metals.
resistance, and other mechanical and chemical
properties in comparison to traditional structural
Aluminum-Lithium Alloys
metals such as steel. U.S. technological leadership
in the development and processing of high-perfor-
Al-Li alloys represent a promising approach
mance metals is an integral factor in maintaining
to overcoming the technological limits of conven-
the dominant position of the United States in the
tional alloys. A one percent lithium content reduces
aerospace sector.
the weight of an aluminum alloy by three percent
and increases its specific stiffness by six percent.
For decades, aluminum alloys and superalloys
Substitution of Al-Li alloys for conventional
have been the primary high-performance metals
aluminum alloys could yield total weight savings of
used in aircraft (both civilian and military), space
10-20 percent throughout the airframe, thereby
vehicles, and other aerospace systems. More
boosting aircraft performance and fuel efficiency.
recently, titanium alloys have come into significant
Recent advances have resulted in Al-Li alloys with
use. These conventional high-performance metals
much greater strength (up to 100 kpsi), useful
have distinct properties which dictate their specific
strength retention at elevated temperatures (75 kpsi
applications. Aluminum alloys, which are lighter
at 250° and improved welding characteristics.
than steel, have long been the primary material for
airframes. Superalloys (based on nickel, cobalt, or
To date, the use of Al-Li alloys in civilian and
iron) withstand relatively high temperatures and
military aircraft has been constrained by their
are employed widely in the hot section of aircraft
higher initial costs, as well as the lack of adequate
engines. Titanium alloys were also developed for
experience in the design and use of these materials.
A comprehensive data base on the characteristics
use in some engine components.
and performance of Al-Li alloys is needed to
overcome the reluctance of airframe manufacturers
Although new processing methods, such as
rapid solidification processing, continue to yield
to promote the widespread structural application
evolutionary improvements in the capabilities of
of a largely unfamiliar material. A firm commit-
these materials, conventional high performance
ment from the U.S. aircraft industry to use these
metals clearly are approaching their technological
alloys is also necessary in order to stimulate the
limits. The U.S. aerospace industry cannot achieve
needed investment in Al-Li processing -- the key to
the dramatic advances in performance required for
reducing fabrication costs. Despite such obstacles,
advanced aerospace systems without the develop-
Al-Li alloys are strong candidates for aerodynamic
ment of a new generation of lightweight, high-
surfaces and other high-performance aerospace
strength materials capable of withstanding extremely
applications in which temperature requirements
high operating temperatures. Along with ceramics
exceed the thermal capabilities of PMCs.
and polymer matrix composites (PMCs), advanced
New aluminum alloys incorporating iron or
high-performance metals are likely to play an
other transition element alloying additions are also
important role as an enabling technology for
attracting attention for aerospace applications.
advanced aircraft like the National Aero Space Plane,
These alloys, which are processed by rapid solidifi-
space-based strategic defense structures, and other
cation techniques, also show promise for operating
27
at higher temperatures than conventional alumi-
cost-effective fabrication techniques is key to
num alloys and, along with the new Al-Li alloys,
broader use of MMCs.
could replace some titanium alloys in selected
applications with significant weight and cost
Intermetallic Alloys
savings.
Intermetallics are unconventional alloys which
have great potential for high-temperature structur-
Metal Matrix Composites
al applications. Rapid solidification and other
sophisticated processing techniques may be used to
MMCs consist of a reinforcement material
produce these alloys in which the atoms of the
embedded in a metal matrix. The reinforcement
constituent metals are arranged into a highly
may be in the form of particles, whiskers, or
ordered lattice or crystal structure. This superlat-
continuous fibers or wires, and can be made from
tice structure results in high strength and, in some
a variety of high strength materials -- usually
cases, high melting points. In fact, over some
ceramics such as silicon titanium carbide, tita-
temperature ranges, certain intermetallics can even
nium diboride, or alumina. MMCs exhibit dra-
become stronger as temperature increases. Inter-
matically superior characteristics in comparison
metallics are therefore a potential replacement for
to unreinforced metals and, like other compos-
superalloys in the hot section of jet engines.
ites, can be tailored for specific high-perfor-
mance applications. For example, aluminum
Titanium aluminides are among the most
matrix composites demonstrate three to ten times
promising intermetallic candidates for aerospace
greater strength than the monolithic metal, as well
applications because of their low density and high
as superior stiffness and lower density. For these
melting points. While less brittle than ceramics at
reasons, aluminum MMCs are attractive for a
low temperatures, the toughness of the titanium
number of high-temperature aerospace applica-
aluminides is lower than that of conventional
tions in the hot section of aircraft turbines and
metals, and therefore will likely be reinforced with
rocket engines, as well as aerodynamic surfaces in
ceramic particles or fibers. Such materials are
hypersonic aircraft. They are also promising for
being developed for use in the hot sections of
space vehicles, where their resistance to radiation
advanced aircraft turbines and high-temperature
and "out-gassing" is an important advantage
aerodynamic surfaces. The complexity and cost of
over PMCs. Some MMCs also have potential for
the resulting fabrication processes are the primary
non-aerospace commercial applications; for ex-
constraints to the widespread use of such interme-
ample, Japanese automakers have pioneered the
tallics. The development of processes for the
use of aluminum matrix composites in automo-
superplastic forming of intermetallics has signifi-
tive engine components such as piston skirts.
cant potential to enhance current capabilities to
fashion these materials into complex final shapes.
Despite these potential benefits, MMCs face
Nickel and iron aluminides are also being
several serious obstacles. Because the rates of
developed. While not capable of operating at the
thermal expansion of the matrix and reinforce-
extremely high temperatures at which titanium
ment are usually different, the matrix/reinforce-
aluminides can be used, they show great promise at
ment bond has a tendency to fail after exposure to
lower temperatures, i.e., 800-1000°C. These inter-
repeated temperature cycling, both during pro-
metallics exhibit strong creep and oxidation resis-
cessing and in service. Similarly, reactions
tance, and may challenge expensive materials such
between the reinforcement and the matrix metal
as stainless steels and nickel alloys for certain
can degrade the interface unless these are
applications. In contrast to titanium aluminides,
carefully chosen to be thermodynamically stable.
low temperature toughness is not a problem in
Most important, because of high raw materials
these materials.
costs and complex processing methods, MMCs
are usually significantly more expensive than
Intermetallics represent an emerging technolo-
competing materials. The development of more
gy in materials science. While some components
28
could be introduced on a limited scale in the
represent a longer term, more revolutionary techno-
mid-1990s, broader applications are not likely
logical challenge. Intermetallic alloys, probably
before the year 2000.
used in composite form, will compete with ceramics
as the replacement material for superalloys in many
REASONS FOR SELECTION
high temperature applications, particularly in hot
sections of advanced propulsion systems While
Advanced high-performance metals and al-
intermetallics have a somewhat lower maximum
loys are an integral enabling technology for future
service temperature, the reliability of ceramics in
military aircraft and other defense systems; sub-
structural applications remains a concern.
sonic and supersonic civil transport aircraft;
proposed space systems like the National Aero Space
To date, high-performance metals and alloys
Plane (NASP); and space-based strategic defense
have had limited success in penetrating non-aero-
structures. Preeminence in advanced metals and
space commercial markets, largely because of their
alloys is a prerequisite for continued U.S. world
higher costs. MMCs, however, are attractive for
leadership in aerospace.
possible use as connecting rods and other reciprocat-
ing parts in automobile engines. A number of
Advanced metals will compete with ceramics
commercial applications are currently being pursued
and PMCs in future aerospace applications. In
for nickel and iron aluminides.
general, high-performance metals offer higher tem-
perature resistance, but lower strength and specific
STATUS AND INTERNATIONAL TRENDS
stiffness, than PMCs. They are tougher than ceram-
While the United States enjoys a strong
ics, but tolerate lower operating temperatures. High
position in advanced metals, Japan and major
performance metals and MMCs therefore occupy an
European countries can match U.S. technology in
intermediate position between PMCs and ceramics.
many areas. In the advanced areas of development
Because of their high specific strength and stiffness,
-- Al-Li alloys, MMCs, and intermetallics -- the
Al-Li alloys will compete with PMCs and MMCs to
United States faces concerted overseas efforts to
supersede conventional alloys in many airframe
surpass its capabilities. Europe is building upon its
applications. Already, Al-Li alloys are in limited use
aerospace industry expertise, while the Japanese
in commercial aircraft as landing gear fittings and
challenge has its foundation in that country's large
cabin floor beams. The C-17 military transport will
steel sector.
include several Al-Li alloy components. This trend
will accelerate as Al-Li alloys become cost competi-
France, Germany, and the United Kingdom
tive with conventional aluminum alloys by the
are engaged in vigorous research in a variety of key
mid-1990s.
fields. France hopes to become the major supplier
of Al-Li alloys for the next generation of Airbus
MMCs with aluminum alloy matrices are
aircraft. However, French suppliers still have some
under consideration for both selected airframe as
production problems that place French technology
well as engine applications. MMC technology is not
somewhat behind that of the United States.
as developed as Al-Li alloys, but is further refined
Germany has a major program in intermetallic
than intermetallics. Where adopted, MMCs will
compounds underway for possible applications in
compete with PMCs for many applications which
hypersonic aircraft and advanced aircraft engines.
now employ unreinforced metals. The relatively
The United Kingdom is focusing its efforts on
high costs of MMCs may limit their use. The key
developing conventional titanium and aluminum
market for MMCs may be space vehicles, where
alloys with higher temperature capabilities.
their strong resistance to radiation and out-gassing
is a key advantage over PMCs, and heat engines for
Japan is approaching U.S. capabilities in
aircraft, rockets, and power generation.
superalloy technology, and is becoming a major
developer of intermetallics. Several Japanese steel
While Al-Li alloys and MMCs are already
companies are vigorously developing new metals
employed in limited applications, intermetallics
and other materials in an effort to diversify from
29
steel. Nippon Steel has world-class capabilities in
goods sector, and Japanese automobile companies
developing titanium aluminides. The Japanese are
have pioneered the use of aluminum MMCs in
also working on Al-Li technology, but remain
engine components. In contrast, U.S. companies
substantially behind the world leaders in this field.
Japanese firms are exploring non-aerospace appli-
are highly oriented toward the military/aerospace
cations for MMCs in order to develop future
markets and have not been as active in seeking
commercial markets and gain fabrication experience.
novel commercial applications for high-perfor-
Japan dominates the MMC market in the sporting
mance metals.
30
MANUFACTURING
Flexible Computer Integrated Manufacturing
Intelligent Processing Equipment
Micro- and Nanofabrication
Systems Management Technologies
31
MANUFACTURING
Throughout its deliberations, the Panel placed heavy emphasis on the importance of man-
ufacturing and process technologies. In this section of the report, four critical manufacturing pro-
cess technologies are described:
Intelligent processing equipment
Flexible computer integrated manufacturing
Micro- and nanofabrication
Systems management technologies.
In addition, several other National Critical Technologies also highlight the importance of manufac-
turing and processing issues.
The manufacturing technologies identified by the Panel involve a combination of new tech-
nologies and changes in management and engineering practices. These technologies draw upon
many other National Critical Technologies including sensors, controls, computer software and
hardware, simulation and modeling, and new materials.
The current trend in manufacturing is a move toward more rapid product introduction, ab-
breviated product life cycles, increased flexibility, and integrated design-production-quality con-
trol. Companies which do not move in this direction will become increasingly noncompetitive. To
achieve these streamlined operations, manufacturers must implement advanced manufacturing
technologies and management practices throughout their operations.
Manufacturing technologies involve far more than simply factory automation. Ultimately,
advanced manufacturing capabilities involve the integration of the entire enterprise, permitting
rapid adjustment to changing conditions, maximum efficiency, optimum staffing and inventory, and
improved product quality and affordability. Operations that will be affected include not only pro-
duction, but also engineering design, purchasing, sales, and cost accounting. A systematic approach
to the introduction of these technologies, along with changes in management practices, is essential
to maximize their potential benefits. These new technologies cannot be grafted onto an existing
organization. Instead, they imply a fundamental redesign in the approach to manufacturing.
U.S. economic competitors have tended to pursue advanced manufacturing processes and
technologies, as well as the management systems that integrate these technologies, more aggres-
sively than U.S. manufacturing companies. Continued competitiveness of U.S. manufacturing
equipment producers will depend not only on their own actions, but on a "sea change" in manage-
ment actions and investment practices at U.S. manufacturing enterprises.
33
FLEXIBLE COMPUTER INTEGRATED MANUFACTURING
DESCRIPTION OF TECHNOLOGY
systems, factory scheduling and center control
systems, and individual workstations and cells. In
Flexible computer integrated manufacturing
theory, flexible CIM should be able to adjust
(CIM) can reduce manufacturing lead time and costs
rapidly to changes in production requirements,
and improve product quality. Through the use of
adapt to disruptions in other aspects of production,
computer technology, flexible CIM integrates prod-
and manufacture parts in virtually any sequence. In
uct, process, and manufacturing management infor-
general, the more advanced the system, the less
mation into a single interactive network, greatly
direct supervision required, although optimal
reducing the number of "transactions" necessary to
utilization of flexible CIM requires extensive
produce the product. It affects all manufacturing
planning and coordination. (See Systems Manage-
functions including product engineering and design,
ment Technologies.)
process planning, production scheduling, subcon-
tractor and vendor activities, part production and
The components of a flexible CIM system are
product assembly, inspection, and customer service.
very broad, and depend on the scope and nature of
Flexible CIM now enables lower volume and more
a particular enterprise's manufacturing task. Typi-
variety of product to be managed more like a
cal equipment used in a flexible CIM system
continuous flow process than has ever been possible
includes:
before. Costs and quality are comparable to the
Computer aided production, inspection and
higher volume fixed automation systems. The key to
test equipment, including machining and
successful application of a flexible CIM strategy is the
turning centers, composite tape laying ma-
ability to adjust rapidly to changes in engineering
chines, and coordinate measuring machines
design, demand, or other product requirements. It
(programmable devices capable of automatic
helps ensure that the right product at the right price is
and precise measurements of parts)
on the market at the right time.
Electronics assembly equipment, consisting
of programmable equipment to perform
Whereas intelligent processing equipment (de-
routine assembly functions and operations
scribed in a separate section) focuses on the
such as insertion of components into printed
circuit boards. (Some current systems can
process/workstation level, flexible CIM addresses the
carry out assemblies of 15,000 parts per
management and process requirements at the factory
hour.)
level. Flexible CIM incorporates various levels of
factory automation and information systems into a
Process control equipment (PLCs -- pro-
grammable logic controllers), which are
single coordinated system. At the lowest level,
small, dedicated computers that control a
manufacturing tasks consist of individual steps and
variety of production processes, most often
processes performed at individual workstations. A
steps that must follow an established se-
group of workstations, organized around a set of
quence (for example, heat treatment of
common tasks or functions, constitutes a factory cell.
metals, in which the sequence of steps and
temperature must be controlled very precise-
Collectively, these cells feed parts into factory centers,
ly). Programmable controllers are finding
which may be composed of subassembly, assembly,
uses in both continuous processes and
and final assembly operations. The CIM system
discrete manufacturing tasks
"oversees" all of the factory's operations, including its
Computer control of multiple, interrelated
workstations, cells, and centers, and ensures that the
operations, such as control of several racks of
factory can be responsive to both engineering and
detail parts being processed simultaneously
marketing inputs.
through various chemical tanks for degreas-
ing, cleaning, rinsing, drying, and different
surface treatments, in each case with differ-
Flexible CIM integrates company-wide infor-
ent bath times and sequencing required. At a
mation systems, plant-wide planning and control
factory level, an application is the nightly
35
determination of the sequence and schedule
widely in manufacturing, these systems will become
of all factory operations for the following day.
increasingly important as a means to reduce
Flexible CIM is the integration of these and
production and design cycles as well as manufac-
other components. Some of the associated tools
turing costs. They are important competitive and
and technologies utilized to implement flexible
efficiency tools for product and tooling designers,
CIM are discussed below.
production planners, and managers.
Group Technology (GT)
Simulation Tools
Group technology emphasizes identifying ma-
Manufacturing simulation models contain
jor similarities among items so that they can be
data involving physical systems, control systems,
grouped for more efficient production, by minimiz-
management policies, vendor/supplier informa-
ing tooling changes or the reprogramming of
tion, and exogenous influences on the enterprise
manufacturing systems. Parts produced are classi-
and factory. Using interactive systems to simulate
fied according to their physical characteristics,
a task or set of subtasks, managers can design
qualities, or other criteria. GT enables planners to
more effective manufacturing systems, increase
exploit similarities in parts and machining pro-
utilization rates, streamline factory layouts, and
cesses to improve factory and production efficien-
simplify scheduling. Simulation and modeling
cy. It is the basis for establishing workstations,
enable project teams to design products in a
cells, and factory centers.
manner that simplifies subsequent analytical
tasks in the production phase. (See Simulation
Computer Aided Process Planning (CAPP)
and Modeling for a more complete description.)
This includes: establishing methodologies for
Computer Aided Design (CAD)
determining processing sequences from part speci-
fications, part characteristics, and/or assembly
CAD already has an enormous impact on the
configurations; applying process models to deter-
manufacturing environment. Three generations of
mine economical operating conditions for each
CAD systems are in use today. The first generation
processing unit; and evaluating the impact of
consists of two-dimensional, computerized drafting
operating conditions within workstations and CIM
systems that streamline the process of drawing and
systems on production rates and economics of the
editing plans or blueprints. The second generation
entire production sequence. Some systems allow
enables three-dimensional designs, while the third
the generation of three-dimensional models of a
generation allows operators to create solid object
factory floor and systems to identify production
representations. The capabilities of CAD systems are
and material flow bottlenecks. Utilizing CAPP
continually developing. Three themes are evident in
would enable managers to determine the optimal
current CAD research: improving algorithms for
production sequence and flow within a manufac-
representing objects; adding "intelligence" to CAD
turing system.
systems so that they can prevent design errors; and
developing effective interoperability among CAD
Two types of CAPP are currently available,
systems and manufacturing operations and manag-
variant and generative. Variant CAPP is the more
ers.
common and simpler of the two. It relies on group
technology to develop process plans for similar yet
Computer Aided Engineering (CAE)
different parts by the same system, without
extensive investments in reorganization of man-
Computers are being used to define, refine,
ufacturing processes. Generative CAPP, which is
and optimize the qualities of various products.
far more complex, is used to develop process plans
CAE takes CAD techniques and benefits one step
based on multiple factors, including expert systems
further, allowing interactive design and analysis to
and artificial intelligence. Generative CAPP can
simulate performance. Although already used
also be used to optimize routing and production
36
lead times, as well as to anticipate necessary
Although automation in machine tools and
changes in tooling.
transfer-type machining systems was introduced
initially for mass production, approximately 75
Factory Scheduling Tools
percent of total production in the mechanical
industry is batch-type, or small lot production
These include computer-assisted material
(production of 50 or fewer parts). This requires
requirements planning (MRP) and manufacturing
more flexibility and capability than is economical
resource planning (MRP II). MRP is used to
for traditional automated systems. The production
manage lead-times, in-process inventories, and
of specialized parts has become more demanding in
other tasks. MRP II is a more advanced forecasting
its own right, requiring the development of new
and scheduling tool.
technologies and systems simply to remain abreast
of international competition.
REASONS FOR SELECTION
Flexible CIM systems are also central to the
Although the U.S. economy is dependent on
the service sector for its economic growth, both
affordability of complex and specialized weapon
systems that are required for national defense. For
services and the economy continue to be driven by
production capabilities. In addition, there is a
example, it is widely recognized that strategic
defense systems will only be affordable if wide-
strong linkage between manufacturing and the
service sector: erosion of the manufacturing base
spread implementation of CIM concepts occurs at
will result in the loss of a significant portion of the
all levels of the defense industry.
service sector employment and trade that depend
In short, flexibility in manufacturing is essen-
on it. Failure to maintain world-class manufactur-
tial to the efficient production of parts and entire
ing capabilities would compromise the nation's
products in today's rapidly changing marketplace.
ability to compete in domestic and international
Flexible CIM is the most promising means of
markets, and would threaten our ability to contin-
attaining such flexibility. Unfortunately, the use of
ued economic growth and to obtain access to the
these systems in U.S. industry is not yet wide-
full range of components and equipment required
spread. In addition to its high cost, flexible CIM
for a strong national defense.
diverges from the manufacturing strategies that are
Flexible CIM systems provide greater flexibil-
commonly practiced in this country today, and
ity than traditional, dedicated processes, and are
requires alterations in most firms' operating
even superior to many fixed automated systems. As
philosophies. CIM affects not only physical aspects
of production, but also such related areas as
the introduction of new products accelerates,
especially in high technology fields, the product life
engineering design, purchasing, sales, and cost
accounting. It is doubtful that even smaller firms
cycle is shortened and as little as 18 months may
that rely solely on domestic markets will be able to
pass before a new generation of a product is
introduced into the marketplace and the older
remain competitive without adopting flexible man-
product becomes obsolete. In addition, the size of
ufacturing strategies.
production runs for advanced products is decreas-
ing because of the shortened production life cycles,
STATUS AND INTERNATIONAL TRENDS
the growing demand for a large variety of parts and
Although industrial specialists believe that the
components, and increased "just in time" man-
number of flexible CIM systems in operation in the
ufacturing and purchasing practices. To meet
United States is double that of Japan, Japan
these competitive pressures, manufacturers must
nevertheless is well advanced in the field. In Japan,
implement new manufacturing systems that are
the field is more commonly referred to as Factory
flexible enough to respond quickly to product and
Automation (FA), an integrated approach to
demand changes. Increasingly, economics will
product design and manufacturing. Japan's work in
dictate that life cycles of manufacturing systems
the area is facilitated by the world's largest
must span several product life cycles.
automated machine tool industry, world-class
37
capabilities in information technology, and man-
turer assists managers with capacity planning and
ufacturing and product development philosophies
inventory management. The system can receive
that are highly compatible with CIM. In fact,
customer orders, generate manufacturing plans,
Japan's Ministry of International Trade and Indus-
and then use these plans to monitor implementa-
try has proposed an international collaborative
tion. A related CAPP process developed by a major
research program to conduct joint research in
U.S. research institution generates factory job
promising automated information and manufac-
schedules, selecting the sequence for each job to be
turing technologies, as well as to establish common
performed, determining the starting and ending
international standards to facilitate their
times, and assigning resources to each step. Still
introduction and proliferation. Many of the sys-
another system, developed jointly by U.S. industry
tems that would fall under this program -- the
and universities, helps control the manufacture and
Intelligent Manufacturing System Initiative -- go
distribution of a firm's final products and develops
far beyond the technologies described here.
assembly and testing plans based on customer
Many other management tools have been
orders and plant activity information. In addition,
implemented in industry, with varying success. For
it can diagnose and suggest solutions to problems
example, a system for a major computer manufac-
within the system.
38
INTELLIGENT PROCESSING EQUIPMENT
[Including Robotics, Sensors, and Controls]
The four technologies included in the "Man-
interacting with these sensors and other manufac-
ufacturing" category -- intelligent processing,
turing equipment.
flexible computer integrated manufacturing,
micro- and nanofabrication, and systems manage-
This control and sensor feedback concept is now
ment technologies -- are related, but have distinct
being applied to other manufacturing equipment and
roles in contributing to achievement of world-class
is referred to as the Next Generation Controller
manufacturing capabilities. Intelligent processing
(NGC). The use of sensory feedback with appropri-
equipment is central to the successful implementa-
ate information processing capabilities enables the
tion of advanced manufacturing strategies through
equipment to react, even to anticipate changes in
flexible computer integrated manufacturing.
the material, the process, or the equipment itself
which could affect the consistency of the item
DESCRIPTION OF TECHNOLOGY
produced. Consistency is critical to the productiv-
ity and control of the manufacturing process and
Intelligent processing equipment is the foun-
the quality of the goods produced. For example,
dation on the shop floor upon which advanced
intelligent processing equipment virtually elimi-
manufacturing capabilities are built. It includes a
nates the need for post-inspection. The net effect is
broad range of computer-controlled equipment
lower manufacturing costs with increased product
capable of carrying out a wide array of manufactur-
quality and reliability - keys to world-class
ing processes such as machining, forming, welding,
competitive manufacturing capabilities. Other Na-
heat treating, painting, testing, inspecting, assem-
tional Critical Technologies that have important
bling, composite fabricating, and material
roles associated with intelligent processing equip-
handling. Flexibility, programmability, and con-
ment include software, high-performance comput-
trollability are inherent attributes of such com-
ing, electronic imaging and displays, and
puter-controlled equipment, but intelligent
optoelectronics.
processing equipment carries these attributes to
the next level of control through the use of sensory
Intelligent processing equipment requires a
feedback. Furthermore, more than one process can
thorough knowledge of the process and relies on
now be integrated into an intelligent manufacturing
intelligent control systems which react to input
workstation. The fundamental concept behind this
from advanced sensors. Some sensors are able to
critical technology is that the manufacturing
react directly to the environment to detect states
process includes the ability to sense the desired
and situations. In many cases, however, the nature
characteristics or properties of a product and has
of the manufacturing process is such that the
enough local intelligence to control those proper-
desired variable cannot be measured, and a
ties.
combination of several indirect indicators must be
used. In such cases, and where many variables
Robots have been in the vanguard of this
interact to affect the process results, artificial
emerging technology. Most industrial robots are
intelligence technologies, fuzzy data, and neural
generic in concept and are not designed for a
network techniques are used. In addition, the
specific process. They must be coupled with other
control system interacts with automated manage-
equipment and require additional information
ment tools and manufacturing information systems
about the operational environment in order to
to coordinate the next level of factory operation (see
perform the desired process. This requirement has
Flexible Computer Integrated Manufacturing and
necessitated the development of various types of
Systems Management Technologies). Thus, sensors
sensors and computer-based controllers capable of
and control systems, coupled with artificial
39
intelligence and an understanding of process
part by recognizing physical characteristics
variables, are critical to intelligent processing
such as color, size, or shape within a reason-
equipment. The mechanical elements of intelligent
ably short cycle time. Machine vision and
processing equipment include manipulators and
proximity sensors are used for such applica-
tions. Critical considerations for such sensors
actuators, precision mechanisms, machine vision
include accuracy in the determination of
systems, nonvision sensor systems, and assembly/
precise dimensions and the ability of the
inspection systems.
system to perform accurate operations repeat-
edly over prolonged periods
One of the most important technological
components of intelligent processing equipment is
Sensors such as photoelectric and ultrasonic
sensors that enable intelligent processing
the controller --- the "brains" of modern automa-
equipment to position and set functions
tion equipment. Controllers use advanced proces-
sor chips and software languages and tools to
Sensors that are used for monitoring equip-
ment operations. These can include condition
command and control multiple functions simulta-
sensors (used to determine operation tempera-
neously to achieve higher efficiencies in manufac-
tures, vibrations, etc.) and position-monitor-
turing. In the area of machine tools, advanced
ing sensors (for counting product output and
controllers monitor and manipulate axes of motion
timing of operations). Monitoring sensors are
to high accuracies at relatively high speeds.
especially important in diagnostics -- moni-
Broader mechanical functions typically "controlled
toring and anticipating conditions that could
lead to equipment breakdowns or other system
by the controller" include machining, machine
dysfunctions
setup, intra-workstation materials handling, and
part inspection, grasping, and fixturing, as well as
Sensors that can be used for status and part
task planning and process programming. A non-
identification. Bar code and RF systems, for
example, frequently are used for status and
mechanical example illustrating the range of
part identification. Part identification tells
controller functions would be advanced autoclaves,
controllers what operations to perform.
in which controllers control temperature and
Future sensors necessarily will be more ad-
pressure while monitoring the curing process.
vanced and "smarter" in terms of their ability to
Sensors provide the inputs needed for these
measure, evaluate, and assess precise physical,
machines to perform their functions. Sensors are
mechanical, and chemical characteristics of a
needed to provide real-time information that can
product.
assist controllers in identifying potential bottlenecks,
Machine vision is also an important compo-
breakdowns, and other problems with individual
nent of intelligent processing equipment. Potential
machines and with a total manufacturing environ-
uses of machine vision systems illustrate the vast
ment before they upset production. Accuracy and
range of applications of sensor-based systems in
repeatability are critical capabilities, without which
manufacturing. Such systems can be used in
sensors cannot provide the reliability needed to
virtually any location and spatial relationship in
perform in advanced manufacturing environments.
production, and in determining dimensions for
To be useful with intelligent processing equipment,
parts and assemblies having specified tolerances.
sensors must be able to discern weak signals while
Representative examples include:
remaining insensitive to other interfering impulses.
Sensors must be able to ascertain conditions
Lead bonding for microelectronic chips
instantaneously and accurately, and provide usable
data to system controllers, without whose processing
Mask and reticle inspection in integrated
circuit manufacture
capabilities these inputs would be useless. Many
types of sensors are utilized in intelligent processing
Printed circuit board, solder joint, and wafer/
equipment. Four examples are:
diode inspection
Arc welding
Sensors that can detect the presence or
absence of a component or characteristic of a
Automated vehicle systems
40
Assembly
quired if the U.S. is to regain its traditional
leadership position in manufacturing.
A variety of dangerous manufacturing tasks on
the shop floor.
It should be noted that the health of manufac-
turing equipment and supporting sectors are
REASONS FOR SELECTION
closely related; a large number of technologies are
required to adequately support our manufacturing
Present-day processing is based upon the
base. As an illustration, advances in control devices
assumption that controlling process and equip-
represent perhaps the greatest potential for in-
ment variables within predetermined ranges and
creasing the capability of intelligent processing
relationships will ensure that the process results in
equipment in the future. Improvements in process-
a consistent product. Historically, consistency of
ing speed and supporting technologies such as
output was accomplished through the use of "fixed"
graphical programming and high-level languages
automation, which was used to produce a large
are allowing more and more functions to be
volume of a single product over a long period of
performed automatically by controllers as an
time. But fixed automation is both too slow to
integral part of the manufacturing process. Thus,
change and too costly, except for some high volume
these advances contribute to increased productivity
products with long product lives. Today's market is
and higher, more repeatable quality, which give
being driven by customers and competitors who are
users a competitive edge. It is also anticipated that
responsive to large product varieties and rapid
spin-offs from these intelligent processing technol-
introduction of new products. In the past, the use of
ogies will impact other segments of the U.S.
highly skilled and experienced machine operators
economy such as agriculture and the service sector.
was the only approach available to produce the
Examples include smart tractors, and service
low-volume, high-variety products - a costly
robots for health care, security, cleaning, and fire
approach no longer effective in this country. Thus,
fighting.
the trend in manufacturing is toward more rapid
product realization, increased flexibility, and inte-
STATUS AND INTERNATIONAL TRENDS
grated design-production-quality control. Man-
ufacturers lacking intelligent manufacturing
Although the United States had early leader-
capabilities will become increasingly noncompeti-
ship in developing and marketing programmable,
tive in many industries; as a consequence, they
automated machinery, its market had been signifi-
increasingly will demand these capabilities from
cantly reduced by the mid-1980s. Foreign manufac-
their domestic and foreign manufacturing equip-
turers, particularly Japanese, have come to
ment suppliers.
dominate the world market and take an aggressive
position in developing next-generation products.
It is impossible to maintain competitive
There has been a loss in market share in underlying
manufacturing capabilities, particularly in high
technologies as the production of intelligent pro-
technology fields, without having indigenous access
cessing equipment has moved offshore. In Japan,
to a broad range of state-of-the-art equipment.
this field is more commonly referred to as
Equipment suppliers in the United States are losing
"mechatronics," which is the integration of me-
market share to international competitors in a
chanical and electronic technologies. It is therefore
broad range of fields, including fabrication equip-
not surprising, for example, that the U.S. controller
ment, machine tool controllers, semiconductor
industry has been faced with significant competi-
manufacturing and test equipment, and large-scale
tion from both the Europeans and the Japanese,
presses. Although effective management can offset
and has steadily been losing both market share and
some of the disadvantages of less-than-competi-
technological leadership. As a result, considerable
tive equipment, foreign competitors have access to
attention is now being given in the United States to
both effective management and up-to-date equip-
the development of Next Generation Controllers
ment. Further development and deployment of
(NGC) which will provide improved performance
intelligent manufacturing technology will be re-
and greater flexibility to a wide range of users.
41
Further development of process technology is
capable systems that can be used for a broader
necessary for the widespread utilization of intelli-
range of applications. In the interim, simpler
gent processing equipment, especially for the new
technologies and techniques derived from robotic
engineered materials being developed. Such added
technologies can be introduced incrementally to
knowledge will lead to the development of new
facilitate deployment of intelligent processing
machines aimed at improvements in productivity
equipment. An example of these trends is the new
and process precision. Another requirement is for
composite fiber placement machine which is one of
the development and application of smart sensors
the first pieces of equipment to combine the
and related software tools such as neural networks,
technologies of machine tools and robotics into a
pattern recognition techniques, etc. Overcoming
new intelligent processing machine for aerospace
existing limitations in these areas will result in more
structures and engines.
42
MICRO- AND NANOFABRICATION
DESCRIPTION OF TECHNOLOGY
distances among devices and components limit
Micro- and nanofabrication involve the
performance capability. Micro- and nanofabrica-
fabrication and manipulation of materials and
tion techniques can be used to compress those
objects at microscopic (microfabrication) and
distances and sizes, thus improving performance.
atomic (nanofabrication) levels. Microfabrica-
Quantum effect devices, for example, theoretically
tion involves the fabrication and manipulation of
could have channels as small as 100 atoms in width,
smaller than a biological cell.
materials on a scale of less than one micron (one
micron = 10⁻³ mm). Microfabrication processes
Nanolithography techniques are a critical
include lithography, etching, deposition, epitax-
element of nanofabrication. At present, it is done
ial growth, diffusion, implantation, testing, in-
using scanned, focused electron or ion beams to
spection, and packaging. Nanofabrication
develop patterns on a wafer surface. Because of the
includes some of these techniques (ion beam
microscopic detail required to produce devices of
lithography, for example), but also involves
this sort, a formidable barrier in nano-scale
atomic-scale tailoring and patterning of materi-
manufacturing is developing techniques that can
als to utilize their natural properties in achieving
etch circuit patterns without damaging materials
desired results. Nanofabrication-scale struc-
themselves. In scanned electron-beam lithography,
tures are 10 to 100 nanometers (nm) and smaller
for example, incident electrons, after passing
(one nanometer = 10⁻⁶ mm).
through a resist, scatter back through it, causing
broadening of the pattern. (A similar problem
Micro- and nanofabrication techniques are
exists for focused ion-beam lithography, although
essential in semiconductor device production to
it can result in greater pattern precision.)
achieve the densities necessary for the next
generation of integrated circuit chips. Expected
Other challenges in nanofabrication include
applications include high-density integrated cir-
developing substrate materials and patterning
cuits, optoelectronic devices, quantum devices
structures to optimize characteristics conducive to
(where the quantum properties of materials
nano-scale fabrication.
themselves affect device design and perform-
ance), textured surfaces for biotechnology (see
Thin Films/Surface Treatments
Applied Molecular Biology), optoelectronics (see
Microelectronics and Optoelectronics), and a wide
Thin films consist of microscopic layers of
range of other uses. Research in advanced
materials deposited or otherwise fabricated on the
nanotechnology may also lead to the production
surface of other materials (substrates). Surface
of nano-scale mechanical devices and sensors.
treatment technologies focus on processes that
modify the surface of a base material to produce a
thin film or coating on a surface to utilize the
Integrated Circuit Applications
advantages inherent in the physical properties of
Micro- and nano-scale manufacturing pre-
the respective materials. Microscopically applied
sents formidable challenges at the scientific level
films and surface treatments are utilized in a
and in processing equipment development. How-
number of areas. Coatings are applied, for example,
ever, breakthroughs in this field would enable the
to turbine blades in aircraft engines to reduce wear.
production of integrated circuits and other devices
Bearings can be treated to produce surface coatings
with functional capabilities orders of magnitude
that reduce friction. Films themselves can be
beyond those currently in use.
fabricated as part of an integrated circuit. Cutting
and drilling tools are coated to protect against wear.
The key to efficient and powerful microelec-
Both thin films and surface treatments can be
tronic devices is switching speed. Current sizes and
utilized to overcome limitations in materials and
43
provide improved performance in terms of wear,
capable of performing a range of functions in fields
heat resistance, and corrosiveness. A key produc-
as diverse as environmental control and medical
tion factor is the ability to fabricate a microscopi-
science. Their potentially low cost coupled with
cally thin, dense, and uniform surface.
sensitivities orders of magnitude beyond the
capabilities of devices currently in use promise
Diamond films illustrate the promise of micro-
breakthroughs in numerous fields. Electrostatically
fabricated films. A diamond's physical, electrical,
driven micromotors, for example, could be man-
optical, thermal, and electronic characteristics are
ufactured in the future to control computers and
superior in many respects to those of other materials.
communications systems. Microsensors could be
Its remarkable properties include higher thermal
used to measure flow, pressure, or concentration of
conductivity (five times that of copper at room
various chemical species in environmental, medi-
temperature, for example), hardness that is orders of
cal, and mechanical applications.
magnitude higher than many other coating materials,
and greater electron mobility, making it suitable for a
Advances in manufacturing techniques must
variety of electronic applications. The key to micro-
be matched by improved material fabrication
fabrication is in using this material in minute
methods to facilitate the widespread production
quantities to capitalize on its superior properties
and utilization of microdevices. The high stress
while also utilizing the desirable qualities of other
levels in these devices require the development of
materials to which it might be bonded in various
new materials and improved processing of existing
fabrication processes. Diamond films fabricated
materials to assure reliable operation and high
through deposition and other techniques can be used
performance. Greater understanding of the me-
to harden drilling and cutting tools or to produce
chanical properties of these materials is also
more efficient semiconductor devices and microwave
necessary before they can be utilized to their full
circuitry. Other potential applications include bear-
potential (many of the materials now used to
ing coatings, heat sinks for high power integrated
manufacture demonstration devices are semicon-
circuits, and optical components for high power
ductor materials which have been used in the past
lasers. Aerospace applications include the use of
primarily for their electrical properties). Finally,
diamond films to reduce wear on space-rated alloys
design know-how must be enhanced to minimize
and radiation resistant optical coatings.
defects that affect microdevice manufacture and
operation.
Physical vapor deposition (PVD) and chemi-
cal vapor deposition (CVD) are two common
Although U.S. capabilities in thin film and
techniques used in creating thin films on sub-
microdevice production are advancing rapidly,
strates. PVD applies films to substrates through
greater benefits will accrue to the nations that excel
such techniques as evaporation and sputtering (ion
in the design and manufacture of equipment
bombardment of a target to deposit displaced
needed to produce these materials and devices
material onto the substrate). CVD relies on
economically and in mass quantities. Just as in the
processes by which a film is created on another
semiconductor and other industries, basic know-
material through chemical reaction between a gas
how and production technologies are interrelated.
and the heated surface of the substrate itself. Other
Failure to make advances in one area could
deposition processes include spin-on deposition
preclude strides in the other, ultimately hampering
(which involves dropping a liquid onto a spinning
the ability of a nation to remain competitive in the
substrate for even distribution of the material,
overall field.
followed by pyrolysis to cure the film).
REASONS FOR SELECTION
Micro-Mechanical Devices
Semiconductors and integrated circuits are the
Advances in micro- and nanofabrication
fundamental building blocks of the information
techniques have enabled the development of a new
and communications industry and form a founda-
class of devices of microscopic dimensions that are
tion for many other industries that are essential to
44
today's economy and to the U.S. defense posture.
nanolithography. New semiconductor devices pro-
Advances in the area of integrated circuits and
duced by utilizing advanced X-ray lithography, for
other microelectronic devices drive downstream
example, are expected to be commercialized by
capabilities and applications in information indus-
Japanese firms in the early part of this decade. This
tries. The next generation of integrated circuits will
will assure that Japanese firms will be able to retain
move toward greater utilization of manufacturing
their present market share in this critical industry
processes at micro- and nano-levels, thus requiring
and extend their lead in advanced memory chips
U.S. firms to make continued efforts to remain
and other microelectronic devices. Fabrication
viable competitors.
technology with one micron feature size is already
relatively mature; X-ray lithography technology in
Advances in the basics of micro- and nanofa-
Japan is reportedly capable of manufacturing at
brication must take place in tandem with improved
scales of 0.3 microns. One Japanese firm's research
manufacturing equipment capabilities required to
in microscopic and atomic scale manufacturing has
produce such devices. The U.S. semiconductor
led it to launch development of 256M memory
industry is dependent on an infrastructure of
chips.
equipment suppliers, and the nation that leads in
processing equipment innovation is likely to
Japan already has more than a 50 percent
dominate the world market for semiconductor
share of the global semiconductor market. The
devices.
three top suppliers of semiconductor manufactur-
ing equipment in the world are Japanese firms,
STATUS AND INTERNATIONAL TRENDS
their total sales representing 43 percent of global
equipment sales for the top ten manufacturers.
Progress in a wide range of technologies is
This provides Japanese firms massive financial
required to attain the benefits of micro- and
resources to fund semiconductor manufacturing
nanofabrication capabilities. Nanofabrication
R&D. Because of the immense capital investments
processes are likely to be highly application-specif-
required (for a single, first generation X-ray
ic; each process will be effective and appropriate
lithography plant, the required investments might
for only a group of materials or production
be on the order of $1 billion) and the highly
problems.
advanced nature of the technology, failure to at
least remain abreast of overseas competitors could
Although U.S. efforts in nanotechnology re-
threaten permanent loss of the industry for the
main strong, Japan leads in certain areas such as
United States.
45
SYSTEMS MANAGEMENT TECHNOLOGIES
DESCRIPTION OF TECHNOLOGY
Data Exchange using STEP) is expected to advance
the field by enabling the smooth exchange of total
Systems management technology (SMT) is
product data, including information about the
often thought of as a scientific discipline or as a
design, production, support, and other stages of the
management approach rather than a "technology"
product's life cycle. (STEP is the evolving
or set of technologies. Systems management
international Standard for The Exchange of Prod-
technologies do indeed involve extensive modifica-
uct model data.) Although these tools are not
tions of management and organizations, to allow
perfect, they represent steps toward allowing
more effective integration of the diverse functions
different CAD and computer aided manufacturing
carried out by a manufacturing enterprise (e.g.,
(CAM) systems to communicate with one another,
market research, product design, manufacturing
and represent technologies that are essential if the
operations, quality control, marketing, and custom-
benefits of flexible computer integrated manufac-
er support). However, new information technolo-
turing (CIM) are to be realized fully. Future
gies are fundamental enablers of advanced systems
systems, or variants of existing systems, will become
management concepts. The area includes tools,
on-line databases to allow more than a simple
practices, and sciences that will become increasing-
exchange of information.
ly important as advanced manufacturing systems
become the standard. As with many of the other
Databases
technologies included in the "Manufacturing"
category in this report, systems management
Computerized tools are required to manage
technologies are intertwined with other National
and control CIM and flexible manufacturing
Critical Technologies, including several in the area
systems (FMS). Typically, these include extensive
of "Information and Communications." Failure to
databases on various components of manufactur-
achieve advances in these related technologies and
ing processes, including system and individual
to incorporate them promptly in manufacturing
machine performance.
operations and processes will retard the potential
development of SMT.
Data-Driven Management Information
Systems (DDMIS)
Within the manufacturing hierarchy outlined
DDMIS involves the storage and use of
in Flexible Computer Integrated Manufacturing, SMT
designs, inventory/order information, and informa-
is directed at the intra- and inter-enterprise level
tion on capabilities of different machines to design
rather than toward specific manufacturing opera-
tions. Because of the large number of technologies
and manage flexible CIM. Using such inputs,
managers and engineers can generate up-to-date
that this area can involve, this section highlights a
few that are in current use and are expected to grow
reports on the utilization of the system, inventory
in importance in the future.
and production status, demand levels, personnel
information, and financial information.
Product Data Exchange Tools
Interoperable Information Systems
The ability to exchange computer information
The continuing evolution of a national frame-
within and among business units is central to
work for enterprise integration architectures in-
successful diffusion of systems management tech-
creasingly will permit smooth interoperability of
nologies throughout industry. Early computer data
information products from multiple vendors.
exchange systems such as Initial Graphics Ex-
Today, tight integration of software and computer
change System (IGES) allow different computer
hardware, even from a single vendor, is difficult to
aided design (CAD) systems to exchange two- and
accomplish on anything but the smallest scale.
three-dimensional geometric data. PDES (Product
Integration architectures, implemented through
47
national and international standards, will stimulate
and decisions made by individual components of
further integration, with competition shifting to
manufacturing entities.
functional performance rather than implementation
and support factors. Greatly increasing the degree
Effective Japanese utilization of advanced
of integration, often called Factory C³ (command,
manufacturing equipment and systems could ex-
control, and communications), will result in far
ceed that of the United States in the near future.
greater efficiency in all intra- and inter-enterprise
Typically, U.S. managers view automated equip-
functions, and represents a powerful tool for
ment and systems as replacements for older tools,
abbreviating the time for new products to reach the
rather than as a means to provide a new
market, reducing costs, improving quality, and
manufacturing approach or to integrate the new
enhancing flexibility. Truly interoperable informa-
equipment and systems into a new manufacturing
tion systems will allow extensive networks to tie
system. Since traditional U.S. managerial attitudes
together all elements of a corporation, along with its
and practices often retard the development and
supplier infrastructure, trading partners, and cus-
utilization of intelligent processing equipment and
tomers. Such networks will encompass distributed
flexible CIM, emphasis must be placed on sciences
data bases and distributed processing, which in
and technologies that will help managers identify
turn will allow better decisionmaking through
and take best advantage of the strengths of such
broad access to more accurate and timely technical
systems.
and business information.
In this regard, industry must focus more
These independent technologies and tools
attention on such concepts as the management of
individually and collectively provide automated
change and the management of technology.
decision support, throughout an enterprise. They
Introduction of even state-of-the-art equipment
allow the more effective linkage of design, produc-
will not produce desired results without incorporat-
tion, and other functions.
ing the managerial philosophies represented by
such systems. This poses an educational challenge
In addition to technology, significant changes
that is equal to the technological challenges posed
are taking place in manufacturing management
by the development of advanced hardware needed
practices. New strategies, such as continuous
in flexible manufacturing systems.
improvement, are being coupled with participatory
management philosophies and total quality man-
Furthermore, no single technical solution can
agement. However, large-scale integration of all
be copied or acquired easily in automated man-
computer-based systems that support design,
ufacturing. Much of the success in other countries
manufacturing, and business functions is extremely
with automated systems has resulted from incre-
complex and not well understood.
mental improvements in processes and production
technologies, not in the development of a single
REASONS FOR SELECTION
"untailored" device or managerial philosophy. It is
not reasonable to expect U.S. businesses to be able
Increasingly, modern manufacturing empha-
to make only a handful of changes or adjustments in
sizes rapid product design and introduction,
their methods of operation and reap a multitude of
reduced inventories, smoother process flows, faster
rewards as a result. Flexible CIM systems are
turnaround times between production runs, and
enterprise-level initiatives -- not just production
the elimination of other traditional buffers. More
subsystems -- that require expertise and skills
efficient manufacturing results in reduced down
among managers, designers, and workers. Each
times, but also creates the need for more efficient
industry and enterprise faces unique challenges
planning and operation because there is less
and needs. Development of a skill base through
margin for error. As a result, managers of the
systems management technologies to address these
future must be more skilled at developing and
needs will enable future managers and production
implementing manufacturing strategies in totality,
specialists to address a broader range of problems
rather than as a series of isolated, sequential steps
facing industry today and in the future.
48
STATUS AND INTERNATIONAL TRENDS
commitment to the effective management of
technology is essential in order for these tools to
There is considerable worldwide emphasis on
deliver full benefits for their users. While passive or
the development of improved systems management
lackluster utilization will minimize their potential
technologies. One effort, for example, is exploring
benefits, aggressive and comprehensive implemen-
the use of expert systems and artificial intelligence
tation of such philosophies can increase the
systems to expand the capabilities of computer-
benefits of highly integrated and automated
assisted material requirements planning (MRP)
systems.
and manufacturing resource planning (MRP II).
However, many expert and artificial intelligence
Japanese manufacturing enterprises have pio-
systems are available, yet underutilized, today. A
neered in the development of advanced systems
common feature of these technologies is the high
management concepts and the technologies needed
degree of concurrence in the definition of product
to facilitate enterprise integration. U.S. efforts in
specifications, development of product design, and
development of integration technologies are at least
the development of production system specifica-
equal to Japan's, but it is widely believed that
tions and designs. This contrasts with traditional
traditional U.S. management concepts are less
tendencies to treat these considerations as isolated,
amenable to widespread implementation of these
incremental steps in the decision making process.
capabilities. The culture and management
Thus, major changes in an enterprise's outlook and
practices of many U.S. companies must change if
practices are required in order to optimize their
the United States is to remain strong in today's
use.
manufacturing environment. This need is being
recognized, and industrial organizations along with
Many of the "technologies" described here
engineering and business schools now have
include philosophical components, without
programs focused on the management of
which their potential advantages will be lost. A
technology.
49
INFORMATION AND COMMUNICATIONS
Software
Microelectronics and Optoelectronics
High-Performance Computing and Networking
High-Definition Imaging and Displays
Sensors and Signal Processing
Data Storage and Peripherals
Computer Simulation and Modeling
51
INFORMATION AND COMMUNICATIONS
This area encompasses a wide range of advanced technologies that are critical for virtually
every function performed by an increasingly "electronic" society. The seven Information and Com-
munications technologies designated as National Critical Technologies are pervasive, and will play
a substantial role in determining the rate of progress in other critical technology areas. For exam-
ple, sensors, software, simulation and modeling, and computing are increasingly becoming the criti-
cal underpinnings for advanced manufacturing processes. Similarly, information technologies also
enable or limit advances in the performance of next-generation weapon systems, military training,
and the planning and execution of military operations.
In turn, further advances in information technologies are highly dependent on continuing
development of materials and manufacturing technologies. Electronic and photonic materials, ma-
terials synthesis and processing, and micro- and nanofabrication technologies are especially impor-
tant for future-generation information technologies.
The information and communications technologies are both important to and dependent on
other technology areas. For example, continuing advances in microelectronics and optoelectronics,
software, and data storage are essential enabling technologies required to achieve potential ad-
vances in high-performance computing. However, simulation and modeling (itself an essential un-
derpinning for most other National Critical Technologies) depends on substantial advances in
software, computing, and other information technologies.
Because of the pervasive nature of these technologies, the strong international and techno-
logical challenges faced by U.S. producers in this technology area tend to cascade throughout the
economy. Maintaining state-of-the-art capabilities in information technologies will, without ques-
tion, determine the economic performance of increasing numbers of segments of the U.S. manufac-
turing and service sectors.
53
SOFTWARE
DESCRIPTION OF TECHNOLOGY
Software Engineering Tools
Computer software is pervasive in modern
To resolve these problems, programmers need
society. Advanced software permits computers to
sophisticated tools to facilitate the efficient design
solve problems, manipulate data, and create new
and generation of low cost, maintainable, complex,
data or visual displays on a computer screen. It
and reliable software. The development of com-
manipulates sensors, robotics, and other auto-
puter aided software engineering (CASE) tools,
mated machines to perform useful work. Software
user interface design tools, advanced software
is the basis for countless applications in informa-
design methodologies, software testing tools, and
tion handling, manufacturing, communications,
manufactured software concepts are needed to
health care, defense, and in research and develop-
supplement -- not supplant -- the remarkable
ment.
ingenuity of programmers. These tools are neces-
Increasingly, the development of advanced
sary to ensure that software remains an engine of,
rather than a bottleneck to, future technological
software is an important limiting factor in the
introduction and reliability of new military and
growth.
commercial systems. Software requirements, as
Unlike other products, the essence of software
well as development costs, expand at a dramatic
is in its design -- the development of software
pace as automated systems proliferate and increase
requires no extensive fabrication or assembly. As a
in sophistication. Despite these growing demands,
result, software development is dominated by the
the generation of advanced software programs
task of designing the program to ensure that it will
remains largely a painstaking, labor-intensive task.
perform all of its desired tasks. However, it is
As a result, the ability of U.S. industry to provide
frequently difficult for programmers to anticipate
high-quality, reliable software is in jeopardy.
all of the circumstances that may arise when the
The economic infrastructure of the United
program is executed. Moreover, given the complex
States is largely dependent upon highly complex
interactions of the software in sophisticated pro-
software which frequently contains errors. In 1990,
grams, it is frequently difficult to develop a
a "minor" programming flaw resulted in a nine
"maintainable" software structure -- one that can
hour shutdown of the major U.S. long-distance
be easily modified to add capabilities or eliminate
telephone network. As systems become more
programming errors without risk of creating an
automated and complex, there is a real likelihood of
unforeseen, and perhaps devastating, flaw in the
more frequent failures in key systems and services.
program.
Advanced software therefore poses a paradox: a
fundamental source of technological progress, it is
CASE tools can help remove much of the
also a growing source of technological vulnerability.
guesswork and experimentation in software devel-
opment, thereby contributing to the efficient
This paradox is especially acute in the defense
production of high-quality programs. These tools
sector, where software plays a vital role in ensuring
are themselves sophisticated software packages
the technological preeminence of U.S. military
that help programmers define the requirements of a
systems. Software problems have plagued many
program and design its structure. CASE helps the
critical defense systems - frequently resulting in cost
programmer anticipate the variety of tasks that are
overruns, program delays, and serious operational
likely to confront the program, and tailor the
failures. To a great extent, these problems are a
software package to facilitate software mainte-
result of the demanding specifications and unprec-
nance. In addition to developing the design of the
edented complexity of many military software
program, some CASE tools also have the capability
applications.
to generate simple programs based on the specified
55
design. Automated coding for sophisticated soft-
and difficulties in integrating new program ele-
ware packages remains a key technical challenge.
ments with the existing software. In rapid prototyp-
ing, program designers, user interface specialists,
Because of the great number of internal states
and end users work together from the outset of the
and combinations of input and sequence condi-
software development process to produce, in a
tions, complex software cannot be exhaustively
relatively brief period, the essential elements of the
tested prior to release. The multiplicity of variables
desired software. After the user is fully satisfied
has produced a "combination explosion" which
with the core program elements, the program is
makes it impossible for programmers to anticipate
expanded and refined. Rapid prototyping yields
every circumstance that may confront the program.
significant benefits in terms of fewer iterations,
Intensive efforts are underway to develop advanced
reduced development costs, and improved software
testing tools that attempt to simulate the broadest
quality.
possible set of conditions in which a program might
operate. By reducing manual quality control
Modular software is another software develop-
requirements, these tools have the potential to
ment concept with important potential for boosting
greatly shorten the software development cycle and
productivity and quality. By breaking complex
reduce development costs.
software applications into smaller sections (or
modules), the complexity of the overall task is
A central function of software is to render the
reduced. In addition, a proven module can often be
capabilities of the hardware fully accessible to the
reused in subsequent applications, further enhanc-
user. Video displays and other forms of user
ing reliability and cost-effectiveness. Increasing
interface require highly complex software, a result
use of object-oriented programming is reinforcing
of the enormous data requirements to form an
the trend toward greater software modularity.
accurate and responsive display image. In fact, user
Object-oriented techniques provide a mechanism
interface frequently accounts for half of the
to better formalize a model of reality. Software
program code in sophisticated software packages.
written in object-oriented languages is inherently
User interface design tools have been developed to
reusable. Like other modular approaches, object-
design and generate much of the interface software,
oriented software reduces the total life cycle
allowing the programmer to concentrate on highly
software cost by increasing programmer productiv-
specialized features of the interface. These tools
ity and reducing redesign or modification costs.
also facilitate the integration of the interface
software with the rest of the program.
Advanced software design tools and method-
ologies have strong potential to transform software
Innovative Concepts
development from a labor-intensive craft into a
more highly automated production process. With
In addition to these software-based design
such advances, the writing of software can increas-
tools, new management concepts for software
ingly give way to the manufacturing of software.
design and development are contributing to more
The development of a mature manufactured
efficient production of high-quality software. One
software industry is integral to satisfying the
such concept is rapid prototyping. The traditional
expanding needs of business and defense for
software development methodology is known as the
complex programs.
"waterfall" model, a sequential process beginning
with requirements definition, followed by structure
REASONS FOR SELECTION
definition, code generation and, finally, testing.
Frequently, however, the future user cannot fully
Modern, highly-automated systems are be-
anticipate all of the desired functions of the
coming more dependent on the reliability and
program until he/she actually begins to employ the
advanced performance of software. The cost of
product. As a result, the program requirements
such systems is also increasingly affected by
must frequently be redesigned, resulting in delays
software development and production costs.
56
The ability to efficiently produce high-quality
and applications has been a key factor in maintain-
software is the key to a wide range of advanced
ing competitiveness in information technology and
technologies in industry and defense. Modern
other vital sectors. However, overseas competition
information and telecommunications systems --- as
is intensifying. Europe's software capabilities are
well as the air-worthiness of U.S. military aircraft
expected to strengthen as a result of current
-- are virtually dependent upon the flawless
standardization activities associated with the EC
operation of highly sophisticated software. More-
'92 initiative. Additional competition is generated
over, advanced software is fundamental to basic
by some third world nations, which offer lower
research in a variety of disciplines. In short,
labor costs than are available in the United States.
software is a key enabling (or inhibiting) factor in
Japan may pose the greatest competitive challenge.
many of the National Critical Technologies. Cur-
Some Japanese companies are producing large
rent manpower intense, trial-and-error design
quantities of software in highly structured, strict
methods are likely to increase system costs and
writing operations set up much like product
performance problems as the software challenges
manufacturing plants.
become more acute.
The central challenge in software development
STATUS AND INTERNATIONAL TRENDS
is automated code generation for sophisticated
programs. The development of such tools is largely
Software is a traditional strength of the United
dependent upon artificial intelligence and other
States. U.S. programmers are widely considered the
software-based technologies. Further advances in
most ingenious and creative in the world. During
design tools, testing devices, and modular software
1988, the global software market grew by 23 percent
are also considered crucial in increasing the
to $55 billion, with a U.S market share of 60 percent.
productivity and reliability of the software develop-
The traditional U.S. lead in software development
ment process.
57
MICROELECTRONICS AND OPTOELECTRONICS
DESCRIPTION OF TECHNOLOGY
developing new processes (such as X-ray lithogra-
phy and advanced etching techniques) to produce
Microelectronics and optoelectronics have
more versatile IC products at lower costs.
accelerated advances in all fields of knowledge by
providing ever-increasing capabilities to process,
Optoelectronics is a relatively new technology
transmit, and disperse information. Products
that will extend the performance of conventional
based on microelectronic and optoelectronic tech-
electronics. Within the general area of photonics,
nologies have stimulated advances in such diverse
optoelectronics encompasses devices that respond
areas as communications, manufacturing, defense,
to optical power, emit or modify optical radiation,
education, health care, transportation, and enter-
or utilize optical radiation for their internal
tainment.
operation. Optoelectronics also includes any device
that acts as an electrical-to-optical or optical-to-
The distinguishing characteristic of this tech-
electrical transducer. These functions can be
nology is the microscopic size of the individual
carried out by a variety of devices and circuits,
electronic elements, millions of which can now be
including lasers and other light sources, optical
imprinted on a single semiconductor chip. Today's
fibers, electro-optical devices, and electronic cir-
chips have minuscule energy requirements and unit
cuits. Applications include industrial processing,
costs, and offer ever-increasing operating speeds
telecommunications, signal processing, medicine,
and reliability. Continued success in miniaturizing
imaging, computing, analytical instruments, mili-
individual elements and integrating larger numbers
tary surveillance, and guided weapons. The design
of these elements into more efficient and reliable
and performance characteristics of optoelectro-
packages are critical goals for semiconductor
nics, such as power, speed, efficiency, wavelength,
product technologies. Another critical goal is to
spectral linewidth, coupling efficiency, temperature
further develop and improve the cost-competitive-
range, lifetime, and cost, vary with the requirements
ness of new materials, including gallium arsenide
of a particular application. Generally, the more
and other compound (non-silicon) materials, so
formidable the application, the more complex and
that they are available for use in special applica-
expensive the system.
tions. (See Electronic and Photonic Materials.)
Some of the most exciting advances in the field
The low unit cost of today's semiconductor
of optoelectronics are in laser technology. Lasers
integrated circuits (ICs) results from the opportuni-
have become essential tools in manufacturing,
ty to spread production costs over large quantities
research, medicine, information storage, printing,
of chips, each having thousands or even millions of
and measurement and testing. In medicine (see
elements. However, the low unit cost belies the
Medical Technology), lasers already are widely used in
surgical procedures and will find future use in
enormous (and increasing) cost and complexity of
IC manufacturing. Microelectronics production
correcting vision defects by reshaping the eye's outer
involves some of the most intricate and exacting
optical surface and in dental applications to identify
operations found in manufacturing today. Produc-
and eliminate plaque. In manufacturing, lasers are
used to drill holes that have a diameter narrower than
tion of a typical integrated circuit requires several
a human hair.
hundred separate steps in which delicate wafers
must be manipulated repeatedly, with tolerances
One of the most useful lasers is the semicon-
maintained at microscopic scales. Manufacturing
ductor laser or diode laser. First demonstrated in
must take place in an extraordinarily clean environ-
the United States, the largest number of these lasers
ment so that high production yields can be
are now being produced in Japan for applications
obtained. Goals for semiconductor manufacturing
that range from low-cost compact disc players to
include improving currently used processes and
complex long-distance communications systems.
59
This type of laser is built from a single semiconduc-
components are integral to virtually all advanced
tor chip, where all of the laser's electrical and
manufacturing, information and communication,
optical functions are performed. Its small size,
and aerospace and transportation systems. In the
durability, low cost, and long life distinguish this
case of computing, new photonic technologies may
from other laser technologies and have allowed it to
in the future replace the all-electronic computer
revolutionize fiber optic communications systems,
and assume the lead role as the technology of the
optical memory devices, and home entertainment
future.
(such as compact disc players). Laser diodes also
have defense applications. Laser diode arrays,
Applications of both microelectronics and
which provide more light output than is possible
optoelectronics will continue to refine and eventu-
from a single diode laser, provide increased
ally transform the way we live by providing
efficiency and compactness within individual de-
improved communications, stronger defense capa-
vices. Incoherent (unphased) arrays are being used
bilities, and innovations in medical services. Today,
as an alternative pump source for solid state lasers,
electronics is the largest and fastest growing
while coherent ones have found use in optical radar,
manufacturing sector in the United States. Ad-
satellite communications, directed energy, and
vances in its underlying technology base are clearly
antisubmarine warfare.
important to U.S. competitiveness in world mar-
kets, since they enable development of new
Given the dynamic pace of development for
products and improvements in the cost, quality,
microelectronics and optoelectronics, there are
and performance of existing ones. Advances in
innumerable advances that will increase the use
these technologies are revolutionizing production
and effectiveness of these technologies in future
processes and factory management through the
applications. As an example, one promising area of
integration and control of manufacturing opera-
research is the integration of optoelectronics and
tions. In defense, microelectronics and optoelectro-
information processing electronics on a single chip.
nics are no less critical to "smart" weapons and to
The creation of the optoelectronic integrated
command, control, communications, and intelli-
circuit (OEIC) will enable receivers, transmitters,
gence functions. Advances in this technology also
laser arrays, and other assemblies of tens and
improve products and services in such areas as
hundreds of photonic and electronic circuits to be
health, human welfare, and the environment.
realized on a single substrate. With progress in
materials technology, microelectronic and opto-
STATUS AND INTERNATIONAL TRENDS
electronic systems will be able to improve perform-
Although both microelectronics and optoelec-
ance for thousands of vital information and
tronics had their beginnings in the U.S., the
communication-related products. Another exam-
Japanese have assumed a strong role in product
ple is the extremely important area of packaging
development, manufacturing, and sales.
and interconnection. With the expanding demand
for pin-outs and the quest for ever higher speeds on
In photonics-related technologies, Japan is the
these pins, much of the improvement in the future
world leader and now has two-thirds of the world's
will rely on advanced packaging and interconnec-
market for semiconductor-based optoelectronic
tion technology.
devices. This category includes laser and light-
emitting diodes, photodiodes, charge-coupled de-
REASONS FOR SELECTION
vices, solar cells, and optical couplers. The main
exception to Japan's leadership position is in
Electronics-related technologies are arguably
optical fibers, where the U.S. has dominated the
the most pervasive of all technologies. Nearly every
market by effectively integrating R&D phases with
other technology that can be envisioned looks to
manufacturing. Although most of Japan's optoelec-
microelectronics as one of its essential building
tronics output is used to support its extensive
blocks. The direct impact on other technologies is
consumer electronics industry, Japanese firms are
evident in the fact that electronic and microelectronic
applying optoelectronics technology in such areas
60
as telecommunications and data processing. Some
trade deficit in 1989. While U.S. companies
of these newer applications will require more
continue to lead the logic and microprocessor
advanced optoelectronics technologies, including
markets, Japanese companies now dominate the
optoelectronic integrated circuits and photonic
world market for memory devices, which consti-
switching devices. The Japanese coordinate re-
tutes the largest single segment of the IC market.
search through the Optical Computer Group,
Optoelectronic Projects under sponsorship of the
The United States has also lost ground to
Ministry of International Trade and Industry
Japan in a growing number of IC fabrication
(MITI). Japanese firms, with government assis-
techniques. The United States still maintains an
tance, are currently linking up with U.S. and
edge in such areas as ion implantation, thin film
European firms and research institutions to gain
epitaxy, thin film deposition, and etching, but has
access to the most advanced optoelectronics
fallen behind in lithography, materials purity, and
developments. In particular, MITI is approaching
ceramic packaging. Achieving and maintaining
U.S. and European firms and research institutes
preeminence in product and process technologies is
for their participation in Japan's Sixth Generation
highly capital intensive, and well beyond the
Computer Project -- a key goal of which is the
practical capabilities of many U.S. firms. Japan
development of optical computing technology.
appears to have taken the lead in a number of new
The position of European firms and research
semiconductor manufacturing technologies, in-
institutes is similar to those of the United States --
cluding microwave plasma processing, radiation
taking a lead role in developing state-of-the-art
sources for lithography, electron and ion micro-
optoelectronics technology but playing a lesser part
beams, laser-assisted processing, compound semi-
in commercial applications. European firms, whose
conductor processing, and three-dimensional
efforts are coordinated through the European Joint
device structures.
Optical Bistability Program, have strengths in
semiconductor lasers, solar cells, and optical
These trends reflect a serious challenge to U.S.
switching and computing. Within the United
technological leadership, not only with respect to
States, a major portion of optoelectronics R&D is
microelectronics and optoelectronics, but also with
being done by a few companies and several
respect to virtually all other advanced technologies
university centers. This research is being funded by
that directly or indirectly rely on those capabilities.
the DoD and National Science Foundation.
The identification of these technologies as among
the nation's most critical highlights the importance
In microelectronics, the U.S. position is now
of efforts to maintain a viable industrial base that
being seriously challenged by Japan. The United
can meet the nation's continuing needs for afford-
States has already lost leadership with respect to IC
able and advanced microelectronic and optoelec-
sales; in fact, the United States ran a $3 billion IC
tronic products.
61
HIGH-PERFORMANCE COMPUTING AND NETWORKING
DESCRIPTION OF TECHNOLOGY
markets. Current industry efforts are aimed at
building an end-to-end digital system for future
High-performance computing refers to the
applications. This configuration may include a
development of computer technologies with ad-
fiber optic link to the home, providing for a
vanced performance in computational power,
quantum increase in voice/image/data transmis-
storage capability, input/output bandwidth, and
sion capability as well as a variety of new features.
software. These objectives can be met through
alternative technical approaches, which currently
Fiber optic communication technologies are
extend from stand-alone "supercomputing" ma-
being developed intensively for combined voice and
chines to systems that link together a number of
data applications, and are central to high-perfor-
processors through the use of "massively parallel
mance computing requirements. The advantages
architectures." The components of high-perfor-
inherent in fiber optics are the extremely wide
mance computing encompass hardware, which
bandwidth (allowing multiple signals to be im-
refers to electronics and other components that
pressed on a single fiber), low noise, low attenua-
make up the physical computer systems, and
tion, high security, and lack of a delay due to a
software, which includes general-purpose operat-
satellite relay. Fiber optic communications still are
ing systems, tools and utilities (such as compilers),
at an early stage of development, but a single pair of
analysis tools, debuggers, and data management
fiber optic filaments currently can carry over 20,000
systems (see Software). The term "architectures"
phone conversations simultaneously. There is a
refers to how the components of a system are
need to develop a high capacity switching infra-
organized and interconnected for optimal perform-
structure and data protocols to take advantage of
ance. A final element is networks, which provide the
the capacity that fibers now offer (i.e., to parcel out
essential links between multiple computing sys-
the stream of bits to the many diverse users).
tems. These links support the interactive operation
of computers by making the most efficient use of
Within the field of high-performance comput-
the limited capacity of communications channels.
ing, computer scientists are in general agreement that
exploiting parallel computer architectures is the most
Network technology is not only essential to
promising approach to achieving major gains in
high-performance computing, but is equally im-
computing power and reductions in computer cost.
portant to a range of other forms of data, image,
Current U.S. parallel computer designs and software
and voice communications. Networks operate
are as much as an order of magnitude more powerful
through the conversion of a binary stream of data
than the most powerful existing vector machines; U.S.
bits into an acoustic, electronic, or photonic signal,
developmental designs will be as much as a hundred
which may be digital or analog. The signal is
times as powerful as any computer that exists today.
transmitted over a network and the data stream
Massively parallel computers concentrate in one unit
reconstructed after reception. In the past, network-
the power of thousands of small processors tightly
related technologies were used to provide remote
coupled together. Additionally, the combined net-
users with access to centralized mainframe com-
work facilitates the interactions and cooperation
puters or to communicate by voice over the public
among machines, permitting more power to be
telephone network. During the past decade, howev-
brought to bear on highly complex computational
er, data exchange between computers has grown
problems than can be obtained from a single
exponentially. Features like automatic funds trans-
machine, with a more efficient use of resources.
fer have radically changed the operations of the
Among the approaches to parallel processing are
banking and finance industries. The technology to
multiple instructions, multiple data stream (MIMD),
allow this kind of data transfer has developed into a
single instruction multiple data (SIMD), very large
huge market of its own and will continue to grow as
instruction word (VLIW), systolic arrays, specialized
industries more effectively integrate into global
parallel coprocessors, and hypercubes.
63
Contrary to early expectations, recent work
cycles. New knowledge and new industries are
has shown that it is feasible and practical to use
increasingly dependent upon computing.
massive parallelism on real scientific and engineer-
ing applications, such as those found in high-ener-
Computers constitute a significant portion of the
gy physics, weather, and economic modeling.
U.S. economy, and U.S. competitive success in the
Parallel processing has defense and nondefense
industry is bolstered by leadership at the high-perfor-
uses and is also critical to the development of
mance end of the market. To illustrate the economic
networks and the perfecting of multiprocessing
importance of computing: in 1988, the U.S. computer
systems. One particularly promising evolution in
industry accounted for 10 percent of GNP, and almost
parallel processing is the development of personal
10 percent of all capital investment. Continued
workstations which will have the capabilities of
success is essential to the nation's future.
today's supercomputer. This is made possible by
Critical applications of high-performance
advances in the use of parallelism and technologies
computing include prediction of weather, climate,
such as submicron feature size fabrication tech-
and global change; aircraft (airframe and engine)
niques for integrated circuits.
design and analysis; and life sciences, structural
Limited parallelism supercomputers will con-
biology, and the design of drugs. High-perfor-
tinue to play an important role in high-perfor-
mance computing technology is also essential to
mance computing. Among their advantages is that
meeting critical national security needs, and both
they are not currently software limited, as are most
DoD and industry have come to rely on continued
massively parallel architectures. However, due to
acceleration of this technology. Besides being used
the supercomputer's high cost and the difficulty in
to improve the design, production, and affordabil-
exploiting the system's innate capacity, most
ity of weapon systems, high-performance comput-
machines have become highly specialized and
ing is also used as a performance-enhancing
therefore are not adaptable for general use.
component of the defense systems themselves.
Although advances in integrating both supercom-
The technology also constitutes an important
puters and parallel processing will make supercom-
tool for many defense and nondefense industries.
puting technology more affordable and accessible
Its use in simulation and design now improves the
to a variety of users, the parallel processor is viewed
productivity of large industries such as aircraft and
as offering a more flexible and faster system at a
automobiles, and is being rapidly extended to other
much lower cost than a supercomputer. Many
industries as the availability of the new technologies
believe that parallel processors can serve the widest
improves. Recent vigorous growth in use of
variety of customers with engineering and scientific
high-performance computing in the electronics,
computing needs.
energy, chemical, and pharmaceutical industries
illustrates the role of computing in assuring the
REASONS FOR SELECTION
long-term strength of the U.S. economy. These
technologies are also expected to be so deeply
During the last two decades, computing has
integrated into many service industries over the
become pervasive in our society. High-perfor-
next ten years that independent survival in the
mance computing is the leading edge of computing
industry without advanced computerized systems
technology, which in turn supports many areas of
will be nearly impossible.
science and technology, industry, and defense.
There has been a wellspring of new successes in the
In communications, global networking systems
computing field. Computing has become an inte-
that will provide real-time access for data processing
gral part of experimental and theoretical research.
capabilities for all interconnected systems represent a
In industry, computer aided design and engineering
final illustration of the breadth of high-performance
techniques are rapidly replacing manual ones.
computing applications. Such a network would
Computer assisted and automated manufacturing
contribute to the rapid diffusion of technical
is increasing productivity and improving the value
knowledge around the globe and increase the
and reliability of industrial products, while reducing
availability of international financial and manage-
the time required for engineering and manufacturing
ment information for personal and business use. The
64
creation of a global computer network system relies
International Trade and Industry plans to initiate a
on international cooperation as well as technological
joint public-private parallel processing development
change.
project in 1992 to address Japan's weakness.
Although high-performance computer developments
STATUS AND INTERNATIONAL TRENDS
in Europe lag behind those of both the United States
and Japan, a number of public and private European
Most advances in high-performance comput-
initiatives are currently underway to develop compet-
ing originated in the United States, and the U.S.
itive highly parallel systems.
retains a strong lead in their development and
application. U.S. computer manufacturers have
Additional research and development in ad-
devoted considerable R&D funds to high-
vanced software -- an area of long-term U.S.
performance computing. Additionally, U.S. gov-
strength -- is also required if the United States is to
ernment R&D funding for high-performance
maintain its leadership position in high-perfor-
computing is about $500 million annually.
mance computing. New software tools, including
application-specific software and other specialized
The pace of innovation within this technology
methods and algorithms, will allow high-perfor-
continues at a rapid rate. In terms of capability,
mance computing systems to be embedded trans-
today's supercomputer is tomorrow's desk-top
parently in a distributed environment. The
workstation and the following day's classroom tool.
technology base required to build such environ-
A result of the rapidity of technological change and
ments includes software engineering and data
market expansion is increased international com-
management tools, and basic research in high-level
petition. The economic benefits of a strong
languages and algorithms. Improving these capa-
high-performance computing capability are recog-
bilities will greatly enhance scientific and engineer-
nized and pursued by other countries, some of
ing software productivity.
which have formed and funded collaborations
between private and public sectors to pursue the
Standards represents another area where
technology. Their successes represent increasingly
progress is required in the development of ad-
vigorous competition in high-performance com-
vanced computing and communications systems.
puting markets.
Computing and networking face the same dilemma
as other new or rapidly changing technologies:
The U.S. has maintained its world leadership in
although agreed-upon standards are required to
supercomputing technology - both hardware and
allow the widespread diffusion of knowledge, any
software - and is also the leader in the use of that
standards created too early in a technology's
technology in defense. However, the United States no
development could inhibit future advancements
longer has a clear lead in nondefense supercomputing
and "lock-in" less-than-optimal solutions. Unfor-
applications, and competition in the development of
tunately, the answer is not to avoid the establish-
supercomputing systems is growing rapidly. Japanese
ment of clear standards. The result of an absence of
supercomputers, though weak in some areas, have
standards could be delayed access to information,
had success in incorporating a number of technical
impeded professional communications, inability to
improvements that have improved their competitive-
share information sources and research results,
ness. For example, the Japanese have made hardware
and inadequate coordination of research. In the
advances in circuitry and in circuit packaging and
United States, no single entity (either governmental
interconnect technologies. Also, the Japanese are
or private sector) is responsible for the national
strong in network management and network services.
communications infrastructure which includes the
As a result, next-generation Japanese supercomput-
setting of standards. Improvements in this area
ers will provide serious competition with the most
require that the views of a large number of
advanced U.S. models. Japan's ability to design and
interested groups be elicited and considered by an
produce massively parallel computers currently lags
international standards setting body, so that
behind that of the United States, but the Ministry of
technological progress is not unnecessarily delayed.
65
HIGH-DEFINITION IMAGING AND DISPLAYS
DESCRIPTION OF TECHNOLOGY
data compression techniques, and semiconduc-
tor memories
High-definition imaging and display technolo-
gy involves devices capable of recording and
High-rate data transmission, involving exist-
displaying images with high degrees of accuracy,
ing transmission technologies, fiber optic
networks, and broadcast satellite systems
clarity, and speed. The goal is to create equipment
that uses, to its fullest advantage, the human ability
High-density data storage, including optical
to see both high-resolution images and smooth
or magnetic systems
motion at the same time. In addition to advanced
High-definition displays, including conven-
imaging and display capabilities, meeting this goal
tional picture tubes or flat panel displays (such
involves real-time signal processing, high-rate data
as liquid crystal displays).
transmission, and high-density data storage to
This list reflects a convergence of video and com-
handle the billions of data bits and computations
puter products, due to the ongoing evolution of con-
per second required to generate and display
sumer electronics from analog to digital technology.
high-definition images.
Most of the technologies critical to high-defi-
The most prominent high-definition imaging
nition imaging and displays are addressed else-
and display application is high-definition televi-
where in this report. One key technology that is not
sion (HDTV), because of its potential to capture a
covered is production of large flat panel displays.
significant portion of the world video market. A
High-throughput, low-cost production of such
general goal for HDTV development is to provide
displays will require advances in lithography
roughly twice the vertical and horizontal line
equipment, circuitry patterning, glass sheet pro-
density possible using current television technolo-
duction, and thin-film techniques.
gy. HDTV's commercial potential is the driving
force behind most ongoing R&D in the high-defini-
REASONS FOR SELECTION
tion imaging and display market. However, numer-
ous other potential applications for this technology
High-definition imaging and display technolo-
exist in such areas as: electronic imaging for
gy is critical both because it is driving the state of
document storage; digital photocopying; displays
the art for a number of other critical technologies
for engineering workstations; desk-top publishing;
and because it has the potential to become a major
industrial inspection and monitoring equipment;
component of the electronics market throughout
and battlefield command, control, communica-
the world. A recently completed study by the Office
tions, and intelligence functions.
of Technology Assessment (OTA) found evidence
that "HDTV developments are driving the state-
HDTV is the most demanding high-definition
of-the-art in several [information and communica-
imaging and display application, because it com-
tion] technologies more rapidly than are
bines requirements for: high resolution; rapid
developments in computers or telecommunica-
response times; large display size; excellent color,
tions." The report noted, for example, how data
brightness, contrast, and efficiency; and low cost.
storage requirements are more demanding for
These requirements generate a need to advance
high-definition imaging and displays than for
enabling capabilities in five major areas:
computers. In fact, the computer field has already
begun to adapt data storage technologies devel-
High-definition vision, which includes video
oped initially for audio and visual applications. The
cameras, document scanners, and computers
that synthesize images
United States currently holds strong R&D and
market positions for most data storage technolo-
Real-time signal processing, including analog-
gies, but has fallen behind in some areas. Similarly,
to-digital data converters, digital processors,
the signal processing demands posed by the high
67
quantities of data needed for high-definition
consumer electronics created only marginal bene-
imaging and displays are stimulating advances in
fits in other electronics sectors. However, the rising
some semiconductor and computer software appli-
use of digital technology for consumer products has
cations.
increased the importance of advances in this sector
to the electronics market in general. Continued
As another example, the OTA report noted
weakness of the United States in development and
how HDTV could stimulate widespread use of
production of consumer electronics will become an
optical fiber networks for signal transmission.
increasing handicap to U.S. competitiveness in the
While the United States pioneered both fiber optic
other electronics sectors.
technology and the technologies needed to drive
signals through these fibers, Japan now leads in
The U.S. weakness in consumer electronics has
R&D and production for many of these technolo-
already hurt competitiveness with respect to
gies.
display technologies. Displays for consumer elec-
tronics constituted 70 percent of the total display
The potential market for high-definition and
market in 1988, compared to 18 percent for
related products is enormous, amounting to tens of
computer applications. The United States is still
billions of dollars for direct applications and
competitive in a number of flat panel display
perhaps hundreds of billions of dollars for indirect
technologies, including design, basic materials,
impacts in other electronics markets. In addition to
certain types of manufacturing equipment, and
potentially replacing much or all of current home
certain types of displays. However, current U.S.
video equipment, high-definition imaging and
resources to advance these technologies fall far
display technology is likely to stimulate a variety of
short of comparable Japanese resources, so the
other revolutionary changes in the information and
U.S. competitive position is likely to deteriorate.
communications field. Capabilities in this technol-
Worldwide sales of flat panel displays equalled $2.4
ogy are likely to be important throughout the
billion in 1988 and are projected to increase by as
electronics market rather than just within the home
much as a factor of four by the mid-1990s.
video sector.
Flat panel display technology also has major
The U.S. position with respect to HDTV
implications for future military capabilities. The
technology also reflects declining competitiveness.
ability to generate higher quality visual images in a
The Japanese began selling HDTV production
significantly smaller space will greatly enhance the
equipment in 1984 and HDTV systems for the
capabilities of electro-optical systems used in
home in 1990. Recording materials, (e.g., movies on
virtually all military systems. It will improve
video disk) permit commercial introduction with-
navigation, guidance, target recognition, and a
out the development of a broader standard. The
variety of other functions and provide a means to
Europeans undertook a major program to develop
display the outputs of increasingly sensitive sensor
high-definition imaging and display technology in
and signal processing capabilities.
1986 and are not far behind the Japanese. U.S.
efforts in this area have been extremely limited, and
STATUS AND INTERNATIONAL TRENDS
capabilities are far behind those of the Japanese
and Europeans. Moreover, the prospects for a
High-definition imaging and display technolo-
significant increase in U.S. efforts are poor,
gy is a major step in the evolution of consumer
because the market prospects are too long-term
electronics from analog to digital regimes. The
and high-risk to justify a substantial increase in
current status of this evolution does not bode well
privately funded R&D, and national security
for the future competitiveness of the U.S. electron-
requirements alone do not support a major
ics industry. In the past, technological advances in
commitment of defense funding.
68
SENSORS AND SIGNAL PROCESSING
DESCRIPTION OF TECHNOLOGY
sensors are being used extensively in automotive
Sensors and signal processing allow auto-
engine control systems and flexible computer
mated systems to interact with the external world.
integrated manufacturing.
Sensor and signal processing devices are the core
Imaging sensors play an increasingly promi-
components of vital systems in the fields of defense,
nent role in many high technology applications.
aerospace, bioprocessing, human health care,
These devices detect energy at enough discrete
manufacturing, pollution control, transportation,
points to create an image of the sensed object.
and telecommunications.
Photodetector arrays, which operate in the visible
region of the electromagnetic spectrum, are an
Sensors are microelectronic devices that ob-
important class of imaging sensors. These devices
serve or monitor changes in their environment.
are used in surveillance systems, video cameras,
Sensors respond to a variety of phenomena,
and robot vision systems. One type of X-ray
including temperature, pressure, and the presence
imaging system is used for medical diagnostics and
or movement of physical objects. The increasing
materials analysis. In the infrared spectrum,
automation and complexity of computer-assisted
infrared imagers are instrumental to a range of key
technologies places increasing demands on sensors
applications, including earth monitoring satellites
for accuracy, reliability, and responsiveness.
and night vision systems.
Signal processing technology transforms the
Novel materials are integral to the develop-
electrical signals generated by sensors into useful
ment of a new generation of advanced imaging
information, and this information into electronic
sensors. While first generation imaging devices
commands or visual displays. These functions are
were based largely on silicon, advanced imaging
achieved through the use of advanced microelec-
sensors increasingly employ compound semicon-
tronic devices and sophisticated software algo-
ductor materials like mercury cadmium telluride,
rithms. Advances in these areas are needed to
indium antimonide, platinum silicide, and gallium
achieve the required signal processing capabilities
arsenide for highly specialized applications. Anoth-
for a variety of future systems.
er important development in sensor technology,
Coupled with advanced software and comput-
particularly for geological and defense applica-
er capabilities, sensors and signal processing are
tions, is the trend toward multispectral sensing. In
contributing to the development of "virtual reality"
multispectral sensing devices, multiple sensors are
technologies. These technologies can provide a
employed to form a composite image. For example,
vastly improved, almost life-like environment for
an infrared image may be overlaid by a radar image
simulation and training.
to provide a more precise representation of the
observed object. As a result multispectral devices
provide superior target recognition capabilities.
Sensors
New fabrication techniques are also playing an
There are two general categories of sensors:
important role in improving the capabilities of
non-imaging and imaging. Non-imaging sensors
imaging sensors. Innovative processing techniques
are devices that directly monitor physical phenom-
have greatly enhanced the resolution of imaging
ena. They are used to monitor such parameters as
sensors by increasing the number of photosensitive
temperature, acceleration, pressure, position, rela-
picture elements (pixels) that can be fit on a single
tive humidity, voltage, and current. A variety of
device. Another innovation, silicon machining, has
materials perform the sensing function in non-
permitted the development of new types of minia-
imaging sensors. These devices are particularly
ture sensors that can monitor acceleration, temper-
important in industrial applications. Non-imaging
ature, relative humidity, as well as electrical
69
parameters. Improved processing is also leading to
computational capabilities and associated algo-
improved photodetector arrays, which in turn
rithm development.
improve the capabilities of surveillance, robot
The trends toward multispectral imaging and
vision, and other systems.
improved resolution are placing an ever increasing
burden on the sensors' signal processing function.
Signal Processing
The development of chip-level sensors has led
Signal processing, as a generic term, consists
naturally to integrated signal processing, where the
of two distinct functions: signal conditioning and
signal processing function is incorporated onto the
signal processing. Signal conditioning involves the
sensor device itself. Integrated signal processing
"correction" of electrical impulses, or the elimina-
minimizes the need for expensive, bulky, and slow
tion of spurious signals or "noise." These signals
interconnections.
are then converted from a continuous data stream
(i.e., analog) to digital form. This step is necessary
Advanced Human-Computer Interface
for the computer to process the data.
Sensors and signal processing are central to
the ability of an automated system to interact with
In the second stage of signal processing, the
its environment. Coupled with advances in software
processor receives the corrected electrical signals,
and computational capabilities, advanced sensors
and then utilizes these signals to deduce the
and signal processing are helping to revolutionize
environmental variable (temperature, pressure,
the interaction between the computer and the
electromagnetic energy, etc.). The processor may
human operator. The human-computer interface is
then make the appropriate response, such as
becoming more sophisticated and life-like. These
issuing instructions to the system or generating a
advances are leading to the development of "virtual
visual display.
reality" technologies, which could dramatically
High-performance applications frequently re-
expand the role of the computer in modern life.
quire many sensors to be included in a single
"Virtual reality" technology is a 3-D simula-
system, such as in a phased array. The proliferation
tion of an environment that the user can "step into"
of sensors in a single system has increased the
and interact with. Current systems utilize comput-
importance of validating the reliability of the data
erized gloves and a special headset with stereo
acquired by each sensing device: a malfunction in
display. In these systems, the computer creates a
one device can render the entire system inoperable.
"reality" that can be explored, changed, experi-
Efforts are underway to assess trade-offs between
enced, and shared with others. If the user wants to
redundancy and reliability, and to develop testing
alter the environment from within, he or she just
strategies for complex systems that do not require
reaches towards the object to be altered, grasps it,
the measurement of all possible parameters and
and changes it. The technology is currently being
that distinguish between system and sensor errors.
used to a limited extent in architectural design,
medicine, aircraft pilot training, and manufactur-
Another important issue in signal processing
ing. "Virtual reality" technology has dramatic
technology is the need for real-time target recogni-
potential as a training tool, as well as in research
tion for the development of "brilliant weapons."
and development.
Although fully automatic target recognition is not
expected in the near-term, existing automatic
Further advances must be made to enhance the
target cueing (ATC) technologies will benefit
quality of human-computer interface to more
defense in areas such as undersea targeting,
accurately simulate natural experience. The devel-
land-attack standoff weapon guidance, over-the-
opment of natural language understanding (NLU)
horizon targeting, airborne multiple-target fire
would contribute significantly to this objective.
control, anti-ship and other air-to-surface mis-
NLU systems support efficient and natural human-
siles, and assistance in finding relocatable targets.
computer interaction through the use of colloquial
Such applications call for advanced memory and
speech patterns. Advances in pattern recognition
70
and artificial intelligence may also allow users to
night- and all-weather navigation. In the longer
communicate with a computer system through
term, sensors will form the basis for "intelligent
speech or handwriting rather than through the use
highways" that will address traffic congestion
of typed words. Voice recognition would be
problems. (See Intelligent Processing Equipment for
particularly beneficial in defense applications, as it
sensor applications in manufacturing and Surface
would allow a pilot to use voice commands to
Transportation for the use of sensors in intelligent
maneuver an aircraft and fire weapons. Handwrit-
highway design.)
ing recognition also has important potential; for
example, the Internal Revenue Service could
STATUS AND INTERNATIONAL TRENDS
employ this capability to process income tax
returns rapidly.
The United States enjoys a strong global
position in sensor and signal processing technolo-
REASONS FOR SELECTION
gy. To a considerable extent, U.S. strengths in these
areas have been driven by government-funded
Modern society relies extensively on the ability
military and aerospace programs. As in other
to develop and control complex, computer-based
fields, the United States has experienced difficulty
systems for such applications as manufacturing,
in translating its technological edge in sensors and
transportation, energy, and communications. All
signal processing into commercial advantage.
computer-based systems require sensors and
Moreover, projected declines in U.S. defense
signal processing to provide the data on which
real-time decisions are based.
spending could jeopardize U.S. technological lead-
ership in this critical area.
Advanced sensors are especially important in
national security applications. They are fundamen-
While U.S. firms appear to be superior in
tal to strategic intelligence functions, providing
advanced sensor technology, foreign competition in
remarkably accurate eyes and ears at extremely
high-volume, low-cost solid-state sensors is in-
long distances. Tactically, infrared and radar
creasingly intense. Foreign firms are showing an
sensors provide U.S. forces with a significant
impressive ability to bring technologies to market
military advantage for operating at night, in all
quickly. For example, the Japanese are establishing
weather conditions, with increasing accuracy at
an advantage in second generation infrared imag-
greater and greater distances. Leadership in sensor
ing and advanced electro-optical sensors, despite
and signal processing technology is a key to victory
their limited experience in military technologies.
in the increasingly automated combat environment.
The U.S. has a significant lead over other
Commercial applications of advanced sensor
countries in the area of signal processing technolo-
and signal processing capabilities are growing.
gy and in the development and use of complex data
Imaging sensors are the basis for the recent boom
bases needed to facilitate signal processing in
in video cameras and camcorders. Advanced
high-performance applications. Although much of
sensors are also used in medical imaging, machine
this work is classified, there is much progress
vision, space exploration, weather and crop surveil-
underway in NATO countries, Sweden, and Israel,
lance, oceanography, and high-definition television.
that could contribute to the advancement of signal
Advanced infrared sensors are expected to have an
processing techniques and automatic target recog-
expanding role in transportation applications for
nition applications.
71
DATA STORAGE AND PERIPHERALS
[Magnetic and Optical Media, and Subsystems]
DESCRIPTION OF TECHNOLOGY
Data Storage
The utility of computers can only be measured
by their ability to perform functions more efficient-
The most widespread current technology for
ly than some other, less automated, means of
data storage involves magnetic transducers that
problem solving. To be useful, computer systems
read and write on magnetic tapes or disks. Such
require an efficient means of entering the data to be
storage systems are sophisticated applications of
processed, some mechanism to view the results of
materials science, tribology (the science of lubrica-
the computer's activity, and some way to store the
tion and wear), and signal processing. Magnetic
computations for future reference. Data storage
media provide lower costs per bit than semiconduc-
and peripherals provide these ancillary, yet essen-
tors and higher data rates than optical subsystems.
tial, functions. Storage and input/output technolo-
gies are required for the full spectrum of computing
Increased computing capabilities have fueled
applications.
escalating requirements for greater storage capac-
ity and access speed. Several factors are responsi-
Since the invention of the computer, computer
ble for this trend, including increased program size
scientists have searched for means to store pro-
(due to increased functionality), more demanding
grams and data for later use. Early technologies
applications which generate or process more data,
included paper tape and cards. These rather
and innovative applications that were infeasible
clumsy technologies were followed by the develop-
due to data storage limitations, including document
ment of magnetic tape and disk mechanisms.
retrieval with embedded images and medical
Magnetic media have been the mainstay of the
applications with images.
computer revolution thus far, with the more
recently developed optical media including com-
pact-disks, read-only-memory (CD ROM), write-
Storage technology has essentially three levels.
once, read-many-times (WORM), and rewritable
Primary, or semiconductor, memory is the random
optical media used as secondary and tertiary
access memory (RAM) within the computer re-
(online and archival) storage media for computers
quired for immediate processing needs. This
now gaining market acceptance.
memory must be fast enough to permit the efficient
operation of the processor. However, it is extremely
The same paper tape and cards that provided
expensive to have large quantities of semiconductor
storage capacity early in the computer era also
memory. Secondary memory in the form of disk
provided data input. Printers, usually dot matrix
storage is less expensive, but also slower than RAM,
type, provided the processed output. These devices,
so it is used to store data or applications that are
and their successors, are the means by which
not needed for the internal functioning of the
humans interact with computers. They are used to
computer. This is generally called mass storage,
introduce commands, data, ideas, and images into
and has 10 to 50 times the semiconductor memory
the computer system for processing, and to receive
capacity. Finally, tertiary storage is needed for the
processed output data and images. This area
maintenance of archival data, where it can be kept
includes relatively simple items like more user
offline and referred to when needed. Archival
friendly variations of the traditional keyboard, as
storage is least expensive and slowest in response
well as futuristic hardware interfaces like a voice
time, but is cost-effective for long-term storage of
recognition/synthesis system which would allow
the copious quantities of output from the comput-
users to directly communicate with and issue
er. This level of storage frequently has a capacity of
instructions to the computer.
10 to 50 times greater than mass storage.
73
The most demanding applications for data
able performance increases are possible when the
storage are usually associated with high-
hardware input device and its associated control/
performance computers or "supercomputers."
interpretation software are bundled into a package,
Without the large, low-cost capacities provided by
along with a combining of the output hardware and
tertiary storage, high-performance computing
its software. These developments free the main
would be impractical. Mainframe computers at
processor from the requirement to perform the
major Federal agencies produce archival informa-
input/output processing, thus increasing overall
tion requiring hundreds of thousands of magnetic
performance.
tape reels and cartridges.
Peripheral devices are often thought of as
Measures of performance are used to both
unitary technologies --- printers print. In reality,
characterize specific media and compare different
however, they are composed of a number of
media and subsystems. Density of information
divergent hardware and software technologies.
storage on the media, access time, and data transfer
Text/image scanners, for example, utilize three
rates are generic measures of the capacity of media
component technologies: sensing, electronics, and
and responsiveness of storage systems.
paper handling. As the hardcopy document passes
the sensor, the arrangement of image content is
Compact disks are a familiar form of optical
detected and converted to electronic signals.
disk technology first used in audio applications.
Electronic processing often "corrects" irregulari-
Mass production is done from masters by physical-
ties in the data received from the sensors.
ly impressing the information onto the surface of
Intelligent character recognition techniques may
the disk. Data are recorded in a helical spiral as
further process the image data and produce
impression pits etched by lasers in a surface cover,
encoded textual data and document layout. Finally,
or phase changes in a reflective material. These
paper handling technologies are needed to deal
data subsequently are read by detecting changes in
with any significant volume or variation of input
reflected light from a laser source.
documents.
Peripherals
Printers also utilize three major component
technologies: marking, electronics, and finishing.
The general term "peripherals" includes all
The marking technology causes electronic signals
forms of input and output hardware. Current input
to be rendered in some visible fashion, such as ink
devices consist of keyboards, mice/trackballs, light
drops or toner particles adhering to specific
pens, digitizing tablets, video cameras, and text/
locations on a piece of paper. The software running
image scanners. Newer input technologies under
in these computers must control the various
development include handwriting pens and tablets
imaging elements, such as lasers and paper motion,
and voice recognition systems. Output devices in
and increasingly can render the full range of
general use include printers (daisy wheel, dot
document content through paper description lan-
matrix, laser, electrostatic, and other high-speed
guages. The simplest finishing technology is a
devices), plotters, CRTs, movie and/or video
stacker tray that receives the printed pages. More
cameras/recorders, and facsimile machines. Newer
complex finishing provides stapling, binding, fold-
output technologies include voice and music
ing, inserting, cutting, and trimming options.
synthesizers and 3-D imaging devices.
REASONS FOR SELECTION
In addition to these input/output devices, this
area of technology includes the software that
Storage technology is a limiting factor in the
enables the initial interpretation and recognition of
application of other information technologies.
the input information, and also controls the
Development of high-performance computing
formatting of the output information. Although this
applications is dependent upon vast storage capa-
software has in the past been generally considered
cities. Such applications include modeling and
as part of the "main" computer program, consider-
forecasting weather, modeling global change,
74
mapping the human genome, and design of
In recent developments, data formats for
high-performance aircraft. Archiving and manage-
optical media have been developed which are
ment of data collected from satellites are already
comparable to those used for magnetic disks and
overwhelming existing storage facilities. Multi-me-
significantly improve access time. Holographic
dia workstations, which are currently being devel-
optical elements are being explored to replace glass
oped, will store and process text, images, and voice
lens and supporting structures to reduce weight
and will require significantly larger secondary
and improve access time of the read head in optical
storage subsystems.
systems. Current read and write storage systems
have data record speeds which are limited by the
Input/output technologies, such as printing
power of available semiconductor lasers.
and voice recognition, are critical in that they
improve the user's ability to utilize computing
Widespread acceptance of optical media has
capabilities. These technologies increase the cost-
been slowed by the lack of interchange standards
effectiveness of computers by reducing the differ-
and by limited information on the life expectancy of
ence between the way in which humans normally
data stored on the media. Unlike magnetic tape for
interact and the way in which data and instructions
mainframe computers, where media standards
are moved into and out of computers. Without
have encouraged multiple vendors to produce
some sort of input/output devices, the most
interchangeable media and drives, the optical
advanced computer is worthless. Additionally, the
media industry has produced a variety of data
ease of use of input/output devices represents in
formats for otherwise quite similar media. Conse-
large part the perception humans have of the
quently, users are not confident that, at some later
computer and its utility.
date, consumers will be able to obtain optical disk
drives to read data written today. Furthermore,
STATUS AND INTERNATIONAL TRENDS
while magnetic storage has a relatively limited
lifetime of about 10 years as an archival medium,
The storage system industry is a $50 billion
similar quantifiable experience is not yet available
industry, in which the United States enjoys a strong
for optical media.
leadership position. For example, the disk drive was
developed and brought to commercial introduction
As limits to storage densities and data transfer
by IBM. However, the U.S. position is now at risk as
rates are reached and massively parallel computers
the large Japanese computer companies are all
become common products, architectures and
developing high capacity storage systems. While
products for highly parallel disk storage subsys-
performance improvements in capacity and
tems will be required. While they are likely to be
throughput are expected for both magnetic and
fabricated out of rigid magnetic disk media,
optical media, additional research and develop-
architectures for controllers, data storage and
ment are required.
management, and supporting operating system
components are likely to be substantially different.
Thin film recording head transducers and
recording media are current topics of magnetic
The United States and Japan are the major
media research. Thin film transducers and thin film
innovators in printing technologies. In the low-end
media promise to improve performance by at least
market segment, consisting largely of dot matrix
an order of magnitude. A goal of the research is to
printers common on personal computers and
develop prototype 3.5 inch disk drives capable of
facsimile machines, Japanese capabilities in elec-
storing 1- gigabyte of data within five years - a 25
tromechanical systems and designing for
fold increase over today's technology. Recently,
producibility have resulted in a very strong market
redundant inexpensive disk arrays have been devel-
penetration. The mid-range market segment in-
oped based upon 5.25 inch rigid disk technology.
cludes laser printers with speeds between 10 and 40
While promising to reduce data loss and reduce
pages per minute. Traditional U.S. strengths in
floor space required for large storage subsystems,
leading edge technologies and integration have
the technology has not been widely deployed.
given domestic firms a market lead in laser printers.
75
These printers, however, use foreign-made printing
engines with the U.S. value-added being the
integration of the technologies and proprietary
software. The high-end market segment includes
systems with speeds that exceed 50 pages per
minute with high-quality resolution of 600 spots
per inch. In this sector, U.S. strengths have given
domestic firms a significant but not necessarily
permanent market dominance.
76
COMPUTER SIMULATION AND MODELING
DESCRIPTION OF TECHNOLOGY
Distributed processing techniques, which are
applied to the entire simulator operation and
Simulation and modeling systems are com-
serve to enhance the visual systems
puter-based tools that allow scientists, engineers,
Instructor station capabilities, which simplify
and operators to test complete systems, advanced
an instructor's task, allow more time for
structures, design concepts, and command meth-
management of simulation exercises, and
odologies under a variety of conditions. With
apply artificial intelligence techniques to
specially designed software and computer hard-
produce advancements in interactive systems
ware, advanced simulation and modeling tech-
such as touchscreen inputs.
niques will allow researchers to create and utilize
virtual reality with an unprecedented degree of
Manufacturing
control and realism. Simulation and modeling can
Simulation and modeling is currently used by
be applied to almost any situation that would
some commercial and defense firms to save time
otherwise require laborious physical testing or
and money in many aspects of manufacturing and
which may be impractical or impossible to test
eventually is expected to become pervasive in small
directly. The following highlights the diversity of
and large firms across all manufacturing sectors.
simulation and modeling applications and the ways
Simulating design, manufacturing, and testing
in which these techniques can be applied to the
processes on a computer minimizes waste in
solution of complex problems.
materials, allows for processes to be refined or
altered, and improves the rate at which products
Defense
are brought to market. Today's computers can
handle more complex simulation programs than
The military sector currently uses simulation
ever before. In the next ten years, with widespread
and modeling techniques for a large number of
implementation of computer integrated manufac-
applications, including simulation of combat oper-
turing (CIM), simulation and modeling advances
ations (from small-scale tactical levels to global
will be the driver in implementing more efficient
combat), simulation of complex system perform-
manufacturing approaches.
ance, and training. As an example, DARPA's
These techniques will also be used more
Simulation Network (SIMNET) is a large-scale
frequently to design and optimize the performance
simulation environment for combat training of tank
platoons and helicopters. In addition, the SIMNET
of traditional processes, including forming, casting,
forging, powder consolidation, and welding, and to
environment can be used to "prototype" new
perform general applications with shorter trial and
weapons systems without the need to construct a
working model.
error periods. For example, future applications for
simulation and modeling software include systems
Over recent years, enhanced graphics and data
that will allow engineers to visualize machining
bases have been essential in improving the quality
processes in advance. This type, called numerical
of simulation and modeling technology for defense
control (NC) simulation, reduces cost, time, and
purposes. For example, advances in three areas are
paperwork involved in processing a raw material
converging to support flight simulation systems for
into a part. The simulation model depicts on a
training and cockpit resource management. Tech-
computer screen the paths that machine tools
nologies that will boost success in the field are:
follow to mill, turn, drill, bore, punch, and otherwise
sculpt parts, allowing manufacturing engineers to
Visual systems, which include image genera-
detect process defects in a timely manner. By
tion and display and depend upon improve-
having the capability to measure and assess many
ments in field-of-view capabilities and
different options before cutting raw material,
realistic detail
material waste and cost are kept to a minimum.
77
In another manufacturing application, simu-
Useful applications of simulation and model-
lation and modeling is being used to improve the
ing to the highly complex and organized systems
operation of production lines and reduce the
of cells have had to await access to high-
requirement for buffers (extra stocks of materials
performance computers and the development of
or parts) by as much as 25 percent. Buffers
appropriate software. Increasingly, simulation
prevent a production line from shutting down
and modeling is being employed to elucidate
when a problem occurs, but are also capital
biological processes, to study the structure and
intensive and take up storage space. Also, to
dynamics of proteins and other macromolecules
encourage greater use of simulation and modeling
in solution, and in the design of molecules with
on the factory floor, software producers have
specific receptor affinities. Such usage is likely to
developed user-friendly packages to minimize
multiply rapidly.
the programming required. Although many man-
ufacturing-oriented programs are currently tai-
Computational Fluid Dynamics
lored for specific purposes (such as materials
Computational fluid dynamics (CFD) is a
handling), friendlier and more general-purpose
specific software application that has been used in
systems will be realized in the future. Companies
many industries to develop products dependent on
also use simulation and modeling techniques to
the science of fluid flow. By predicting fields of
analyze administrative problems such as capital
pressure, temperature, velocity, and turbulence in
investment and staffing policies.
and around objects, CFD can determine the best
shape and size of equipment, as well as the
properties of fluids and related materials. This tool
Agriculture and Medicine
can take the place of initial testing for missiles and
aircraft and can be used to predict the effects of
Simulation and modeling is enjoying rapidly
aerodynamic processes. There are numerous com-
growing applications in agriculture. By helping to
mercial and defense applications involving prob-
assure that just the needed quantities of agricultur-
lems in which air is the fluid being tested, including
al chemicals are applied at exactly the right time,
simulation of flight and gas turbine engine opera-
excesses that lead to surface and groundwater
tions. Manufacturing applications that require
pollution can be avoided. Farmers are rapidly
fluid flow analyses include processes such as
becoming aware of the benefits of this technology
chemical vapor deposition and plasma spraying.
and are gaining access to the necessary hardware
and software. As an illustration, a decision support
In the commercial sector, CFD is expected to
system based on a physiological model of the cotton
be used with greater ease and frequency in the
plant has allowed farmers to increase profits by
automobile industry. In addition to modeling,
approximately $50 per acre. Moreover, simulation
computing stresses, and controlling machines,
and modeling programs that help to boost food
CFD can aid in the testing of external and
production are of strategic importance for interna-
in-cylinder flows. Also, this technology is used for
tional trade.
simulations of passenger-compartment air flow,
oil flow and cooling, fuel-air mixture preparation,
Plant and soil scientists have for many years
spark ignition, tire adhesion, metal forming, and
used computer models as research tools to study
paint application.
plant-environment, plant-nutrient, and plant-pest
interactions as well as cultivation-erosion relation-
Prediction of Weather, Climate, and Global
ships. More recently, such models have been
Change
equipped with inference interfaces and utilized in
Another rapidly developing application of
decision support systems to ensure that informa-
computer simulation and modeling is in operation-
tion from all relevant disciplines and data from all
al weather forecasting, study of local and regional
available sources are integrated to improve agricul-
(mesoscale) weather systems, and prediction of
tural management.
climate change. Operational global models are
78
used for medium-range forecasting in the 3-to
Although there are current applications in complex
10-day range for aviation and marine purposes.
systems, manufacturing and production, CFD,
The emphasis in these models is on integrating
finance, environmental "mimicking," and biotech-
weather over large areas of the globe. On the other
nology design, future success in this technology will
hand, limited-area or regional models are used for
depend on perfecting and advancing existing
short-range predictions extending 1 to 2 days and
techniques. In the next ten to fifteen years, the goals
focused in greater detail on the areas of primary
of scientists and engineers are to reduce design
interest. The ability to model and predict local
costs, increase flexibility, and optimize design by
severe weather conditions, with adequate warning
anticipating changes in performance, thus reducing
time for the population, has particularly important
needless trial and error.
economic and societal benefits. Historically, prob-
lems requiring computer modeling of atmospheric
Increasingly, simulation and modeling is
circulations on continental, hemispheric, and glob-
shown to be not only the best way of attaining an
al scales have provided a major impetus to
objective -- it is often the only way. Integrated
developments in computer software and hardware.
complexes, sometimes referred to as "systems of
systems," characterize modern military and civilian
Recent concerns over global climate change
operations. Increasingly, these systems are too
have led to the development of large-scale comput-
complex to be built and managed using traditional
er models that take into account interactions of the
manual and computer-based techniques. Exam-
various components of the biogeochemical, hydro-
ples include the operation of an aircraft carrier
logical, vegetation, and physical-climate systems.
battle group, of a strategic missile defense system,
These models are designed to simulate some of the
or of the North American air traffic control system.
important processes of global change, such as the
The command, control, operation, design, and
direct response of the climate system to increased
testing of such integrated complex systems of
atmospheric concentrations of carbon dioxide and
systems is possible only through advanced simula-
other so-called "greenhouse" gases. One type of
tion and modeling. For example the Navy's Aegis
climate prediction model tries to estimate future
system employed a complete simulation (known as
change based on reconstructions of past climates.
"the frigate in the corn field") throughout its
The other type, known as a general circulation
development; this system has been replicated for
model (GCM), is derived from weather forecasting
training. The SIMNET system has demonstrated
models and includes representations of other
its worth in integrating crews and troops at
elements of the climate system such as oceans and
widespread locations into a single computer-
land surfaces. Improving the quality of these
simulated battle. The Strategic Defense Initiative
models involves a substantial ongoing international
National Test Bed is the most recent and complete
effort in data gathering and management, model
example, utilizing two supercomputers in its new
development, documentation, testing, application,
facility to test strategic defense concepts and
and verification.
hardware, which cannot be adequately tested in an
operational environment.
REASONS FOR SELECTION
STATUS AND INTERNATIONAL TRENDS
Simulation and modeling has become integral
Simulation and modeling techniques were first
to development and implementation of new tech-
developed in the United States at the time of the
nologies in such diverse areas as defense, manufac-
Manhattan Project. As scientists developed ad-
turing, agriculture, and medicine. While the wide
vanced technologies for warfare, the development
array of applications described above attests to the
of simulation and modeling techniques to test for
important role that simulation and modeling has
climate changes and to produce weapons became
already assumed, future applications are limited
critical. As the technology matured, U.S. simula-
only by the creativity of the software designer and
tion and modeling capabilities expanded to other
the depth of analysis brought to bear by the user.
industries and applications. Because of the scale of
79
resources required, comprehensive simulations are
creating reality on a computer, advancements in
likely to continue to be dominated by applications
computer capabilities and architectures that lead
for large systems (as in aerodynamic design,
to more adaptable and accurate graphic and
modeling water supply, or war gaming).
pictorial models are necessary for the technology's
future success.
The challenges in this technology are in
software design and computer hardware. The
Military and civilian simulations have also
United States has maintained a strong position in
been developed and used by other countries,
software but is losing its edge in certain areas to the
especially European. The Japanese have developed
Japanese, Europeans, and third world nations. The
excellent capabilities in simulation and modeling
computer industry is also becoming increasingly
techniques for massively parallel computers and
competitive. Because simulation and modeling is
are currently organizing a national effort to
dependent upon a high degree of sophistication in
collaborate on this type of software application.
80
BIOTECHNOLOGY AND LIFE SCIENCES
Applied Molecular Biology
Medical Technology
81
BIOTECHNOLOGY AND LIFE SCIENCES
The life sciences demonstrate, perhaps more vividly than any other discipline, the synergy
between scientific discovery and the commercialization of innovative and life-enhancing products.
The publication by Watson and Crick in 1953 of their startling hypothesis that the genetic basis of
life resides in a so-called "double helix" of DNA strands stimulated intense scientific effort to un-
derstand the cellular and molecular basis of biological processes. These advances have led to the
development of recombinant DNA techniques, monoclonal antibody technology, sophisticated
new approaches to bioprocessing, and other biotechnological applications with almost limitless po-
tential to benefit mankind.
The "new" biology is having a profound impact on health care. Already, it has spawned
scores of important new products and approaches for the prevention, diagnosis, and treatment of
disease. In addition, applied molecular biology has important potential for many promising appli-
cations in energy conservation, bioremediation of wastes, production of chemicals for a variety of
uses, and other industrial processes. Recombinant DNA technology and other biotechnological
techniques also hold considerable promise for improving the performance of agricultural crops and
enhancing the productivity of livestock.
The revolution in applied molecular biology has been accompanied by dramatic advances in
the development of sophisticated medical technologies, which increasingly play a vital role in dis-
ease diagnosis and intervention. These technologies-derived largely from the physical and com-
puter sciences-include laser technology, magnetic resonance imaging, positron emission
tomography, advanced biosensors, and biocompatible prostheses. These technologies are contrib-
uting to longer life spans and improved quality of life.
Future progress in advanced medical technology and applied molecular biology is likely to
be stimulated by growing demand for advanced medical services as a result of population aging of
many industrialized countries, and increased requirements for environmentally benign industrial
processes and agricultural methods. However, the future impact of these technologies is also likely
to depend on other external factors including the regulatory environment, public acceptance of
products generated through biotechnology, and increased public concern regarding rising health
care costs. These and other such issues must be resolved to realize the full benefits of the rapid pace
of technological progress in biotechnology and the life sciences.
83
APPLIED MOLECULAR BIOLOGY
DESCRIPTION OF TECHNOLOGY
grown in culture. The transplanted gene replicates
as the new host cells divide. In this manner, for
Spectacular advances in the understanding of
the molecular basis for cellular functions are the
instance, a desired protein can be produced in large
foundation of a new biology with almost limitless
quantities, harvested from the culture fluid, puri-
fied, and prepared in bulk. By introducing human
potential for the betterment of mankind. The basic
genes into cultures of bacterial, yeast, or mammali-
techniques used to harness this scientific knowl-
an cells, biotechnology companies have succeeded
edge for practical purposes are known collectively
in developing commercial quantities of a new
as applied molecular biology, or biotechnology.
generation of important preventive and therapeutic
According to the Office of Technology
proteins, including vaccines, human insulin, human
Assessment, biotechnology consists of "those
growth hormone, cancer-fighting agents, and drugs
techniques that use live organisms (or parts of
that dissolve blood clots and treat anemia.
organisms) to modify products, to improve plants
Recombinant DNA technology also appears
or animals, or develop microorganisms for specific
applicable to the treatment of some genetic
uses." Biological processes have been employed for
diseases in humans through the introduction of
thousands of years in such uses as fermentation (an
normal genes into a patient's cells. This new field of
essential step in baking bread and brewing beer).
gene therapy potentially could eliminate or amelio-
However, this technology category refers primarily
rate many forms of inherited diseases. Likewise,
to new and innovative techniques to modify or to
genetic material has been directly introduced into
manipulate biological organisms to produce useful
animal embryos, thereby creating "transgenic
products. These capabilities are bringing about a
animals" which exhibit the traits associated with
revolution in the development of new vaccines,
the foreign gene. Transgenic mice, with defective
therapeutics, agricultural products, specialty
human genes, for example, have an important
chemicals, pollution control mechanisms, and
potential as models of human disease.
materials.
While the initial impact of genetic engineering
The basic tools of applied molecular biology
has been most apparent in the field of human
include recombinant DNA technology, protein
health, these techniques also have the potential to
engineering, monoclonal antibody production, and
make a major contribution to agriculture. New
bioprocessing. The following discussion describes
traits may be transferred to transgenic plants, such
these techniques and discusses their potential
as improved pest, drought, and disease resistance.
implications.
Transgenic livestock may be developed that are
leaner and can be raised more efficiently. Safe
Recombinant DNA
microbial pesticides developed with recombinant
DNA technology could replace some chemical
Recombinant DNA techniques (also known as
pesticides.
genetic engineering) most frequently involve the
transfer of genetic material between differing
Cultures of genetically-modified cells can also
organisms. This transplanted genetic material
be employed in the production of specialty and bulk
contains encoded instructions for functions charac-
chemicals, including enzymes and other biochemi-
teristic of the original cell, namely the production of
cal products used in food processing. Receptors
vital proteins. The transplanted gene imparts that
from nerve and muscle cells are being cloned to be
function to its new host cell.
used as sensors to detect toxic chemicals in the
workplace or water supply. The tools of recombi-
Recombinant DNA technology is frequently
nant DNA technology are also being used in the
used to introduce a target gene into cells that can be
development of materials as varied as antifouling
85
paints, high energy cathodes, and high-strength,
biotechnology and sophisticated analytic methods,
lightweight composites.
researchers can design highly specialized binding
molecules -- or "biological response modifiers"
Recombinant DNA and other techniques of
(BRMs) -- to trigger the desired cellular reaction.
molecular biology can also be used to identify the
This development of new therapeutics, based on a
location of a specific gene on a particular chromo-
detailed understanding of protein shape and the
some. A collaborative international program has
molecular basis of cellular functions, is known as
recently been launched to develop a comprehensive
"rational drug design." While "rationally designed"
"map" of the human genome. Such a map will assist
drugs have not yet appeared in the marketplace,
researchers in investigating the function of specific
these techniques have the potential to revolutionize
genes and could lead to effective gene therapies to
the development of more effective therapeutics.
correct defective genes as well as a better under-
standing of normal physiological processes. To
Monoclonal Antibody Production
date, researchers have succeeded in isolating and
identifying only a small portion of the 50,000 to
Monoclonal antibody technology has already
100,000 genes present in every human cell. A major
begun to alter medical practice. Monoclonal
contribution to this effort is provided by the new
antibodies are produced by combining antibody-
polymerase chain reaction techniques which great-
producing, disease-fighting white blood cells (lym-
ly amplify DNA and so increase the amount of
phocytes) with tumor cells which divide
genetic material available for study. The develop-
continuously to create a culture of hybrid cells that
ment of similar types of genome maps for major
can produce large amounts of homogeneous
agricultural crop plants would be an important tool
antibodies. Because the antibodies resulting from
for harnessing biotechnology to improve crop
this procedure are cloned from a single hybrid cell,
production.
they are known as "monoclonal" antibodies. As a
result, these antibodies are highly specialized and
Protein Engineering
only attack a specific disease-causing agent or cell
type.
Protein engineering embraces systematic, ana-
lytical approaches for the development of useful
The development of monoclonal antibodies
proteins for specific applications by altering their
has spawned scores of new diagnostic products
molecular structure. This procedure already is
which are used to detect sexually-transmitted
employed in a number of important industrial
diseases including HIV infection, as well as cystic
applications. By combining selected portions of
fibrosis, hepatitis B, various forms of cancer, and
various molecules, researchers have developed
other disorders. Monoclonal antibodies may also
novel enzymes that can catalyze reactions in
be employed in the development of highly specific
solvents other than water, or which are capable of
and sensitive detection systems for plant and
synthesizing industrial chemicals more efficiently
animal diseases, as well as food-borne pathogens.
than conventional methods. Proteins have been
Monoclonal antibody technology may also have
modified to increase their stability in a variety of
important therapeutic applications in addition to
environments, making possible new food produc-
its current use for disease diagnosis. For example,
tion methods, better laundry detergents, and
researchers are developing tumor-seeking mono-
biochemicals for destroying wastes.
clonal antibodies which can carry anti-cancer
agents directly to the cancer cells. Thus, very high
Similar techniques have important potential
concentrations of drug can be achieved without
for the development of new therapeutics. The cell's
causing significant harm to healthy cells. Recent
defenses against infection as well as other vital
developments have led to the production of
cellular functions are activated when a protein
monoclonal antibodies with enzymatic activity.
molecule with an appropriate shape binds to a
These have considerable medical and industrial
"receptor" on the cell membrane. Using the tools of
potential.
86
Bioprocessing
diseases and disorders such as cystic fibrosis,
muscular dystrophy, sickle cell anemia, and Hun-
Bioprocessing is the critical link between the
tington's disease. Other tools of applied molecular
basic science of biotechnology and the production
biology, such as the development of transgenic
of therapeutic drugs and other life-enhancing
animals, also may be instrumental in the develop-
products, food enzymes and ingredients, and
ment of effective treatments for AIDS, cancer, and
specialty products for agriculture and industry.
other diseases.
Bioprocessing is potentially more energy efficient,
product specific, and environmentally clean than
In agriculture, biotechnology has the potential
conventional organic synthesis. Opportunities for
for improving the efficiency of livestock. A biotech-
genuine innovation are abundant. However, the
nologically-produced hormone that promotes the
economics of bioprocessing must be improved for
growth of healthier, leaner pigs is under develop-
biotechnology to achieve its full potential.
ment. Biotechnology also has the potential to
increase crop yields, improve crop quality, and
Novel techniques have been developed to allow
reduce production costs while minimizing the
bioprocessing on a commercial scale. Microbial,
detrimental environmental impacts of pesticides
plant, and animal cells have been genetically
and chemical fertilizers. A number of innovative
modified to increase their production of desired
products of agricultural biotechnology are nearing
biochemicals. Some cell types have been tailored to
the market, such as environmentally safe biopesti-
secrete the product into the culture broth rather
cides and disease-resistant crops. Such products
than to retain it within the cell wall-a method
represent the leading edge of a technological
which simplifies purification. The productivity of
revolution in agriculture.
cell bioreactors is being improved with the develop-
ment of packed or fluidized beds, micro-carriers,
Bioprocesses are also being harnessed to
and hollow-fiber technology. Enzymes that have
fabricate novel materials, such as spider silk and
been immobilized on membranes are facilitating
underwater adhesives (from mussel cell cultures)
product removal. Advanced affinity and chroma-
for commercial applications. Other biological
tography techniques and membrane filtration
polymers are being developed to produce high-
technologies are boosting the efficiency of product
strength, elastic materials. The new biology has also
purification.
made possible the development of biosensors,
which have important applications in ultrasensitive
REASONS FOR SELECTION
detection systems for medical diagnostics, pollu-
tion control, detection of explosives and illegal
The potential applications of molecular biolo-
narcotics, and industrial process control.
gy span a broad spectrum of the U.S. economy. For
Genetic engineering has become an important
some sectors, such as disease prevention and
new tool in environmental protection by making
treatment, this potential has become a reality. In
possible the development of microorganisms that
others, further efforts must be made to transform
efficiently degrade solid wastes and toxic chemi-
what is technically possible into commercially
cals, clean up oil spills, and assist in the treatment
viable applications. The most promising areas for
of wastewater. These techniques may also be useful
future progress are in the fields of human health,
for developing microbes that produce enzymes
agriculture, energy conservation, specialty chemi-
useful for converting biomass, a potentially impor-
cals, new materials, and bioremediation.
tant source of renewable energy. Other genetically-
In the health field, the tools of applied
engineered microbes which are capable of
molecular biology offer considerable potential for
extracting minerals are also being investigated.
understanding, diagnosing, preventing, and treat-
Technological progress in bioprocessing is key
ing a wide range of disorders, including hereditary
to realizing the full potential of biotechnology.
diseases, AIDS, and cancer. Gene therapy has the
Bioprocesses are being explored for the
potential to cure or ameliorate many hereditary
manufacture of chemicals used in pharmaceuticals,
87
cosmetics, household products, and industrial
with the United States in biotechnology, particular-
production. Recombinant DNA technology is
ly in the field of diagnostic, preventive, and curative
well-suited for the large-scale synthesis of natural
products for human health. Germany, for example,
biological products like peptides, enzymes, and
has strong pharmaceutical companies. Its research
vitamins. Other organic chemicals may also be
base is first-rate, and the government is devoting
produced efficiently using bioprocesses.
substantial R&D resources to the field. However,
inadequate venture capital markets and regulatory
STATUS AND INTERNATIONAL TRENDS
obstacles to establishing new biotechnology busi-
nesses may inhibit Germany from fully capitalizing
At present, the United States enjoys leadership
on its strengths. The United States offers a
in the research base for applied molecular biology.
relatively positive environment for biotechnology
The field has benefited from the strong financial
start-up firms, but time-consuming product ap-
support of the Federal government; an excellent
proval processes, delays in securing patents, and
research base in leading universities, the National
deficiencies of venture capital remain significant
Institutes of Health, and the Agricultural Research
constraints to the development of the U.S. biotech-
Service; a high level of collaboration between
nology industry.
industry and the university research community;
and a dedicated, entrepreneurial workforce. A
Japan is devoting considerable public and
world-class pharmaceutical industry and strong
private resources to improve its capabilities in
agricultural sector also contribute to an excellent
biotechnology. The Japanese emphasis on the
infrastructure for biotechnology research and
development of nonmedical applications is evident
product development.
in food products, waste management technology,
and biochemicals. Japan's extensive experience in
In bioprocessing, the United States has a clear
bioprocessing and fermentation technology allows
advantage in harnessing the tools of applied
it to capitalize rapidly on research developments
molecular biology in the medical area. Other areas
elsewhere in the world. The field of biosensor
of promise have received significantly less atten-
technology is rapidly expanding, with increasing
tion. Government R&D programs have empha-
numbers of publications and patents appearing
sized applications to human health; private
each year. Several Japanese companies have
investors in biotechnology have also viewed thera-
already begun to sell devices for environmental
peutics and diagnostics as the most attractive areas
monitoring, industrial analysis, and clinical analy-
for investment. Nonmedical applications like agri-
sis which utilize miniaturized electrode technology.
culture, alternative fuels, new materials, specialty
Of the present commercially available instruments,
chemicals, and pollution control also have great
15% are of American origin; virtually all the others
commercial and technological potential, but have
are Japanese. Japan is moving to improve its
only begun to be exploited.
research base in molecular biology, but in the
meantime, Japan is noted for the speed with which
A number of European countries have the
it can translate scientific knowledge generated
scientific potential to become strong competitors
anywhere in the world into commercial advantage.
88
MEDICAL TECHNOLOGY
DESCRIPTION OF TECHNOLOGY
have opened the door to early detection and
effective treatment of a broad range of life-
Innovative medical technology has revolution-
threatening conditions.
ized American medicine. Medical technology
encompasses many diverse areas of science, draw-
Major advances are also occurring in implant
ing on advances in computers, fiber optics,
technology. Cardiac pacemaker development
materials science, electronics, lasers, sonography,
illustrates the dynamic pace of innovation. From
and other fields. Medical products include new
large, cumbersome devices driven by external
diagnostic imaging equipment that can provide
power sources, state-of-the-art pacemakers are
precise pictures of bones, organs, tissue, and neural
now miniaturized (from the size of hockey pucks to
activity; implanted devices such as cardiac pace-
half dollars), fully implantable, and rate-responsive
makers, defibrillators, artificial heart valves, and
to individual cardiac rhythms. There are also
hip replacements; and innovative noninvasive
important advances in implant materials. For
alternatives to conventional surgery, such as
example, researchers have tailored biodegradable
lithotripsy, a technique using shock waves to crush
polymer microcapsules that slowly release proteins
kidney stones. Indeed, the medical technology
to encourage bone growth following dental or facial
industry is characterized by a dynamic pace of
surgery. A family of nontoxic polymers has been
innovation and rapid diffusion into the medical
developed that creates biodegradable structures
marketplace. This discussion focuses on medical
with microencapsulated growth hormone to stimu-
products and equipment, other than drugs, used for
late bone growth.
the diagnosis, mitigation, or treatment of disease.
Breakthrough technologies offer alternatives
to conventional surgery. Lasers are proving
Several areas illustrate the rapid rate of
superior to traditional techniques by causing less
progress in the field. In less than two decades, we
bleeding, fewer complications, and faster healing.
have moved from conventional X-rays to a host of
Lasers offer a growing number of medical applica-
advances in imaging technologies. The CAT
tions; they can resculpt the shape of corneas,
(computer-aided tomography) scan uses computer
remove cataracts, and vaporize plaque deposits in
technology to reconstruct multiple X-rays into a
coronary arteries. Fiber optic technology has
three-dimensional "slice" of the patient's body.
expanded the use of angioplasty and arthroscopic
Subsequent product improvements have increased
surgical techniques. First generation lithotripsy
the intensity, quality, and speed of the equipment.
uses sound waves to crush kidney stones without
Magnetic resonance imaging (MRI) uses the
surgery. Newer lithotripters employ optical fibers
interactions of hydrogen atoms in human tissues
with pulses of laser light that pulverize the stones.
with magnetic and radiofrequency fields to produce
images of tissue and organ structures. Advances in
Sensors are an important development in
MRI include angiography (MRA), which trans-
diagnostics. They combine electronic circuits with
forms electrical signals into computer images that
biological material. In an at-home glucose
provide accurate data on the vasculature of the
monitoring system, a drop of blood is placed on the
brain. Spectroscopy (MRS) generates spectra that
tip of a detector containing glucose oxidase bound
reveal identities and levels of various metabolites in
to flavin adenine dinucleotide (FAD). The glucose
the body, allowing, for example, assessment of heart
from the blood binds to the strip, releasing
attack or stroke. The positron emission tomogra-
electrons. By counting electrons, the device can
phy (PET) scan measures glucose metabolism of
provide immediate and accurate test results. There
neural tissue. Following injections of radioactive
are numerous other potential applications of this
glucose, the scanner can map areas of brain
technology that will vastly improve a wide range of
activity. These relatively noninvasive technologies
diagnostic procedures.
89
REASONS FOR SELECTION
because the government is deeply involved in its
Innovative medical technology can enhance
role as payer (Medicare outlays alone were over
the quality of life and ease suffering from disease
$107 billion in 1990), policymakers have focused on
and disability. Due to the aging of the population
controlling market growth rather than promoting
and the demand for products that improve and
competition in this dynamic industry. This
prolong life, major global market growth is
increasingly cost-conscious marketplace, along
expected. The United States has long dominated
with regulatory constraints, product liability
the global marketplace for medical technology. The
threats, and the present economic slowdown, may
U.S. consumes over 40% of all medical technology
discourage innovation and product development in
the future.
produced worldwide, and has consistently main-
tained a trade surplus in the industry ($3.2 billion in
As the American market stabilizes, producers
1990). The industry is very research-intensive and
will increasingly have to look to foreign markets for
has demonstrated leadership in development and
new opportunities. However, sophisticated medi-
commercialization of breakthrough technologies.
cal technology requires a well-developed medical
High technology medical equipment is also vital to
infrastructure, limiting markets for certain prod-
national security. Sophisticated and responsive
ucts to developed nations. Most of these nations
emergency treatment capabilities are essential in
are also struggling to control rising health care costs
times of war.
and deal with complex regulatory regimes and
government-controlled pricing policies.
STATUS AND INTERNATIONAL TRENDS
There are signs that America's competitors are
The United States cannot afford to be compla-
gaining ground. The United States has a negative
cent despite its present strength in medical
balance of trade in medical technology with
technology. The cost-insensitive health care
Germany. While the overall U.S. balance of trade
environment of the past has given way to intense
in medical technology with Japan is still positive,
concern over rising costs (health care expenditures
the United States is now a net importer of Japanese
account for more than 12% of GNP). Medical
electromedical equipment such as imaging devices.
technology is often blamed for cost increases,
Over half of the technologies identified as highest
although many technologies may actually reduce
priority emerging technologies by the Japan Sci-
costs by reducing the length of hospital stays.
ence and Technology Agency were medical and
Frustrated by seemingly intractable cost problems,
biotechnologies. Thus, competition in both devel-
and hampered by lack of good data about the link
oped and developing nations abroad will be fierce,
between technology and actual expenditures, many
and only the most cost-effective, highest quality
see medical technology as a mixed blessing. Also,
products will succeed.
90
AERONAUTICS AND SURFACE TRANSPORTATION
Aeronautics
Surface Transportation Technologies
91
AERONAUTICS AND SURFACE TRANSPORTATION
This section includes two applications-oriented areas where continued advances in technol-
ogy and technology management will have a critical impact on the competitiveness of U.S. industry,
the balance of trade, military strength, and the quality of life. Aeronautics is a traditional area of
U.S. strength; the U.S. aircraft industry has led the world in military and civilian aircraft perform-
ance, production, and export sales.
Aeronautics encompasses a broad range of technologies, many of which are National Criti-
cal Technologies in their own right. These include: propulsion (which itself represents a complex
integrated set of technologies), materials, electronics, and the capability to integrate complex tech-
nologies into a system. Future generations of high-performance aircraft depend on substantial ad-
vances in all of these underlying technologies.
While the United States maintains an overall edge in aeronautics, the lead has substantially
narrowed in many of the underlying technologies. The Europeans and Japanese have made sub-
stantial gains in selected electronics and materials technologies, and the Europeans are competitive
with U.S. producers in civil air transport export markets. The United States is maintaining its over-
all strength in systems integration.
Advanced surface transportation technologies can relieve growing congestion on U.S. high-
ways, improve vehicular safety and fuel efficiency, reduce reliance on liquid fuels, provide more
affordable mass transit, and reduce air pollution. Promising technology applications include intelli-
gent vehicle/highway systems and compact power sources. Technical challenges that must be over-
come before these can become technically feasible and affordable include continuing advances in
electronics, sensors, information technologies, materials, and compact power sources.
93
AERONAUTICS
DESCRIPTION OF TECHNOLOGY
are advanced polymers, metals, intermetallics,
ceramics, fibers and composites, and the technolo-
Aeronautics encompasses an array of technol-
ogies essential to the design, development, con-
gy to create them in economic quantities. Specific
structures areas which demand attention are:
struction, testing and qualification, operation,
advanced structures theory and computational
performance, safety, and flight management of
aircraft. Although these technologies are inherent
structural mechanics; hot structures and actively-
cooled structures for hypersonic aircraft such as
in all classes of aircraft, the focus of this section is
the National Aero Space Plane; and new inspection,
on the key technologies associated with the larger
and more advanced aircraft, such as large subsonic
life prediction, corrosion control, and repair
methods to extend the useful life of aging aircraft.
transports, high-performance military aircraft
(both fixed and rotary wing), and supersonic and
Aerodynamics
hypersonic aircraft. Leadership in these aeronauti-
cal technologies will be a necessary condition for
Aerodynamics involves the complex physical
leadership in the commercial aviation marketplace
laws, theories, and computations that underlie the
and for military air superiority in the next century.
design and performance of aircraft and aircraft
engines. Skillful application of this discipline
Propulsion
enables aircraft and aircraft engines to be designed
and their performance accurately assessed without
Turbine and turboprop engines propel all large
requiring the fabrication and physical testing of
transports and military aircraft, and are a key
prototypes through trial-and-error methods,
determinant of aircraft speed, range, noise, agility,
thereby greatly reducing aircraft design cost and
and payload. More powerful engines, with better
development time. Specific areas which require
fuel economy and significantly lower levels of
attention are: improved ability to predict the
nitrous oxide emissions, are required for the next
formation of turbulence and to develop methods
generation of commercial aircraft. High-thrust
for its control; more accurate and efficient compu-
turbine engines with the ability for sustained
tational fluid dynamics (CFD) algorithms; codes
supersonic cruise without afterburners and having
and grids for analyzing and optimizing aircraft and
low thermal signatures will be necessary for many
engine designs by computer simulation; enhanced
military aircraft. Specific areas which need priority
techniques for laminar flow control to improve
attention are: highly integrated engine/airframe
airfoil efficiency; advanced hypersonic, aero-assist
designs; ultra-high bypass, variable cycle, multi-
and wave-rider vehicle designs; and improved
fuel, and hybrid (e.g., air turbo-ramjet) engines;
methods to reduce aerodynamic noise and sonic
advanced engine components (inlets, propellers,
booms generated by aircraft and rotorcraft.
fans, compressors, combustors, nozzles, etc.); and
advanced aerothermodynamics and aerothermo-
Avionics and Systems Integration
chemistry (to improve engine performance).
Avionics provide the information and commu-
Aviation Materials and Structures
nications processing that facilitates aircraft con-
trol, operation, and survival. Systems integration
Aviation materials and structures must meet
provides the network that links the various elec-
increasingly demanding requirements for strength,
tronic and automated devices within an aircraft
durability, rigidity, temperature and corrosion
and its weapon systems. Smaller, lighter, more
resistance, size, weight, and (for military purposes)
reliable, and more highly integrated avionics and
"stealth." Advances in materials enable improve-
instruments are required as aircraft become
ments in airframes and aircraft engines. Specific
increasingly complex. Specific areas which need
materials areas which require additional emphasis
priority attention are: highly integrated engine/
95
airframe controls; advanced electrical and optical
and management technologies are necessary to
subsystems (especially fly-by-light/power-by-
remain competitive. Specific areas which need
wire); advanced sensors to allow aircraft to safely
priority attention are: advanced fabrication, lay-up
fly in wind shear, heavy rain, icing, and other
and joining methods for aircraft materials and
adverse conditions; and advanced "glass cockpit"
structures, multi-disciplinary aircraft design tech-
technology (replacing conventional gauges and
niques, advanced numerical optimization, and
instruments with computer-generated displays).
advanced computer aided design and manufacture.
Human Factors Engineering
Aeronautical Testing
Human factors engineering relates to man-
Aeronautical test facilities, such as wind
machine interfaces and the biomedical aspects of
tunnels, engine test cells, and supercomputers, are
aircrew performance. Advanced, human-centered
required to conceive and validate aspects of aircraft
automation concepts (in which the benefits and
design, construction, and operation. A state-of-
capabilities of automation technology are achieved
the-art aeronautical testing infrastructure is there-
through designs which properly exploit human
fore required for the United States to design, build,
capabilities) are needed for ever larger, faster,
and operate advanced aircraft. Specific areas which
longer flying, and more complex aircraft. Aircraft
require attention are: advanced supersonic and
operation necessarily includes consideration of the
hypersonic wind tunnels; large test cells which can
safety and productivity of the flight crew, their
accommodate extremely large engines; advanced
interaction with the aircraft and air traffic control
aircraft sensors and telemetry devices; supercom-
systems, and the information transfer required for
puters to perform the calculations involved in
involved operational procedures. As automation
numerical aerodynamic simulations; and, perhaps
and complex computer-based systems are incorpo-
most important, improved academic curricula/
rated in flight decks and air traffic control facilities,
techniques and work incentives to attract, develop,
and as flying times and distances increase, while
and maintain a cadre of skilled aeronautical
airports and airspace become more congested,
engineers.
opportunities will arise to improve both productiv-
ity and safety. A specific area of human factors
REASONS FOR SELECTION
engineering which needs increased emphasis is a
There are two main reasons why aeronautics is
better understanding of aircrew biomedical limita-
important to the United States. First of all, it is
tions (especially fatigue and jet lag), and the
essential for continued dominance of the large
countermeasures to change, adapt to, and work
world aviation marketplace, which had over $100
around these limitations. In the military area,
billion in aircraft and aircraft-related sales in 1990.
improvements in aircraft speed, maneuverability,
The U.S. aviation industry accounts for about 70%
and information acquisition require continuous
of that total, and currently employs over 1 million
human factors improvements to ensure that pilots
people. Second, aeronautical technology is the
can remain in control of the full range of the
single most important component of military air
system's performance.
superiority and troop mobility, whose criticality to
national defense was clearly demonstrated in the
Aircraft Manufacturing
recent Gulf War.
Modern aircraft require new and increasingly
Commercial and military aircraft are, and for
computerized methods and procedures to design,
the foreseeable future will remain, high technology
fabricate, join, and install the advanced aviation
products. New classes of aircraft and significant
materials, structures, engines, and components
improvements in aircraft performance are therefore
from which they are made. Also, because of
attainable only through advances in aeronautical
escalating start-up and tooling costs for new
technology. In the commercial arena, prospective
aircraft, more efficient and economical processes
advances in aeronautics could make possible the
96
following aircraft: economical and environmen-
STATUS AND INTERNATIONAL TRENDS
tally acceptable supersonic transports (e.g., High
Speed Civil Transport successor to the Con-
Although post-World War II U.S. manufactur-
corde), vertical take-off and landing aircraft for
ing dominance has been undermined in many
commuter purposes (e.g., V-22 Osprey tilt-rotor
sectors during the past two decades, the U.S.
derivative), and significantly more economical
aerospace sector has thus far retained its preemi-
subsonic transports (including successors to the
nent market position and generated a substantial
Boeing 747). In the military arena, advances in
surplus for the U.S. trade account. U.S. aerospace
aerospace technology could lead to the following:
exports currently outpace imports by a ratio of
sustained Mach 3 capability in fighters the same
three to one, for a net annual gain to the U.S. trade
size as the F-15; short take-off and vertical
balance of almost $20 billion. U.S. companies
manufacture roughly three-quarters of all large
landing capability in fighters with the same size,
commercial transports delivered in the 1980s (not
range, and payload as the F-15; and a doubling of
including Soviet production). This market share is
the payload capability of rotorcraft the same size
declining due to an aggressive Airbus Industrie
as the CH-47 helicopter.
effort and is likely to worsen if the United States
fails to maintain a strong commitment to aeronauti-
Aeronautics is both dependent on, and a
cal technologies.
stimulus for, many other critical technologies cited
in this report. For example, the design and testing of
U.S. military exports outpace imports by a
more efficient and higher performance aircraft rely
ratio of four or five to one. However, the United
to an increasing extent on computing capabilities.
States is now less dominant in worldwide military
The construction requirements of advanced air-
aircraft sales because many countries have fostered
indigenous military aircraft production. Moreover,
craft have stimulated the development of new
U.S. export of military aircraft is coupled to U.S.
manufacturing equipment, processes, and manage-
defense and foreign policy and is therefore con-
ment techniques. The operation of and perform-
trolled. The large commercial transport market will
ance requirements for these aircraft have driven the
become increasingly important to aerospace sales
development of high-performance materials and
and technologies as U.S. and foreign defense
electronics, which have many non-aviation applica-
budgets decline in the 1990s. This trend is likely to
tions.
encourage foreign governments to support efforts
by their domestic aerospace producers to shift
The relative importance of aeronautics from a
resources from military to commercial aircraft
research investment standpoint is reflected in the
design and production.
fact that roughly half of Federal funding to industry
for R&D goes to the aerospace sector, and that 20
Foreign governments have provided support
for their indigenous aerospace industries through
to 25 percent of all independent R&D by U.S.
direct subsidies and other policies that favor
industry is in this sector. Approximately one-third
domestic production. These policies, along with
of the total U.S. defense budget is devoted to the
other market factors, such as high product-line
research, development, procurement, operation,
start-up costs, have facilitated a trend toward
and support of aircraft. It is important to note that
international consortia to develop, produce, and
since industry investments in technology develop-
market aircraft and aircraft engines, components,
ment derive from commercial and military sales,
and parts. In order to promote foreign sales, U.S.
market share ultimately impacts technological
aircraft and aircraft engine producers have pur-
superiority. Therefore, the United States must
chased increasing quantities of foreign-made parts
maintain a strong commitment to both aeronauti-
and components for use in their finished products.
cal technology development and aerospace market
These practices have been a double-edged sword
share.
for U.S. aerospace companies. They have facili-
97
tated the diffusion of aeronautical technologies
continues to lead in systems integration technolo-
from the United States to other countries and have
gies, although Western Europe and Japan have
stimulated a sharp rise in aircraft and engine parts
made progress in this area. As a measure of the
imports. However, they have also ensured contin-
importance of aeronautics in the world, other
ued U.S. access to foreign aerospace markets.
countries such as Brazil, Israel, and Australia have
developed advanced aircraft.
Partly as a result of direct government support,
Western Europe is now on a par with the United
States in aerodynamics and structures and is
Market share in commercial transport aircraft
slightly ahead in some advanced materials applica-
depends on many factors in addition to advanced
tions to new aircraft designs. European propulsion
technology. However, to compete at all in this era of
and avionics capabilities are somewhat behind the
direct foreign government subsidies, the technology
United States. Japan has instituted a large,
in U.S. aircraft must be better than that of its
well-coordinated government and industry R&D
competitors. For the United States to even main-
program, which may improve the Japanese technol-
tain its current market share, it must continue to
ogy base and close what has been a significant gap
make significant advances in aeronautical technol-
between it and the United States. The United States
ogy.
98
SURFACE TRANSPORTATION TECHNOLOGIES
DESCRIPTION OF TECHNOLOGY
regard to optimum routes from origin to destina-
tion and navigational assistance; help drivers better
Surface transportation technologies offer im-
sense impending dangers; sense lapses in their
portant potential contributions to more efficient
judgment and skills; aid them in performing their
and cost-effective transportation systems for the
driving task; and compensate for some errors.
nation. Two sets of technologies that are particular-
ly important to the future of surface transportation
Intelligent vehicles and highways will accom-
are intelligent vehicle/highway systems and com-
plish these objectives by applying and integrating
pact vehicular energy sources (especially more
many other National Critical Technologies. For
efficient batteries for electric powered vehicles).
example, advanced traffic management systems
The advantages of each technology to transporta-
incorporate technologies such as sensors (detector
tion systems will become evident only if trade-offs
and surveillance technologies), microelectronics,
with existing or alternative systems can be weighed.
software, and high-performance computing to
Each concept must be designed, developed, tested,
manage traffic flows more effectively. These sys-
and evaluated in an intermodal competitive con-
tems will increase capacity on existing or slightly
text.
modified/upgraded infrastructure, reducing pollu-
tion, energy losses, and other adverse effects
Intelligent Vehicle/Highway Systems
associated with overburdened roadways.
Intelligent vehicle/highway systems (IVHS),
A related set of technologies deals with
often referred to as "smart cars" and "smart
advanced vehicle controls. These technologies will
highways," use advanced technology to increase
enable improved handling, greater vehicle stability,
safety, system capacity, operational efficiency, and
and size reductions. These improvements, in turn,
driver convenience; reduce emissions, fuel con-
will permit reduced lane width and increased
sumption, and congestion; and provide mobility to
density of traffic on highways and city streets
drivers with diminished skills (e.g., the elderly and
without sacrificing safety or convenience.
the handicapped) by improving the interactions
among the driver, the vehicle, and the roadway. The
Compact Vehicular Energy Sources
emphasis is on the total "driver-vehicle-roadway
Electrically powered vehicles are an extremely
system." The addition of an information and
important focus of surface transportation research
control infrastructure to the existing physical
and development. However, these vehicles can
transportation infrastructure will result in a funda-
become convenient and cost-effective alternatives
mentally different system, which will have an
to conventional vehicles only with the development
enormous impact on drivers.
of advanced battery and fuel cell technologies (see
Recent advances in electronics, sensors, com-
Energy Technologies) and the resolution of potential
puters, and communications provide a major
environmental concerns. Battery technologies of
opportunity for breakthrough improvements in
potential value include conventional lead-acid
crash avoidance and highway traffic management.
types, as well as systems based on lithium,
A vast array of new driver information, communi-
aluminum-iron sulfide, sodium-metal chloride,
sodium-sulfur, zinc-bromine, and iron-air combi-
cation, and vehicle control systems is currently
nations.
under development by the automotive and electron-
ics industries around the world. Advanced technol-
A number of design, engineering, perform-
ogy allows the development of systems that will
ance, and lifecycle problems must be solved before
monitor, control, and manage highway traffic much
electric vehicles come into widespread use, even
like an air traffic controller at an airport; provide
though the basic technologies are understood in
pre-trip and in-route, real-time information with
principle. Prototype electric vehicles have attained
99
top speeds of 50 miles per hour and have a range in
advances in this area could lead to the replacement
excess of 100 miles before recharging. In addition to
of mechanical parts with smaller, more efficient
these speed and range constraints, conventional
electronic components, improving engine perform-
lead-acid batteries must be replaced at least every
ance, fuel economy, and maintenance records.
four years at substantial cost. Improved aerody-
namic vehicle design, utilization of lighter weight
As demands on transportation systems grow,
materials, and use of low resistance radial tires can
so will the difficulties associated with maintaining
all contribute to vehicle efficiency. (These improve-
existing infrastructures. This is especially true in
ments can be incorporated into new internal
the highway infrastructure, where needed mainte-
combustion vehicles to achieve higher fuel efficien-
nance is often deferred because of unacceptable
cies as well.)
disruptions in service. This practice compounds
the problems of deteriorating roadways and declin-
Moreover, battery-powered vehicles may not
ing system efficiency. This challenge must be
be environmentally benign in a systems context.
addressed on several fronts. Advances in materials
Although they do not produce exhaust emissions
technologies, for example, could lead to paving and
while in operation, the generation of electrical
repair materials with higher strength, more durabil-
power required to charge the vehicles could have
ity, and greater ease in surfacing. Strategic manage-
undesirable environmental impacts at the source.
ment systems focusing on all aspects of the highway
The development of immobile and relatively remote
system, including structures, pavements, safety,
generating stations, however, can facilitate the
traffic control, operations, and maintenance, are
identification and minimization of pollution prob-
essential for optimizing already overburdened
lems. Another potential environmental problem
transportation resources.
could be caused by the disposal of spent batteries.
Magnetic levitation (maglev) systems may have
Thus, options for recycling and reusing must be
potential applications in urban, suburban, and
developed (see Pollution Minimization, Remediation,
intercity travel markets, particularly between cities
and Waste Management).
that are 100 to 500 miles apart. This technology uses
Fuel cells are another alternative power source
magnetic lift to raise the vehicle off a guideway, thus
that offers great potential to provide the high
eliminating rolling friction. Several maglev systems
energy densities needed to meet future transporta-
have been designed and used outside the U.S.
tion requirements. Fuel cells, based on non-petro-
leum fuels, could provide improved efficiency and
REASONS FOR SELECTION
reduced emissions compared to current internal
The U.S. transportation infrastructure is vital
combustion engines. Proton exchange membrane
to the nation's economic growth and international
(PEM) is a particularly promising fuel cell technol-
competitiveness. There are various signs, however,
ogy that has certain advantages over phosphoric
that the system is beginning to break down.
acid fuel cells in transportation applications. These
Transportation networks in major urban areas in
advantages include reduced size and weight, faster
the United States are overburdened. Many existing
start-up, better transient response, increased
roads and bridges can no longer accommodate
reliability, and potentially lower cost. (See Energy
traffic increases through expansion or modification
Technologies for further discussion of fuel cell
of existing roadways. Furthermore, there are few
technology.)
places to build new roads, especially in densely
populated urban areas, placing severe constraints
Other Technologies
on the ability to reverse deterioration of the
infrastructure and to handle future growth.
Other technologies of current interest empha-
size incremental improvements in performance of
Existing transportation infrastructures have
conventional systems. Widespread use of micro-
created widespread problems such as air and noise
processors in automobiles, for example, can control
pollution. Supplies of conventional (primarily
emissions and optimize engine efficiency. Further
liquid) fuels that feed the transportation systems in
100
this country are unstable and finite. These prob-
advanced traffic management and traveler infor-
lems create the need to find alternatives to existing
mation systems will be carried out for at least four
systems, to identify new and more practical means
systems in several states. Another major initiative
for mass transportation, to manage current systems
being undertaken in the United States is the
more efficiently, and to minimize the negative
Program for Advanced Technology for the Highway
consequences of conventional systems.
(PATH).
None of the approaches outlined here will
Many of the obstacles to the implementation of
eliminate problems facing the nation's transporta-
these concepts involve policy, regulatory, and
tion networks. Nor are the vehicle technologies
institutional issues as well as numerous human
described here envisioned as replacements for
factors. It is important to work toward the
well-established modes of transportation such as
resolution of these issues, in addition to achieving
automobiles powered by internal combustion
progress in the maturation and development of
engines. Instead, the technologies are incremental
specific technologies.
improvements in systems, operations, and manage-
ment that will produce long-term benefits in
For electric powered vehicles, battery life and
maximizing the utilization of scarce resources --
power ratings remain the single most important
including land, space, fuels, and time.
challenge. While improvements have been made,
both extending the range of battery-powered
STATUS AND INTERNATIONAL TRENDS
vehicles and prolonging their life cycles are
Many of the surface transportation technolo-
essential if they are to compete with conventional
gies and applications rely on other National Critical
gasoline-powered vehicles in the near-term, even
Technologies, including materials, communica-
as a supplemental means of transportation. None of
tions, electronics, and simulation and modeling.
the advanced batteries now being tested in high
Thus, the successful development, application, and
density, compact form -- nickel-iron, nickel-cad-
commercialization of surface transportation tech-
mium, zinc-bromine, lithium-iron sulfide, sodium-
nologies is dependent upon advances in these other
sulfur, metal-air -- are commercially available and
fields as well.
all of them require considerable engineering
development before they can be brought to the
Both Europe and Japan have initiated ambi-
marketplace.
tious intelligent highway programs, although two
European programs stand out. These are the
Maglev technology has been the subject of
Program for European Traffic with Highest Effi-
substantial R&D and demonstration efforts for
ciency and Unprecedented Safety (PRO-
more than 20 years, primarily in Germany and
METHEUS) and the Dedicated Road
Japan. Its use in city operation at low speeds is well
Infrastructure for Vehicle Safety in Europe
proven in those countries, but high speed systems
(DRIVE). U.S. initiatives on intelligent vehicle/
are still being tested and evaluated. The practicality
highway systems center on research, development,
of using maglev in the United States, given the need
and field testing of proven technology. These
to consider density of population centers, construc-
activities involve Federal, State, and local government
tion costs, rights of way, and competing alterna-
offices, as well as the private sector. Field trials for
tives, is still to be determined.
101
ENERGY AND ENVIRONMENT
Energy Technologies
Pollution Minimization, Remediation, and Waste Management
103
ENERGY AND ENVIRONMENT
A wide range of promising technology applications responds to the pressing national need to
reduce use of fossil fuels, reduce the import of liquid fuels, and minimize adverse environmental
impacts of modern industrial society. Energy source issues include energy efficiency, cost-effective-
ness, and the minimization of adverse environmental impact. However, there are trade-offs in
these three areas with virtually every alternative energy source and storage technology. No single
technology offers the promise of limitless energy at minimal cost and environmental impact.
Promising energy source technologies include renewable energy technologies (including so-
lar thermal power generation, photovoltaics, alternative fuels, and biomass processes), nuclear fis-
sion, and environmentally improved processes (such as fluidized bed combustion). Other promising
energy technology areas include improved conservation and storage technologies. Some of the
more promising energy technologies ultimately could replace more conventional fossil fuel power
sources, but at present all except nuclear fission are viewed as incremental technologies to meet
rising energy demand and to manage energy loads more efficiently. None of the source technolo-
gies, even in combination with efficient storage, are viewed as short-term replacements for conven-
tional energy sources for a combination of technological, economic, and regulatory reasons.
Realizing the potential of these new energy technologies depends on further advances in informa-
tion technologies (notably electronics, sensors, and simulation and modeling), materials, and other
National Critical Technologies.
In environmental technologies, trade-offs again exist among pollution minimization, cost,
remediation, and waste management. Although significant environmental improvements could be
made through more widespread application of proven control technologies, the solution to serious
emissions and toxic waste problems will need significant advances in minimization, remediation,
and waste management technologies. Like the energy area, environmental technologies are closely
linked with continuing advances in a range of other critical technologies.
The technological issues associated with energy and the environment are substantially inter-
twined. An integrated approach to energy and environmental issues will produce more effective
utilization of new and emerging technologies.
105
ENERGY TECHNOLOGIES
DESCRIPTION OF TECHNOLOGY
electricity by utilizing reflective surfaces to concen-
There is a critical need to reduce the nation's
trate sunlight onto a receiver. Trough electric
systems use a parabolic reflector with a receiver
reliance on oil, and especially on supply sources
under the control of unstable or unfriendly govern-
that runs along its focal line. Dish/Stirling systems
ments. There also is growing concern about the
use a parabolic dish that focuses sunlight to a single
environmental impact of global increases in energy
point near the engine and generator. Central
receivers use individually controlled heliostats or
use and the effects of higher concentrations of
"greenhouse" gases in the atmosphere. However, a
mirrors located on the ground to reflect and
concentrate sunlight onto a receiver located on a
shift to alternative energy sources inevitably will
involve trade-offs in the areas of cost, system
tower. The higher the concentration, the higher the
efficiency, and environmental impact. Since no
temperatures generated in the system, and the more
energy source offers limitless supplies, low costs,
efficient is the generation of electrical power.
and zero environmental impacts, a total systems
Photovoltaic devices directly convert solar
approach must be employed to identify new
photon energy into electrical current by separating
opportunities and assess their potential drawbacks.
light-generated charge carriers by a built-in
The technologies involved in improved energy
electric field at the interface of the semiconductor
sources, energy conservation, and energy storage
layers. Silicon, copper indium diselenide, cadmium
can bring us closer to these energy goals.
telluride, and gallium arsenide are the principal
materials used in their production. An important
Energy Sources
determinant of the commercial potential of photo-
The United States and other nations are
voltaics is cell and module efficiency. Current flat
exploring a variety of alternative energy options.
plate photovoltaic modules have efficiency rates of
Although many of these show promise of providing
5 to 10 percent, with estimated lifetimes ranging
reliable energy supplies in the future, further
from a few years for older technologies, to as much
as 20 years for newer ones. Costs must be reduced
improvements in cost-effectiveness and technolog-
ical and market developments are required. Tech-
for photovoltaics to compete with other utility-
scale sources.
nologies with the potential to achieve these aims fall
into two broad categories: renewable energy
Wind turbines convert wind into useful me-
sources and environmentally improved technolo-
chanical or electrical energy. The conversion
gies, which are directed toward utilizing traditional
process utilizes basic aerodynamic forces to pro-
fuels while minimizing the drawbacks normally
duce net positive torque on a rotating shaft. This
associated with them. In addition to central power
results in mechanical power, which can then be
station applications, these technologies can often
converted to electrical power. Higher efficiencies
be applied in modular form to satisfy peak demand
can be achieved through improved design tools,
surges, restrain the growth of fossil fuel consump-
advanced airfoils, improved manufacturing, and
tion, and alleviate the need for construction of new
better site selection.
conventional power plants to meet peak loads.
Research is also underway on alternative fuels
Renewable Energy Technologies. Solar ther-
for transportation and other uses, with a focus on
mal power generation, photovoltaics, wind tur-
biomass processes. These include various alcohols
bines, and biomass/alternative fuels are among the
in pure form or blended with petroleum-based
most promising of the alternative renewable energy
products. Grains, sugar, wood, plant wastes, and
technologies. Solar heating of buildings and water
other organic materials with high cellulose content
is utilized worldwide, with varying commercial
are the feedstocks for producing these fuels.
success. In addition, thermal power can generate
Methane production for heating and other
107
purposes is another potential source to reduce
gains in transportation are among the areas that are
demand for traditional energy sources.
critical to our energy future.
Environmentally Improved Technologies. The
Energy efficiency gains and conservation
United States has large reserves of coal that
measures benefit the economy, which grew by 46
theoretically could satisfy energy needs for centu-
percent since 1973, while growth in energy demand
ries. Exploitation of this resource is limited by
was limited to only 11 percent over the same period.
economic and environmental concerns. More com-
Significant additional improvements are essential
plete understanding of combustion and catalytic
to moderate energy consumption while promoting
processes could result in cleaner, more efficient
economic growth. In addition, while total energy
power generation technologies. A fluidized bed
demand has grown moderately in the United States,
combustor continuously feeds small particles,
rising demand in certain energy sectors, electricity,
typically coal particles, into a chamber through
for example, has continued unabated. This necessi-
which large volumes of combustion gases flow.
tates efficiency improvements in power generation
Potential advantages of this process are lower
and distribution, as well as more efficient end use.
emissions and more complete combustion.
Considerable research into energy efficiency
Nuclear fission is the only currently available
technologies continues and will produce future
technology capable of producing large blocks of
payoffs for the nation. Many of the technologies
electrical energy without direct emissions of carbon
and sciences that will improve future efficiency
dioxide, sulfur oxides, and nitrogen oxides.
have been identified in the National Energy
However, vigorous research and development of
Strategy and other analyses. The technology thrusts
include:
advanced designs for light water, gas-cooled, and
liquid metal reactors is needed to ensure that our
Combustion research to better understand the
plants are the safest, most reliable, and most
mechanism and kinetics of fuel consumption
efficient possible. These designs promise to en-
Research into the mechanisms of heat transfer
hance safety margins substantially through passive
in solids and fluids
response to non-normal conditions, use of simpli-
fied systems, and inherently improved thermal
Analysis of material chemistry and develop-
management and tolerance. These enhancements
ment of materials processing methods
should translate directly into better public accep-
Advanced materials research in high- and
tance. Second generation nuclear technologies
low-temperature applications
resulting from research and development could
provide, according to conservative projections, 140
Surface science, coatings, and lubricants to
gain efficiency improvements in precision
GW of new capacity by 2030. Nuclear power would
machining and in rotating machinery.
then reduce carbon dioxide emissions by 24 percent
from alternative scenarios.
Representative of existing and emerging tech-
nologies are building energy conservation technolo-
In contrast to fission, nuclear fusion technolo-
gies, which include factory-produced housing (i.e.,
gy is not considered by the Panel to be a current
the use of modular components that reduce energy
critical technology because of the long development
consumption by unifying wiring, water pipes, and
lead-times anticipated for commercialization
other items rather than installing them separately);
advanced materials for housing and commercial
Energy Conservation
buildings; energy-efficient lighting, appliances, and
equipment; and sensor technology that can shift
The focus of energy conservation is on those
heating and cooling to those parts of a building that
technologies that will directly reduce energy de-
need it the most over the course of a day.
mand. More efficient manufacturing processes,
"Superwindows" (double-paned windows made of
reduced energy loads in buildings, and efficiency
transparent but nonconducting material) offer
108
vastly improved insulation capabilities, with resis-
applications for utility scale energy storage in the
tance values (R-values) of above R-19, compared
future. The former offers incremental efficiency
with the R-3 that is available from normal
gains over conventional lead-acid batteries and the
double-paned windows.
latter is viewed as the most advanced in terms of
research. A major advantage of zinc-chloride
The design and development of more inherent-
batteries is that their discharge rates can be
ly efficient manufacturing and production pro-
controlled. This would have important implications
cesses would improve the competitiveness of U.S.
for both utility grid and transportation applica-
industry while reducing energy demand. In many
tions.
instances, reduced energy consumption through
more efficient process design would also minimize
Fuel Cells. Fuel cells are used to generate
environmental problems associated with industrial
electrical power through controlled reactions of
processes. (See Pollution Minimization, Remedi-
hydrogen and oxygen in the presence of an
ation, and Waste Management.)
electrolyte. A fuel cell powerplant consists of three
basic elements: a fuel processor that extracts
Energy Storage
hydrogen from any hydrocarbon fuel, a power
section that consists of several stacked cells, and a
Energy sources and storage are linked inextri-
power conditioner to transform direct current into
cably. One critical problem in the delivery of energy
alternating current. Since the process that gener-
is the mismatch between the rates of production
ates electrical power is electrochemical, not me-
and use. Solving this problem involves a combina-
chanical, a fuel cell contains no moving parts and
tion of storage and transmission of power from
does not involve combustion. It is possible that fuel
those areas with excess capacity at a given time of
cells can be constructed on varying scales, from
the day to those areas with a capacity shortfall.
individual units, to power-moving vehicles, to
Promising technologies will allow more effective
larger scale plants for commercial electricity
utilization of present energy sources, as well as
generation.
provide a new means to satisfy the mobile power
requirements of electric vehicles and peak electric
Fuel cell technology offers several potential
power demands of the future. Improved battery
advantages over existing power generation and
and fuel cell technologies are required to achieve
storage methods. Fuel cells can be used for a variety
these objectives.
of power needs, from small-scale applications to
larger ones. They are less dependent on location to
Batteries. Batteries are more efficient than
satisfy their role in energy demand, so they could be
mechanical storage systems, but their primary
suitable for remote power generation and storage.
advantage is their flexibility, which allows them to
The environmental impact is presumed to be less
be sited near intended load areas. Other
than that of conventional technologies, and poten-
advantages include their near-zero emission levels,
tial feedstocks are abundant. Its simplicity could
minimum noise levels, and their ability to charge
mean high availability rates, as much as 80 to 90
and discharge rapidly. Operation and maintenance
percent in the case of larger-scale power plants.
requirements also are low, although battery pro-
duction and disposal of expended batteries pose
REASONS FOR SELECTION
environmental concerns. Improvements in cost,
weight, and operating lifetimes are required to
Petroleum and other fossil fuels are finite
achieve widespread utilization.
natural resources that are basic to modern life ----
generating power for homes, industries, and trans-
Promising battery technologies include well-
portation for most of the world's population. The
known lead-acid types, as well as lithium, alumi-
long-term prospects for achieving energy security
num-iron, sodium-metal chloride, sodium-sulfur,
and maintaining economic growth are uncertain
zinc-bromine, and iron-air batteries. Advanced
unless alternative energy solutions are identified.
lead-acid and zinc-chloride batteries could have
While efficiency gains have enabled this country's
109
economy to expand at a significant rate over the
Energy Sources
past decade with limited increases in total energy
Government and private sector research has
consumption, the worldwide demand for fossil
resulted in significant breakthroughs for solar
fuels, especially petroleum, will increase if alterna-
power generation, and DOE estimates that solar
tives are not developed. Although fossil fuels will
energy systems could be a multibillion dollar
remain the primary energy source for the United
market for U.S. firms. Solar technologies are
States in the foreseeable future, economical and
becoming increasingly cost-effective. Power plants
"cleaner" alternatives must be identified and
operated by Southern California Edison initially
developed to meet anticipated increases in de-
generated power at a cost of $0.24 per kilowatt-
mand, while laying the groundwork for implement-
hour; second generation systems will generate
ing a replacement strategy over the long term.
power at an estimated $0.08 per kilowatt-hour, with
Central to this effort is the development of
further cost reductions of 30 percent or more
more effective means of accessing and storing
attainable.
energy. One of the most important factors in the
Research is now being performed by other
escalating cost of delivering electric power to users
nations, and potential international competition is
today is the fact that energy must be delivered as it
particularly strong in photovoltaics. Germany's
is demanded. Thus, generating systems and infra-
research budget on photovoltaics is 65 percent
structures must be geared toward peak demand
larger than that of the United States. Japan's
periods, even though those periods occupy only a
photovoltaic research is 40 percent higher. Even
portion of a day's total power needs. Effectively
though it is still a fledgling industry, the U.S. market
combined energy production and storage technolo-
share of the photovoltaic industry has fallen from
gies could reduce demands on electric power
65 percent in 1981 to 31 percent in 1988. The
generation infrastructures, provide the flexibility
technological key to tapping the solar resource is in
needed to achieve steady utilization rates, and
improving conversion efficiencies and reducing
address pollution control and conversion efficien-
system costs. Among the associated technologies
cies.
that would enable further advances in solar power
are: optical materials and advanced optical tech-
STATUS AND INTERNATIONAL TRENDS
niques to improve light gathering efficiencies and
reduce costs; better semiconductors to improve
Despite their commercial promise and the
conversion efficiency; high-temperature materials
worldwide research momentum, the future com-
to enable receivers to absorb sunlight more
mercialization of energy source, conversion, and
efficiently; low-cost and lightweight heliostats and
conservation technologies is dependent on the
parabolic dish collectors; and advanced molten-
ability to overcome a number of technical obstacles
salt and direct absorption receivers for central
and constraints, which include the following:
receiver systems.
Limited knowledge of fuel chemistry leads to
Energy Storage
less than ideal extraction of chemical energy
from fossil fuels as well as generation of
Capital costs and inherent efficiency limita-
undesirable pollutants
tions constrain the use of currently available
batteries for mobile and stationary power storage.
Development of solar energy technologies
requires an improved understanding of funda-
Few, if any, new battery types are near commercial-
mental properties and mechanisms of photon-
ization. Current research is directed largely at
matter interaction, including photosynthesis
achieving breakthroughs that would enable the use
of advanced batteries in transportation (see Surface
Materials research is required to reduce
manufacturing costs. (Resistance to degrada-
Transportation Technologies). Several other pro-
tion and more suitable materials would help
posed battery technologies, including iron-chro-
achieve higher efficiencies in capture, conver-
mium, zinc-ferrocyanide, nickel-hydrogen, and
sion, transmission, and storage of energy.)
lithium-iron sulfide, are considerably less mature.
110
Fuel cell technology has been demonstrated in
system integration. One important limiting factor is
the United States and Japan, with 38 small-scale
that, due to their relative inefficiency, fuel cells
demonstration plants in operation by the
require far larger installations to generate power on
mid-1980s. Limitations in fuel cells include the
a commercial scale than many conventional pro-
effectiveness of electrolytes (the medium in which
cesses. Periodic replacement of fuel cell stacks also
the electrochemical reactions actually take place),
could prove detrimental, since current fuel stacks
the high cost of constructing and maintaining
need to be replaced at least every 40,000 hours of
power sections, and efficiency losses due to poor
operation if working at full capacity.
111
POLLUTION MINIMIZATION, REMEDIATION,
AND WASTE MANAGEMENT
DESCRIPTION OF TECHNOLOGY
restoration of damaged environments or reduction
of toxicity to acceptable levels. It is unrealistic to
Environmental pollution -- contamination of
expect total elimination of all pollutants, but skillful
air, soil, and water -- occurs in many forms and is
waste management utilizing appropriate technolo-
highly pervasive. U.S. industry alone generates
gies in all four phases outlined above can reduce
more than 300 million tons of liquid and solid
wastes to more manageable levels and reduce risks
hazardous wastes and another 600 million tons of
to society.
nonhazardous wastes annually. Some pollution
minimization and remediation strategies involve
Minimization
more widespread application of existing technolo-
gies and more efficient management methods,
Pollution minimization involves the reduction
rather than new technologies to reduce the conse-
of polluting outputs at their source, generally the
quences of pollution. According to one estimate,
manufacturing process, and the implementation of
environmental contaminants could be reduced
improved production techniques to reduce poten-
globally by as much as 50 percent if currently
tial pollutants from the outset. Source reduction
available technologies were utilized in all stages of
can be achieved through product changes, the use
industrial production.
of less toxic materials in production, equipment
redesign, and/or process modification. Private
However, more widespread application of
sector firms recognize that instituting pollution
current technologies will not be enough to solve
minimization strategies can also lead to improved
serious existing and future environmental prob-
production efficiency and commercial opportunity.
lems; new technologies will be required. Many of
today's processes and technologies simply trans-
Specific strategies and tools vary from one
form pollutants into a more manageable form,
industry to the next, but the common thread of
rather than neutralize or convert them into benign
these strategies is that pollution is controlled and
substances that can be discarded. The elimination
minimized by incorporating new elements into
of one pollution problem often results in the
processes, particularly elements that will simulta-
creation of others. For example, separation pro-
neously improve production processes, rather than
cesses might create more easily handled wastes that
relying on "end of pipe" add-on controls. This is
can be incinerated. Although the treatment pre-
partially achieved through the optimum utilization
vents potentially toxic substances from entering
and efficient control of inputs. An example of a
into water supplies, incineration could result in
minimization strategy is the use of agricultural
toxic air emissions or residual wastes that pose
technologies that can sustain production with less
disposal problems of their own. Thus, future
reliance on fertilizers and pesticides.
technology must systematically address the source
of the problem, not just the pollutants.
Recycling/Re-use
The nation's priorities within this technology
Having reduced the generation of pollutants
area focus on economical minimization technolo-
through minimization actions, recycling and re-use
gies and techniques; recycling/re-use of final
can further diminish the volume of potential
products and production by-products; and the
pollutants resulting from production. Recycling can
treatment of waste products or the disposal and
also benefit industrial processes, where chemical
storage of those wastes that cannot otherwise be
and other wastes are identified for re-use. Closed
accommodated. Remediation is the final stage in
loop processes in particular can reduce waste
this waste management strategy, focusing on
products and improve production efficiency.
113
Materials in industrial processes are amenable
applicable to mixed wastes and, since it can process
to recovery and recycling if their physical and/or
highly dilute process streams, it obviates the need
chemical attributes allow them to be easily sepa-
for preprocessing.
rated from process effluent. A typical recovery/re-
cycling system will use several technologies in
Not all wastes can be recycled or converted
sequence. Standard technologies that can be
into totally benign substances. Although various
adapted for the recovery of raw materials or
treatment technologies can reduce the volume of
by-products may be grouped in three general
pollutants, many wastes still require safe storage
categories:
and/or disposal. Toxic wastes that are concentrated
by treatment technologies can be stored more easily
Physical separation, which includes gravity
and in a manner that poses a more identifiable and
settling, filtration, flotation, flocculation, and
manageable risk than untreated waste.
centrifugation
Component separation, which relies on differ-
The storage and disposal of nuclear wastes is a
ences in electrical charge, boiling points, or
difficult problem. Nuclear disposal traditionally
miscibility
has involved the burial of wastes underground
and/or storage of wastes in containment pools.
Chemical transformation, which relies on
Because of the long time period required for many
chemical reactions to remove specific compo-
nents.
forms of radioactive wastes to decay and the high
toxicity of these wastes, secure disposal and storage
The maturity of different recovery and recycling
methods are required. Research to find alternative
technologies varies and there are trade-offs in-
means for disposing of high- and low-level nuclear
wastes continues to be warranted.
volved in their use. Physical separation techniques,
for example, are relatively well developed and inex-
pensive, but they are not as efficient as other tech-
Remediation
niques. More complex processes, such as reverse
In contrast to the avoidance of pollution
osmosis, are far more costly and have only been im-
through minimization or its reduction through
plemented for hazardous waste reduction on a lim-
treatment, remediation technologies restore con-
ited scale.
taminated environments to their original condition
or reduce levels of toxicity to a point where they
Treatment, Storage, and Disposal
pose no significant dangers. A number of remedies
already exist and others offer potential for dealing
Treatment technologies address processing of
with toxic pollutants that were considered to be
pollutants that cannot be re-used and must be
virtually untreatable a decade ago. Among these
discarded or stored in a way that minimizes any
advances are soil washing techniques, in which
dangers to the environment. An overriding consid-
contaminated soils are treated with chemical
eration in treatment is to reduce the total volume of
agents that permit the separation of both organic
potential pollutants so that they can be more easily
and inorganic contaminants; thermal desorption, in
managed. Separation techniques commonly used
which contaminated materials are heated to release
for recycling/re-use are among the simplest and
toxic pollutants in a gaseous form; and composting
least costly means of reducing the volume of
processes that transform organic contaminants
pollutants, especially liquid wastes. One promising
through biodegradation.
technology in this area is supercritical water
oxidation (SCWO). In SCWO, organics are oxi-
A remaining technical issue in remediation is
dized in the presence of a high concentration of
that the number of treatments required can be
water that is brought to temperatures and pres-
extremely high -- at least equal to the numbers and
sures above its critical point. This technology has
types of pollutants entering soil, water, or air. At
been demonstrated successfully in the treatment of
present, few technologies can effectively restore
many industrial and nuclear wastes. It may also be
areas damaged by more than one form of pollutant.
114
One very promising new technology is bioreme-
on pollution controls to meet existing regulations.
diation, which uses recombinant or naturally occur-
Disposal costs are increasing as well, amounting to
ring bacteria to ingest pollutants that would require
over $240 per ton at many sites. Eighty percent of
years to eliminate through natural processes or that
existing landfill space will close permanently over
pose permanent dangers to the environment (such as
the next fifteen years, further exacerbating the
inorganic toxic wastes). According to one estimate,
problems and costs associated with disposal of
bioremediation of toxic wastes could be only 10
solid waste. Potential economic and health benefits
percent as expensive as conventional treatment and
from improved minimization and remediation
storage processes, without creating attendant prob-
techniques are significant. Pollution minimization
lems with leftover wastes that require supplementary
issues are closely linked to other national needs and
treatment. In a set of recent applications that received
concerns, including energy use and industrial
wide attention, bioremediation was used to treat
efficiency.
devastating oil spills in Alaska and Texas. In other
applications, microbes break hazardous compounds
Nuclear waste disposal is a particularly diffi-
into less dangerous substances, which can then be
cult problem because of the paucity of feasible
incinerated or treated with conventional technology.
storage sites, the long time required for materials to
decay to less hazardous levels, and the potential
Risk Assessment
danger posed to humans, animals, and the environ-
ment. Today, 110 nuclear power plants generate
Systematic utilization of waste management
about 20 percent of all electricity used in the United
and pollution control technologies relies on the
States. Due to problems with safe disposal and
effective use of risk assessment methodologies,
other obstacles, more than 100 additional plants
which can estimate the form, dimension, and
have been cancelled or permanently deferred. Even
characteristics of environmental risks and deter-
with the cutbacks in nuclear plant construction,
mine threats associated with new products or their
disposal is a long-term problem. For example,
by-products. Risk assessment tools are used to
spent fuel from existing plants is expected to reach
address diverse analytical problems in areas that
44,000 tons by the year 2000, and disposal options
extend from biotechnology and agriculture to
remain severely limited. Storage and disposal of
energy and the environment.
low-level nuclear waste also pose significant
long-term consequences, since low-level wastes
Improved risk assessment techniques can make
must decay for many decades before reaching levels
a major contribution toward systematizing and
of toxicity that are believed to be nonthreatening to
prioritizing waste management actions. Development
health or safety.
priorities include improved testing methods, environ-
mental modeling, and sampling techniques. Simpler,
STATUS AND INTERNATIONAL TRENDS
more reliable, and faster monitoring and testing
equipment is also important. New devices in such
Environmental problems are now receiving
areas as supercritical fluid extraction for sample
global attention. Unfortunately, no single technolo-
preparation, and environmental immunoassays for
gy promises to be a "silver bullet" that will cure all
on-site screening of test samples, offer the promise of
the nation's waste treatment and disposal ills. The
more reliable and less expensive monitoring and
development of a broad range of technologies will
testing. This will, in turn, lead to a more accurate
be required. This is particularly true of mixed
understanding of the hazards posed by specific forms
wastes (e.g., chemical/radioactive wastes), where
of pollution and waste.
the processes used to treat an individual compo-
nent might be useless or even counterproductive if
REASONS FOR SELECTION
used on the mixed waste. This creates the need for
hybrid solutions that are tailored to each particular
The dollar cost of combating pollutants is
problem. Another complicating factor in the
huge, even before the impact on health and welfare
assessment of worldwide trends is that different
is considered. Industry spends $46 billion annually
nations have adopted different philosophies and
115
strategies for waste management. For example,
advanced pollution control technologies could
incineration is being aggressively pursued by some
involve different processes, and much work re-
nations to solve the problem of urban solid waste
mains to be done to develop and commercialize
disposal even though it often leads to substantial air
effective and efficient approaches. For example,
pollution.
significant challenges remain before bioremedi-
ation can be practiced on a wide scale. The first is
Developments in the area of pollution minimi-
identifying the types of microbes that can be
zation, remediation, and waste management are
utilized for cleanups, since almost every toxic
extensive, and new technologies are being brought
substance requires a unique treatment. More than
on-line incrementally through international re-
200 potentially hazardous compounds are con-
search efforts. Many pollution control technologies
tained in PCBs alone; many of these compounds
are mature and have been in widespread use for
have been mixed with other chemicals and pollut-
decades. Because of relatively early enactment of
ants in toxic waste sites and must be separated
pollution control legislation in the United States,
before treatment can begin. A second challenge is
U.S. industry has been a leader in "first generation"
to develop new bacteria by recombinant methods
technologies that relied on chemical processes (e.g.,
or adapt bacterial forms to improve their effective-
water treatment plants and scrubbers). However,
ness.
116
APPENDICES
117
APPENDIX A
NATIONAL CRITICAL TECHNOLOGIES:
LEGISLATION, PANEL, AND METHODOLOGY
119
APPENDIX A
NATIONAL CRITICAL TECHNOLOGIES:
LEGISLATION, PANEL, AND METHODOLOGY
LEGISLATION
and Technology Policy (OSTP) appoints nine of the
The National Critical Technologies Panel was
panelists, of whom three must be U.S. government
established by the Fiscal Year 1990 Defense
officials and six must represent private industry or
Authorization Act (P.L. 101-189) through an
higher education. The Director appoints as Chair-
amendment to the National Science and Technolo-
man one of the Federal officials serving on the
gy Policy, Organization, and Priorities Act of 1976.
Panel. In addition to the nine panel members
The legislation further mandated preparation and
appointed by the Director of OSTP, the agency
submission of a biennial report on the nation's
heads of the Department of Defense, Department
critical technologies to the President and the
of Energy, Department of Commerce, and the
Congress through the year 2000.
National Aeronautics and Space Administration
The Panel was charged with identifying up to
each appoint one representative to the Panel.
30 "national critical technologies." These technolo-
Panelists appointed by the Director of OSTP
gies were defined as areas of technological develop-
for this initial study were chosen in an effort to
ment which are "essential for the long-term
ensure that the Panel would include a balanced set
national security and economic prosperity of the
of members with expertise covering a broad range
United States." Process as well as product technol-
of key technological areas as well as possessing a
ogies were to be considered.
broad interest in issues of national security and
economic competitiveness. The Federal agency
PANEL
heads were also encouraged to appoint individuals
Each Panel is to consist of 13 individuals with
with appropriate technical backgrounds whose
expertise in the fields of science and engineering,
government positions provided a policy-level per-
chosen from the Federal government and the
spective on technology issues. Current Panel
private sector. The Director of the Office of Science
members are listed in Table A-1.
Table A-1. National Critical Technologies Panel: 1990-91
William D. Phillips, Chairman
Alexander Rich
Associate Director for Industrial Technology
Sedgewick Professor of Biophysics
Office of Science and Technology Policy
Massachusetts Institute of Technology
Executive Office of the President
Robert Rosen
Frederick M. Bernthal
Deputy Associate Administrator for
Deputy Director
Aeronautics, Exploration and Technology
National Science Foundation
National Aeronautics and Space Administration
Charles V. Shank
Charles M. Herzfeld
Director
Director of Defense Research and Engineering
Lawrence Berkeley Laboratory
U.S. Department of Defense
John C. Tuck
Ruth L. Kirschstein
Under Secretary
Director
U.S. Department of Energy
National Institute of General Medical Sciences
Albert R.C. Westwood
National Institutes of Health
Vice President, Research and Technology
Martin Marietta Corporation
Robert W. Lucky
Executive Director of Research
Robert M. White
Communication Sciences Division
Under Secretary for Technology
AT&T Bell Laboratories
U.S. Department of Commerce
James E. Worsham
Richard C. Messinger
Chairman
Vice President and Chief Technical Officer
GPA Asia Pacific
Cincinnati Milacron
(former President, Douglas Aircraft)
121
METHODOLOGY
many of the prior studies listed technologies at
differing levels of taxonomic aggregation and
The Panel began its deliberations by reviewing
concluded that it was probably not practical to be
recent studies on critical technologies, with particu-
consistent in presenting all critical technologies at
lar emphasis on the criteria and methodologies for
the same level of aggregation. However, in order to
selection of critical technologies. Each of these
understand and recognize the hierarchical relation-
studies had a unique focus and contributed useful
ships, the taxonomy was developed and refined and
input. Briefings were presented by a number of
employed as a candidate list from which to make
organizations that have been examining these
selections. The Panel then established criteria and
issues. The Panel, however, assumed responsibility
ground rules for selection, shown in Table A-2.
for assembling a comprehensive list of National
These criteria were intended to highlight the
Critical Technologies. The importance of establish-
importance of individual technologies to national
ing a careful, step-by-step methodology for selec-
security, the national economy, and to meeting
tion of the technologies, which subjected candidate
other national needs. The criteria were employed
technologies to screening against a set of approved
as a general framework within which to assess the
evaluation criteria, was recognized.
"criticality" of candidate technologies. Primary
A taxonomy was developed which placed
consideration was given to technologies that could
technologies within a general hierarchy and high-
be incorporated into commercial products/
lighted interrelationships. The Panel noted that
processes or defense systems within 10 to 15 years.
Table A-2. Criteria For Selection of Critical Technologies
CRITERIA
DESCRIPTION
Industrial Competitiveness
Technologies that improve U.S. competitiveness in world markets
through new product introduction and improvements in the cost,
quality, and performance of existing products
National Defense
National Needs
Technologies that have an important impact on U.S. national
defense through improvements in performance, cost, reliability,
or producibility of defense systems
Energy Security
Technologies that reduce dependence on foreign sources, lower
energy costs, or improve energy efficiency
Quality of Life
Ability to make strong contributions to health, human welfare,
and the environment, both domestically and worldwide
Opportunity to Lead Market
Ability to exert and sustain national leadership in a technology
that is of paramount importance to the economy or national
defense
Importance/Criticality
Performance/Quality/Productivity
Ability to cause revolutionary or evolutionary improvements over
Improvement
current products or processes, in turn leading to economic or
national defense benefits
Leverage
Potential that government R&D investment will stimulate pri-
vate sector investment in commercialization, or likelihood that
success in the technology will stimulate success in other technol-
ogies, products, or markets
Vulnerability
Potentially serious damage may be caused if a technology is held
Market Size/Diversity
exclusively by other countries, and not the United States
Enabling/Pervasive
Technology forms the foundation for many other technologies, or
exhibits strong linkages to many segments of the economy
Size of Ultimate Market
Ability to exert a major economic impact through the expansion
of existing markets, creation of new industries, generation of
capital, or creation of employment opportunities
122
APPENDIX B
ACKNOWLEDGEMENTS
123
APPENDIX B
ACKNOWLEDGEMENTS
The National Critical Technologies Panel gratefully acknowledges the contributions
throughout this process of Everet H. Beckner (Department of Energy), John W. Lyons (National
Institute of Standards and Technology), William H. Tallent (Department of Agriculture), John A.
White (National Science Foundation), and Leo Young (Department of Defense), as well as Jules
Blake, James G. Ling, Thomas J. Russell, Eugene Wong, and Ronald E. York (Office of Science and
Technology Policy). The Panel also wishes to acknowledge the contributions of the staffs of the
following organizations in preparing this report.
Private Sector
Aerospace Industries Association, National Center for Advanced Technologies
American Society of Mechanical Engineers
Computer Systems Policy Project
Council on Competitiveness
Institute of Medicine
National Academy of Engineering
National Academy of Sciences
Society of Automotive Engineers
SRI International
Federal Government
Department of Agriculture, Agricultural Research Service
Department of Commerce, National Institute of Standards and Technology
Office of the Director
Chemical Science and Technology Laboratory
Computer Systems Laboratory
Computing and Applied Mathematics Laboratory
Electronics and Electrical Engineering Laboratory
Manufacturing Engineering Laboratory
Materials Science and Engineering Laboratory
Department of Defense
Office of the Director of Defense Research and Engineering
Office of Industrial Base Assessment (OASD/P&L)
Air Force Manufacturing Technology Directorate
Naval Research Laboratory, Center for Bio/Molecular Science and
Engineering
125
Department of Energy
Headquarters
Argonne National Laboratory
Brookhaven National Laboratory
Idaho National Engineering Laboratory
Lawrence Berkeley Laboratory
Lawrence Livermore National Laboratory
Los Alamos National Laboratory
Oak Ridge National Laboratory
Sandia National Laboratory
Department of Health and Human Services, National Institutes of Health
National Institute of General Medical Sciences
National Center for Research Resources, Biomedical Engineering and
Instrumentation Program
Department of Transportation
Research and Special Programs Administration
Federal Highway Administration
Council on Environmental Quality
Environmental Protection Agency, Headquarters
National Aeronautics and Space Administration, Headquarters
National Science Foundation
Office of Science and Technology Policy
Office of Technology Assessment
Support Contractor
TASC
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⑉⑈
STATEMENT BY WILLIAM D. PHILLIPS
Chairman, National Critical Technologies Panel
Before the Subcommittee on Defanse Industry and Technology
Armed Services Committee
United States Senate
From Roger Porter
April 25, 1991
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;
STATEMENT
by
William D. Phillips
Chairman, National Critical Technologies Panel
Before the Subcommittee on Defense Industry and Technology
Armed Services Committee
United States Senate
Mr. Chairmant
Thank you for giving me the opportunity to present the report of the National
Critical Technologies Panel ] am here today in my capacity as Chairman of the
Panel, and the views I will express represent those of the Panel. You have a copy of
the report, so I will not repeat much of the detail in it. However, I would like to
expand a little on the background, methodology, and philosophy that underlie the
final list of critical technologies set forth by the Panel. I will also briefly compare
the list with those Issued by the Department of Defense, Department of Commerce,
and private sector Council on Competitiveness.
National Critical Technologies Panel
The National Critical Technologies Panel was appointed in 1990 in accordance
with the Defense Authorization Act for Fiscal Year 1990. Seven of the 13 Panel
members were from the Federal government, and the Department of Defense,
Department of Energy, Department of Commerce, and National Aeronautics and Space
Administration were specified by the Act to have representation. The remaining nine
members, three from government and six from the private sector, were appointed by
the Director, Office of Science and Technology Policy (OSTP).
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In appointing these nine members, OSTP tried to achieve a wide representation
of expertise and experience, bearing in mind that the study was focused on
technologies "essential for the long-term national security and economic prosperity of
the United States." We were fortunate to have the private sector represented by Dr.
Robert W. Lucky, an expert in electronics, information, and communications from
AT&T Bell Laboratories Dr. Richard C. Messinger from Cincinnati Milaeron, an
expert in manufacturing and machine tools; Dr. Alexander Rich, renowned rescarcher
In molecular hiology and professor of biophysics at M.I.T.; Dr. Charles V. Shank,
Director of the Department of Energy's Lawrence Berksley Laboratory and an expert
in optics and electronics; Dr. Albert R.C. Wastwood. Vice President for Research and
Technology at Martin Marietta Company, one of the major U.S. acrospace
corporations and Mr. James Worsham, former President of Douglas Aircraft with
wide experience in aviation and aircraft manufacturing These Panel members
brought with them Invaluable knowledge, not just about technologies but also about
broader issues of commercialization and competition in the international marketplace.
In addition, WE were ably assisted by Panel members representing the National
Science Foundation and National Institutes of Health. Although the specified size of
the Panel precluded appointing experts in other fields of technology, we worked very
closely with the Department of Agriculture, Department of Transportation and the
National Institute of Standards and Technology to ensure that we had a wide
perspective. This diverse representation, along with the charge from Congress,
accounts for the broader range of the Panel's list of critical technologies than 16 seen
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in the Department of Commerce's list of emerging technologies or the Defense critical
technologies.
We also made a point during the course of the study to talk to and receive
briefings from A number of other groups, both in government and the private sector,
who were looking at related issues. I would particularly like to mention the private
sector Aerospace Industries Association, the Computer Systems Policy Project, and the
Council on Competitiveness with which We had fruitful interactions. They were very
generous in sharing their knowledge and insight with us. The Council on
Competitiveness issued its latest report "Gaining New Ground: Technology Priorities
for America's Future" last month. The report contains much in the way of thoughtful
analysis, and I commend it to you as a document well worth reading.
Methodology
The National Critical Technologies Panel approached its task with the benefit
of prior government studies that I have already mentioned: The Defense Critical
Technologies Plan (Issued annually beginning in 1989), and the Commerce Emerging
Technologies report issued in 1990. We quickly realized that determining the level of
aggregation at which the critical technologies should be presented was an important
consideration. We could all agree on the general categories such as materials,
manufacturing, biotechnology, and so forth. However, these categories were too broad
to be useful. On the other hand, focusing on very specific technologies such as zone
refining of allicon or magnetic bearing applications in high-speed machining would
have resulted in a list that was much too long and not likely to be comprehensive.
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Our choice, then, was to select categories that were more detailed than the major
technology areas but which were groupings of related but more narrowly focused
technologies. Thus, for example, Micro- and Nanofabrication represents a family of
technologies which include lithography techniques, thin films, surface treatments, and
microdevices. In a few cases, as in High-Performance Metals and Alloys, the Panel
added subtitles (shown in parentheses) to delineate the technologies of interest within
a very broad category.
I mention all this because the Panel found no parfect way to deal with the
problem of aggregation. In the end it is & matter of judgment, choice, and consensus;
and every expert group faced with the same issue will deal with it somewhat
differently. You will see this when you look at the tables in our report that compare
the Panel's critical technologies with those nominated by other groups. There is
general agreement among all of them, taking into account the slightly different
objectives and boundary conditions that each group operated with. Therefore, as a
practical matter it is best to concentrate on the overall message of these reports
rather than get bogged down in the minutiae of methodology and taxonomies.
We were guided in our final selection by the following considerations:
a National needs
- Does it contribute to U.S. competitiveness in world markets?
- Does It enhance national defense?
- Does It help our energy security?
- Does it improve our quality of life?
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Importance/Criticality
- Does it give us an opportunity to lead the market?
- WIII It lead to improvements in performance, quality, or productivity?
- Does It provide leverage to stimulate success in other technologies?
- WIll the U.S. be vulnerable to damage if the technology is held exclusively
by another country?
Market Size/Diversity
- Does it form the foundation for many other technologies?
- will It exert a major economic impact?
I realize that there are varying degrees of overlap among these criteria, but they were
employed as guides, not as absolute figures or merit. As has been the case in related
studies, the Panel was able to agree on a final compilation of technologies without
necessarily agreeing completely on definitions or on the relative importance of various
criteria.
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Critical Technologies
The final list of 22 critical technologies selected by the National Critical
Technologies Panel in
MATERIALS
Materials synthesis and processing
Electronic and photonic meterials
Ceramics
Composites
High-performance metals and alloys
MANUFACTURING
Flexible computer integrated manufacturing
Intelligent processing equipment
Micro- and nanofabrication
Systems management technologies
INFORMATION AND COMMUNICATIONS
Software
Microelectronics and optoelectronics
High-performance computing and networking
High-definition Imaging and displays
Sensors and signal processing
Data storage and peripherals
Computer simulation and modeling
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BIOTECHNOLOGY AND LIFE SCIENCES
Applied molecular biology
Medical technology
AERONAUTICS AND SURFACE TRANSPORTATION
Aeronautics
Surface transportation technologies
ENERGY AND ENVIRONMENT
Energy technologies
Pollution minimization, remediation, and waste management
The order in which the technologies are listed does not reflect a prioritization,
In fact, the interesting feature of technologies today is that they are all interrelated.
For example, continuing advances in computer software are necessary to support
development of advanced capabilities in simulation and modeling, high-performance
computing, and intelligent processing equipment. The only distinction on the list is
between the first three general categories, Materials, Manufacturing, and Information
and Communications, and the last three. The first three can be considered as
"building blocks' for virtually all sectors of the economy. The other three categories
are more akin to major areas of applications. However, all 22 technologies are
critical to future U.S. national security and/or economic well-being.
You will note that the Panel did not Include technologies that will only be
realized in the longer term, such as nuclear fusion. We also excluded technologies
associated specifically with space exploration because they had insufficient direct
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impact on national security and economic presperity. The Panel did recognise,
however, that space exploration will continue to simulate advances in many of the
critical technologies.
We included in our Panel's report a comparison between our critical
technologies and those selected by Commerce, Defense, and the Council on
Competitiveness. As I mentioned earlier, there is general agreement among them,
allowing for slight differences in criteria, lovels of aggregation, and definitions. I
think the point to be made here is that knowledgeable people contronted with this
task can generally agree on which technologies are critical. The real challenge YYC
face is not generating a list but doing something about it. Alan, the considerable
overlap between technologies that are critical to both national security and economic
prosperity attest to the Importance and pervasiveness of these technologies in our Itves
today.
Implications
The key point that the Panel wants to emphasize is that technology alone
cannot ensure national security and economic prosperity. Technology can make an
important contribution to the future of U.S. national interests, but only if we learn to
utilize It more effectively.
The Panel believes that the U.S. science base is unmatched in the world today.
Science is the wellspring from which all technology is derived, and our broad
scientific base allows us to generate technology in abundance. Support for the basic
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sciences needs to be broadly based in order to maximize the yield of useful advances.
In contrast, technology development and deployment, because of the time and resource
commitments involved, require greater selectivity and concentration of resources than
is appropriate for the basic sciences.
However, In an environment of intensifying global competition, It is not enough
to come up with new ideas, or even to develop those Ideas into Bew technologies. The
ultimate payoff comes when technologies are deployed, whether for military or
commercial purposes. In the commercial world, successful firms are not necessarily
the discoverers and developers of the latest innovation, but those that are able to
swiftly bring the associated products to market. Those firms must also maximize
profits in order to sustain through reinvestment a continuing flow of both new and
improved products derived from research and development. Therefore, it is not the
identification of critical technologies nor even the development of those technologies
that is important; It is what we do with them that matters.
Future U.S. competitive success requires a fundamental change in the way U.S.
industry competes in the marketplace. Our research institutions and businesses must
place greater emphasis on deployment of new technologies. Furthermore, discovery,
development, and deployment must be integrated and viewed as concurrent rather
than sequential activities. As one of our Panel members expressed it: U.S. industry
must be infused, from the boardroom to the factory floor, with a relentless desire to
constantly improve both product and production methods."
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With that in mind, the Panel placed special emphasis on technologies related
to the creation of new products and on the processes to make them. It is essential in
today's competitive environment to take an integrated approach to manufacturing
process and product design, performance, quality and cost. This integrated approach
applies both to defense as well as commercial sectors of the economy.
Finally, the Panel recognized the importance of science and mathematics
education to the nation's ability to remain a world leader in technology and
technology application. Our ability to reap the benefits of the National Critical
Technologies will depend on the generation of a technically literate workforce that
possesses the skills necessary to develop and master these and future technologies.
Where do we go from here? As I have emphasized, our focus should not be on
continuing to generate new lists, which all say about the same thing but on doing
something to Improve the U.S. position. The Panel did not address implementation,
but the Critical Technology Institute which 18 in the process of being established
under the Fiscal Year 1991 Defense Authorization Act will be concerned primarily
with follow-up on the Panel's report. We need to have a better understanding of
overseas models in order to assess the nature of the competition. The value of
research and development consortiums needs to be assessed, and the role of Federal
laboratories should be examined. We also need to examine regulatory barriers, the
Limited available pool of capital, and other inhibiting factors that may be affecting
our ability to compete Internationally.
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In conclusion, I believe that the primary benefit of doing this study has been to
emphasize not only the importance of certain technologies but to highlight the fact
that technology alone cannot ensure economic prosperity and national security. It can
make an important contribution, but only if we learn to use it more effectively in
developing innovative, high-quality, cost-competitive products and bringing those
products to market in a timely manner. To do so will require, above all, continuing
evolution in our approach to International economic competition.
12
MJS-
Ken Yale handed this to me
at 6:35 pm. Dick has a
copy as well.
-HGB
Proposed Letter to the Editor, Wall Street Journal
On April 25, 1991, the National Critical Technologies Panel presented to
Congress a report describing 22 technologies considered critical for national security
and economic prosperity. Since then a number of articles (e.g., Bob Davis, WSJ
5/13/91) appearing in the news media have drawn certain inferences regarding the
Administration's current policy toward Federal support of technology development. In
actuality, the Administration's policy has been consistent and was stated by President
Bush in March 1990 when he said to the American Electronics Association: "This
administration is committed to working with you in the critical precompetitive
development stage where the basic discoveries are converted into generic technologies
that support both our economic competitiveness and our national security. Here
again we can help to level the international playing field on which you compete."
This position was reiterated in the report "U.S. Technology Policy" which was issued
in September 1990. This Administration report addressed a broader range of
considerations and included the private sector's role, government incentives for the
private sector, education and training, transfer of Federally funded technology, and
Federal-State activities as well as Federal R&D responsibilities. Under the latter, the
Federal government is considered to be responsible for participating with the private
sector in precompetitive research on generic, enabling technologies that have the
potential to contribute to a broad range of government and commercial applications.
The National Critical Technologies Panel was created in response to legislation
passed in 1990 and sponsored primarily by the Senate Armed Services Committee. It
was an independent technical panel consisting of seven government and six private
sector members. The panel made it clear in their report that they had responded to
the Congressional mandate, but that the important task was not as much to identify
critical technologies as it was to get on with the job of deploying technologies for U.S.
advantage. The Panel made no recommendations but simply noted that the U.S.
(which includes the private as well as the public sector) has to place greater emphasis
on the imaginative exploitation of its vast knowledge base.
On the same day that the National Critical Technologies Panel made its report,
the President's Council on Competitiveness issued the enclosed fact sheet which
summarizes Administration policies in support of technology development in America.
It covers the same range of topics as the Technology Policy paper but with more
detail on the legal and regulatory climate. Like the Technology Policy paper, the fact
sheet was broadly reviewed within the Administration and represents a consensus
view.
The aggregate message represented by these policy statements is very clear:
The Administration is committed to enhancing the quality of life for all Americans,
economic competitiveness, and national security; and it will do so by working with the
private sector and facilitating the private sector's ability to perform. All elements of
our society must recognize that we possess many strengths and assets that can be
mobilized within our basic system of free enterprise - which is our Nation's ultimate
strength.
Edited
EXECUTIVE OFFICE OF THE PRESIDENT
OFFICE OF SCIENCE AND TECHNOLOGY POLICY
WASHINGTON, D.C. 20506
Date: April 26, 1991
TO:
Michael Boskin
FROM: KENNETH P. YALE Ky
Chief of Staff
I had a good conversation with your staffer,
Harry Broadman, about the recently released
Critical Technologies Report.
I understand there may have been some
confusion regarding the review and release of
the report, and I would like to work with you
to ensure that no such problems occur in the
future. In addition, I would like to obtain
your thoughts on any future activities
involving issues raised by this report.
Attached is a copy of a draft statement we
considered releasing to assist in clarifying
the issues raised at the report's release.
Because we have not received any press
inquiries, we will probably hold off on the
release of the statement.
Please feel free to call if you have any
questions.
Thank you.
cc: Harry Broadman
EXECUTIVE OFFICE OF THE PRESIDENT
OFFICE OF SCIENCE AND TECHNOLOGY POLICY
WASHINGTON, D.C. 20506
Date: April 26, 1991
TO:
Michael Boskin
FROM: KENNETH P. YALE Ky
Chief of Staff
I had a good conversation with your staffer,
Harry Broadman, about the recently released
Critical Technologies Report.
I understand there may have been some
confusion regarding the review and release of
the report, and I would like to work with you
to ensure that no such problems occur in the
future. In addition, I would like to obtain
your thoughts on any future activities
involving issues raised by this report.
Attached is a copy of a draft statement we
considered releasing to assist in clarifying
the issues raised at the report's release.
Because we have not received any press
inquiries, we will probably hold off on the
release of the statement.
Please feel free to call if you have any
questions.
Thank you.
CC: Harry Broadman
DRAFT DRAFT DRAFT
STATEMENT BY DR. D. ALLAN BROMLEY
ON THE REPORT OF THE
NATIONAL CRITICAL TECHNOLOGIES PANEL
APRIL 26, 1991
The report of the National Critical Technologies Panel, formally
released yesterday, was mandated by Congress in the Fiscal Year
1990 Defense Authorization Act. Under the legislation, the
Director of the Office of Science and Technology Policy is
required to appoint a panel solely for the purpose of developing
the report.
I appointed Dr. William D. Phillips, the Associate Director for
Industrial Technology of the Office of Science and Technology
Policy as the panel chairman. The panel is an independent group
of public and private sector members who are responsible for
technology development and application.
The report sets forth the panel's interest in and concerns about
certain key critical technologies. The panel has expressed its
views, which will be reviewed by the Administration in its
discussions of science and technology issues. This and other
documents provide useful information that can assist in the
further development of comprehensive national technology
policies.
04/26/91
POST 02-15-91
MICHAEL SCHRAGE
WASH.
54/166
Industrial Policy by Another Name: Allan Bromley's Success as Science Adviser
8 a nuclear physicist, "spin control" was the sort
Doesn't that sound suspiciously like "industrial
voice communications today. "Ten years from now,"
Lawrence Livermore industrial council? "I would
A
of phenomenon that D. Allan Bromley explored
policy"-the anti-free-market concept that the John H.
says Bromley, "I'd like it to be widely available and
probably say no," Bromley says. "The element of time
in papers like "Enhanced E1 Deexcitations in
Sununus and Richard G. Darmans have sworn to
looked upon like the telephone network."
is why a six-month advantage can be critical."
Ra-128 and the Evolution of Reflection Symmetry at
expunge from the administration lexicon? Absolutely
This new communications infrastructure-which
Make no mistake, Allan Bromley may not have a
Moderate Spins."
not, Bromley insists, it's really "pre-competitive
has also been championed by Sen. Albert Gore Jr.
huge budget, but he has a lot of influence and an
As Bush's White House science adviser, Bromley's
generic technologies" like high-performance computer
(D-Tenn.), among others-would offer a vast array of
agenda to go with it. Bromley is "wonderful, profane,
science of spin control is less Einsteinian than
networks and new materials.
new opportunities for American businesses to share
vigorous and blunt," says Bruce Smith, a senior science
Darmanesque. In fact, Bromley-a feisty, bow-tied
Excuse me, pre-competitive generic technologies?
information with each other, thus making them more
policy scholar at the Brookings Institution who has
Yale University professor-is probably as gifted
While Bromley doesn't quite wink when he describes
competitive, Bromley hopes.
known him for over 15 years. "But he's also a shrewd
putting clever twists and spins on administration policy
such industrial pol-excuse me, generic
He feels so strongly about this that insiders indicate
and cautious guy."
initiatives as he ever was shooting ions down linear
technologies-you would swear there's a twinkle in his
he will ask the Justice Department to seek an antitrust
While Bromley is not an administration heavyweight
accelerators. He persuasively pushed for increased
eye. Just slip a controversial industrial policy initiative
waiver for the giant regional phone companies to let
like Sununu or Darman, he picks his battles carefully
federal funding of scientific research; science was one
like, say, high-definition television, into the Bromley
them participate in building these new networks. "It's
and is widely regarded as a credible team player. He
of the few big winners in the Bush budget.
Spin Vortex and it's deconstructed into tidy, fundable
extremely important to take advantage of all the
has also enjoyed some success at mobilizing resources
But, more intriguingly, he's also used his position as
bundles of generic technology.
expertise we have," says Bromley.
throughout the Office of Management and Budget and
the head of the Office of Science and Technology
"I think the HDTV initiative [which was ultimately
But given Japan's dominance in computer chips and
other executive departments.
Policy to call for government intervention in what he
torpedoed by the White House] was presented in a
other telecommunications components, wouldn't this
By any fair measure, the Bush administration and
calls "critical technologies" to boost U.S.
completely wrong fashion," says Bromley. "It should
new American network have to be assembled from
Bromley have treated science and technology seriously
competitiveness in global markets.
have been presented as a package of generic
foreign parts?
in both policy and budget circles. What's not yet clear
Practically speaking, Bromley is now the
technologies: high resolution imaging systems,
"I don't think so," asserts Bromley. "We still have
is just how far the administration is prepared to go.
highest-ranking administration official advocating both
application specific integrated circuits [i.e., custom
the leadership in hardware and software." In fact, he
Without question, Bromley's efforts at semantic
national-and nationalistic-policies to enhance
computer chips] and frontier software
technologies
wants this network to be an American effort using
engineering have gone over well thus far. Will they
America's technology leadership. He may be the
that have broad applications throughout the economy.
American companies.
continue to succeed when some of these initiatives
acience adviser to the president, but he is intensely
Instead, this was presented as a television problem."
Bromley takes much the same perspective in his
harden into reality?
involved in blending public-sector science with
As Bromley freely acknowledges, "there's a gray
efforts to open up the national labs to better
Can Bromley's brand of techno-nationalism survive
private-sector participation. Indeed, he argues that the
area" where some technologies are less generic than
collaborate with American business. "We support the
and flourish in the Bush White House? To the extent
best way to serve the president's interests is to create
others. Then again, that doesn't seem to be as
national labs, but too often they're doing things just to
that free-market ideologues dominate the White
new dimensions of public-private relationships.
important as prodding people into building new
satisfy their own curiosity," he remarks. "We need to
House, Bromley is playing a dangerous game. To the
"Competitiveness and national security aren't
technological infrastructures that can have a national
get people from industry much more involved in
extent that George Bush believes government has to
separated anymore," says Bromley, asserting that the
impact.
decisions that are now entirely internal. We want
play an increasing role-however ill-defined-in
success of America's high-tech weaponry in the
Bromley is consequently a huge supporter of
industrial collaborators to be present at the creation of
sharpening America's technical edge, Allan Bromley is
Persian Gulf has prompted a positive "sea change in
"high-performance computer networks"-a system
new ideas and directions."
now the point man. We'll know by the end of the year.
attitude" toward technology. "The two are intertwined
that would do for high-speed, graphics-rich computer
So should a Sony Corp., a Hitachi Ltd. or a Siemens
and have to be treated that way."
communication tomorrow what the telephone does for
AG be able to participate in the newly formed
Michael Schrage is a columnist for the Los Angeles Times.
WASH. POST 01-31-91
Data Network Funding May Be First
Step Toward U.S. 54 "Technology Policy'
By Evelyn Richards
Washington Post Staff Writer
The White House appeared to signal this
more in the direction of substantial in-
-
week that the administration will provide fund-
proposal for "record" federal invest-
volvement," Bromley said.
ing in its new budget for initial development of
ment in research and development.
The Commerce Department, for
a nationwide data network that would connect
In addition to high-performance
example, intends to make the first
thousands of universities and companies
computing, an apparent reference to
grants to companies-or groups of
throughout the country on a sort of superhigh-
the network and other supercomput-
companies-soon under its new Ad-
way for information.
ing research, the White House said
vanced Technology Program. Though
As envisioned, the network would allow in-
it will boost research funding for
the department had only $10 million
formation to be exchanged at the rate of
"generic" technologies, like ad-
to dispense in 1990, it received pro-
50,000 single-spaced typed pages a second-
vanced manufacturing and materials,
posals for $125 million. Congress tri-
at least 1,000 times faster than all but a few of
whose fruits can aid numerous in-
pled the funding in this year's budget.
the data networks in use today. In order to
dustries.
Similarly, the White House Office
achieve such speeds, new techniques must be
Early on, Bush's top advisers
of Science and Technology Policy,
developed for, among other things; more rap-
turned a cold shoulder to any gov-
Bromley said, may help bring compa-
idly routing information to the proper destina-
ernment support of specific technol-
nies together to jointly pursue the
tions and sorting out real data from garble.
ogy projects, contending that such
"critical technologies" that will be list-
Technology experts say a commitment to
backing would be an attempt to pick
ed in an upcoming report. The office
the data network, though relatively modest
winners and losers in industry,
also recently published "U.S. Tech-
monetarily, would be a sign that administration
something it said was better left to
nology Policy," a document that
policy is making a subtle shift toward endors-
free enterprise.
raised eyebrows more for its title
ing at least a limited government role in bol-
than its contents.
Now, observers point to cautiously
stering the nation's industrial competitiveness
worded statements by the president's
"The main significance is that it's
by directing money to key technology projects.
chief science adviser, D. Allan Brom-
an officially sanctioned word," said
Supporters of the network say the faster
ley, who has emerged as the chief
Kenneth Flamm, a Brookings Institu-
swapping of information and the use of high-
proponent of government-industry ef-
tion technology specialist. "As to
speed supercomputers would help scientists
forts aimed at helping U.S. firms com-
what's in there, there's no specifics,"
pete more effectively with large over-
said Flamm, who favors a federal pool
more efficiently solve complex problems in
seas consortia, a practice sometimes
of at least $100 million that would be
dozens of fields, including biology, weather
termed "industrial policy."
risked on new technology ventures.
forecasting and speech recognition.
Saying "there was considerable
While Flamm thinks major U.S.
With some initial government funding to
confusion as to where the Bush ad-
firms are prodding the Bush adminis-
jump-start the project, supporters say, private
companies are likely to expand the network,
ministration stood," Bromley said in a
tration into exerting a stronger hand
in pursuing specific technologies, oth-
perhaps laying fiber-optic cables that could ul-
recent interview that the White
timately carry huge amounts of data to mil-
House now is willing to foster "gener-
ers in industry remain wary of federal
involvement.
lions of businesses and homes. Government
ic, pre-competitive" technologies,
backing "will encourage the private sector
meaning technologies before they are
"By and large the Silicon Valley
to develop these communication networks so
ready to be turned into products.
guys are still saying, 'Hands off,'
they apply ultimately to every school, to every
"We have been moving more and
said Burton McMurtry, a California
venture capitalist.
home," said Rep. George Brown (D-Calif.),
chairman of the House subcommittee on sci-
ence, research and technology.
Backers are hopeful that the budget, due to
be delivered to Congress on Monday, will allot
$150 million to a supercomputing initiative,
which would include the network. That would
be in addition to about $500 million the gov-
ernment already spends annually on similar re-
search. Funding would span the National Sci-
ence Foundation, the Defense Advanced
Research Projects Agency, the Department of
Energy, the National Aeronautics and Space
Administration and other agencies.
The effort is part of what President Bush
termed in his State of the Union message his
1991 SCIENCE & TECHNOLOGY POSTURE HEARING
WITH THE DIRECTOR OF THE OFFICE OF
SCIENCE AND TECHNOLOGY POLICY
HEARING
BEFORE THE
COMMITTEE ON
SCIENCE, SPACE, AND TECHNOLOGY
U.S. HOUSE OF REPRESENTATIVES
ONE HUNDRED SECOND CONGRESS
FIRST SESSION
FEBRUARY 20, 1991
[No. 1]
Printed for the use of the
Committee on Science, Space, and Technology
U.S. GOVERNMENT PRINTING OFFICE
40-402 =
WASHINGTON : 1991
For sale by the Superintendent of Documents, Congressional Sales Office
U.S. Government Printing Office, Washington, DC 20402
19
lem that we have.
progress of the budget and there is little time to really adjust to
ver fully solve this
retain and regain the balance.
be more people re-
Let me then turn to an area in which I have particular interest;
ct to fund, and that
that is technology development. When I first came to my office, one
ation. Eighty-seven
of my first initiatives was to bring aboard a presidentially appoint-
have ever lived are
ed, Senate confirmed associate director, a very distinguished indi-
cent of the taxpay-
vidual, Dr. William Phillips, as my associate director for industrial
we must address to-
technology, and in doing so I wanted to send a message, first, that
we were going to raise the image of T in OSTP, and, secondly, that
bility of our univer-
the Bush administration meant business in terms of using our tech-
them is this whole
nology to improve our economic competitiveness and our national
ment and facilities.
security.
mands we make on
There are several initiatives in the budget that address this
new knowledge and
whole question of technology. Applied research and development in
developed countries
the Federal sphere falls into several broad categories. One is the
owledge frequently
applied R&D that is required to fulfill the missions of the various
al laboratories, na-
agencies-health, in energy, in national security, and space. An-
other is the question of generic technology, the kind of technology
t the Federal proce-
that has application very broadly across our society, where no one
pport of R&D have
institution or organization has any guarantee of getting an ade-
enterprise, and we
quate return to justify, in itself, the investment that is required to
Government on one
move that technology forward in competitive fashion, and so here
e tended, over the
the administration has made it very clear.
haps begin to erode
The President, in this past year, has spoken a number of times
the future we must
about the responsibility of the Federal Government, in working
importance of some
with our private sector and working with you in the Congress, to
main on excellence;
make sure that the results of our investment in research and devel-
IS well; and I speak
opment are exploited more effectively, more rapidly, more widely,
to the benefit of our Nation.
ortant programs. I
One of the very important areas here that I mentioned earlier,
National Science
Mr. Chairman, is that in high performance computing and commu-
ear we will expand
nications. The President has proposed a 30 percent increase in the
equest in the Con-
support of this field in recognition of the importance of not only
ure, in the Defense
making this new power available to many more people in the
really take a hard
nation but also to retaining what is still U.S. leadership in this
igned to bring geo-
very important field.
tive levels-wheth-
Another important example, of course, is in energy technology,
is well. And so im-
and at this time, in fact, Admiral Watkins and the President are
cellence; I can not
presenting the National Energy Strategy. The budget has a
number of new initiatives that are keyed to that strategy to pro-
gnize is that, when
vide alternatives to petroleum, to increase the efficiency of energy
vidual institutions
use, and to advance new technologies that can have a major impact
what they view as
on the way we produce and the way we use energy. We are suggest-
that, without sug-
ing a 34 percent increase in our investment in this work on energy-
ect and the prerog-
related technologies.
ur program in the
Another area that finally we are beginning to recognize in this
we possibly can, to
Nation is vitally important but one that was forgotten for a
ce and that merit
number of years is manufacturing. Manufacturing does matter,
and we are in the budget making provision for investment in that.
represents our best
We propose to invest over a billion dollars in fiscal year 1992.
per balance, using
About half of that supports procurement needs of Federal agencies,
that are available,
but the other half is focused specifically on the development of ge-
tend to distort this
neric technologies, technologies that will move this Nation forward
de very late in the
in areas that we perhaps can not even imagine right now, and
20
within the Department of Commerce the administration proposes a
15 percent increase for generic applied research and technology de-
velopment.
Aeronautics, another area where we have led the world but
where our leadership is in serious jeopardy, is an area of emphasis
in this budget, a proposed increase of 13 percent.
In biotechnology, which I believe in the next few decades will
play the role that the physics- and chemistry-based technologies
played in the post-World War II period, we have an exciting fron-
tier. The budget suggests a $4.1 billion allocation for that frontier.
They are designed, again, to maintain what we still have as a lead-
ership position but a leadership position that we could very easily
lose.
And, finally, let me mention an area that is not related to a par-
ticular budget initiative, and that is the research and experimenta-
tion tax credit. In recent years, you in the Congress have extended
this on an annual basis, and we are requesting this year that you
consider making it permanent, and the reason for that is clearly
that if an industry cannot plan on it being available for longer
than a single year period, the advantage that is inherent in this
legislation is not being fully realized, and so I would urge your con-
sideration of the making of that credit permanent.
If I could then-and I must apologize, Mr. Chairman, I am
taking longer than I had intended. I have very little more to say. I
would like, before finishing, though, to mention one or two other
items, with your permission.
One of the very important aspects of our work in technology and
in applied research is the way that we choose to support that re-
search and development. I am convinced that in order for us to be
effective in the Federal Government, it is vitally important that we
develop true partnerships, where we collaborate with the private
sector and with universities. There has been much talk about that
kind of partnership for as long as I can remember but not too
much action, and I believe that we have now the attention of all
sectors of the community, and, working together, I think we can
make some real changes that will move this forward.
I think that Sematech, for example, charged with developing the
manufacturing technologies that will move us into a totally new
generation of semiconductor, is one example of the kind of activity
that we in the U.S. can mount uniquely by bringing together the
know-how, the technology, and the strength of our industrial sector
to focus their attention to develop a critical mass and to compete
with the best that the world can produce anywhere.
A second example in this same area is one related to the Nation-
al Energy Strategy, and that is the new cooperative venture that
has been set up by the Department of Energy, Ford, Chrysler, Gen-
eral Motors, a number of the battery manufacturers, to move us
forward in an exciting frontier, that of electric vehicles, where we
are within a factor of 2 of truly viable units.
In general, we have the opportunity, if we grasp it, to work to-
gether with our private sector companies, to develop strengths, to
develop technologies, to use know-how that cannot be matched any-
where else on the planet. It is an opportunity to challenge, and it is
one that we can easily miss.
36
Dr. BROMLEY. Let me begin, sir, by attempting to answer the
p
question.
t.
I think we have a very important role to play because, first of
r
all, we have to recognize that we are now very firmly part of an
international marketplace and that in the major countries with
in
whom we compete the governments of those countries have forged
p
very strong links with their industrial organizations and that to-
n
gether they put federal monies, industrial monies, sometimes all
sorts of monies, into very focused, targeted programs to develop
S'
technologies that are going to be important in terms of economic
e
competitiveness, and by doing that, they share the risk, they speed
up the process, and they minimize the cost to the individual partic-
u
ipant.
u
Now if we are going to compete in that international market-
place, it seems clear to me that we, too, must enable our competing
01
companies to avoid having to reinvent the technological wheel,
e'
whatever it is, individually, in parallel, because under those cir-
O]
cumstances we simply can not compete, and so I believe that the
Federal Government has as its primary role that of a catalyst, that
p
of bringing together a critical mass of the private sector-indus-
Ir
tries, groups interested in a particular area-working with them,
V6
working with universities to develop a really coherent, sensible
01
plan to move the United States forward into a leadership position
and, where necessary, the injection of Federal funding to help this
program move forward.
CE
Now there has been tremendous confusion as to where we are in
technology policy and industrial policy, and let me try to sort that
CE
out just very briefly. On the one end of the spectrum is basic re-
CE
search. No one questions there that there is a major role for the
Federal Government, because since one can not project where the
returns come or when, no individual organization can afford to
to
make the investment necessary.
I
I would submit, sir, that the same thing is true in the generic
er
technology area, much more true now than it ever was before, and
m
that up through the whole development of the technologies until
you are ready to produce a product or a process in the market-
W
place, that we in the Federal Government have a role. I do not be-
ot
lieve that we have a role in the marketplace itself-for example, in
un
a particular industrial sector, picking a particular company for
ta
support as opposed to other companies in that sector-because,
m
frankly, I do not think that we in the administration are any
ca
smarter or nearly as smart as the people in that sector who can
50
make the decisions better than we can.
tr
Mr. VALENTINE. Thank you.
Mr. Chairman, I heard the gong. Thank you very much.
th
The CHAIRMAN. Thank you, Mr. Valentine.
1(
Mr. Rhodes, you are the next one on my list.
th
Mr. RHODES. Thank you, Mr. Chairman.
pr
I do not know about virtue having its rewards, but, clearly, being
It
early does.
hi
Dr. Bromley, I join with my colleagues in my admiration for your
re
testimony and for the administration's budget proposals on this
th
subject, and I appreciate it, and I wanted to say that at the outset
because I think I am going to take issue with you on one particular
in
04/23/91
10:59
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STATEMENT
by
William D. Phillips
Chairman, National Critical Technologies Panel
Before the Subcommittee on Defense Industry and Technology
Armed Services Committee
United States Senate
Mr. Chairman:
Thank you for giving me the opportunity to present the report of the National
Critical Technologies Panel. 1 am here today in my capacity as Chairman of the
Panel, and the views I will express represent those of the Panel. You have a copy of
the report, so I will not repeat much of the detail in it. However, I would like to
expand a little on the background, methodology, and philosophy that underlie the
final list of critical technologies set forth by the Panel. I will also briefly compare
the list with those issued by the Department of Defense, Department of Commerce,
and private sector Council on Competitiveness.
National Critical Technologies Panel
The National Critical Technologies Panel was appointed in 1990 in accordance
with the Defense Authorization Act for Fiscal Year 1990. Seven of the 13 Panel
members were from the Federal government, and the Department of Defense,
Department of Energy, Department of Commerce, and National Aeronautics and Space
Administration were specified by the Act to have representation. The remaining nine
members, three from government and six from the private sector, were appointed by
the Director, Office of Science and Technology Policy (OSTP).
2
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2023853462-
202 385 4817
impact on national security and economic prosperity. The Panel did recognize,
however, that space exploration will continue to atimulate advances in many of the
critical technologies.
We included in our Panel's report a comparison between our critical
technologies and those selected by Commerce, Defense, and the Council on
Competitiveness. As I mentioned earlier, there is general agreement among them,
allowing for slight differences in criteria, levels of aggregation, and definitions. I
think the point to be made here is that knowledgeable people confronted with this
task can generally agree on which technologies are critical. The real challenge WE
face is not generating a list but doing something about it. Also, the considerable
overlap between technologies that are critical to both national security and economic
prosperity attest to the importance and pervasiveness of these technologies in our lives
today.
Implications
The key point that the Panel wants to emphasize is that technology alone
cannot ensure national security and economic prosperity. Technology can make an
important contribution to the future of U.S. national Interests, but only if we learn to
utilize it more effectively.
The Panel believes that the U.S. science base is unmatched in the world today.
Science is the wellspring from which all technology is derived, and our broad
scientific base allows us to generate technology in abundance. Support for the basic
9
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sciences needs to be broadly based in order to maximize the yield of useful advances.
In contrast, technology development and deployment, because of the time and resource
commitments involved, require greater selectivity and concentration of resources than
is appropriate for the basic sciences.
However, in an environment of intensifying global competition, it is not enough
to come up with new ideas, or even to develop those ideas into new technologies. The
ultimate payoff comes when technologies are deployed, whether for military or
commercial purposes. In the commercial world, successful firms are not necessarily
the discoverers and developers of the latest Innovation, but those that are able to
swiftly bring the associated products to market. Those firms must also maximize
profits in order to sustain through reinvestment a continuing flow of both new and
improved products derived from research and development. Therefore, it is not the
identification of critical technologies nor even the development of those technologies
that is important; it is what we do with them that matters.
Future U.S. competitive success requires a fundamental change in the way U.S.
industry competes in the marketplace. Our research institutions and businesses must
place greater emphasis on deployment of new technologies. Furthermore, discovery,
development, and deployment must be integrated and viewed as concurrent rather
than sequential activities. As one of our Panel members expressed it: # U.S. Industry
must be infused, from the boardroom to the factory floor, with a relentless desire to
constantly improve both product and production methods."
10
04/23/91
11:03
UNB LRU/ ESGG
010
With that in mind, the Panel placed special emphasis on technologies related
to the creation of new products and on the processes to make them. It is essential In
today's competitive environment to take an Integrated approach to manufacturing
process and product design, performance, quality and cost. This integrated approach
applies both to defense as well as commercial sectors of the economy.
Finally, the Panel recognized the importance of science and mathematics
education to the nation's ability to remain a world leader in technology and
technology application. Our ability to reap the benefits of the National Critical
Technologies will depend on the generation of a technically literate workforce that
possesses the skills necessary to develop and master these and future technologies.
Where do we go from here? As I have emphasized, our focus should not be on
continuing to generate new lists, which all say about the same thing but on doing
something to improve the U.S. position. The Panel did not address implementation,
but the Critical Technology Institute which is In the process of being established
under the Fiscal Year 1991 Defense Authorization Act will be concerned primarily
with follow-up on the Panel's report. We need to have a better understanding of
overseas models in order to assess the nature of the competition. The value of
research and development consortiums needs to be assessed, and the role of Federal
Inboratories should be examined. We also need to examine regulatory barriers and
other inhibiting factors that may be hindering our ability to compete internationally.
11
014
04/23/91
11:03
UMB LRD/ESGG
In conclusion, I believe that the primary benefit of doing this study has
that emphasize not only the importance of certain technologies but to highlight been
make technology an alone cannot ensure economic prosperity and national the fact It ca
developing important contribution, but only if we learn to use It more security. in
products Innovative, high-quality, cost-competitive products and bringing effectively
attitudinal to market in a timely manner. To do so will require, above all, continuing those
changes in our approach to International economic competition.
12
from the Critical Technologies
Panel Report
Discussions of this report should de-emphasize its
"official" nature. Rather, the report should be described as one
set of opinions, called for by Congress, which the private sector
may wish to consider in making decisions on investment in
research and development. In addition, the Administration should
not embrace the assumptions of industrial policy advocates by
treating the technologies identified in this report as "winners"
and should instead make clear its continuing opposition to
picking winners and losers.
Examples of troubling passages are given below:
(page 1) "The key to U.S. competitive success involves a
fundamental change in the way U.S. industry competes in the
marketplace. U.S. research institutions and businesses must
place greater emphasis on deployment of new technologies.
Moreover, discovery, development, and deployment must be
integrated and viewed as concurrent rather than sequential
activities."
(page 17) "Such efforts [referring to activities of the Japanese
Optoelectronics Joint Research Laboratory], should they be
successful, would have a direct impact on the health of the U.S.
microelectronics and computer industries
"
(page 25) "Advanced composites therefore represent a key
technology with profound implications for the economic
prosperity
of the United States."
(page 27) "A comprehensive data base on the characteristics and
performance of Al-Li alloys is needed to overcome the reluctance
of airframe manufacturers to promote the widespread structural
application of a largely unfamiliar material. "
(page 33) "Continued competitiveness of U.S. manufacturing
equipment producers will depend not only on their own actions,
but on a "sea change" in management actions and investment
practices at U.S. manufacturing enterprises."
(page 41) "It is impossible to maintain competitive
manufacturing capabilities
without having indigenous access to
a broad range of state-of-the-art equipment."
(page 67) "High-definition imaging and display technology is
critical both because it is driving the state of the art for a
number of other critical technologies and because it has the
potential to become a major component of the electronics market
throughout the world."
3
(page 68) "The potential market for high-definition and related
products is enormous, amounting to tens of billions of dollars
for direct applications and perhaps hundreds of billions of
dollars for indirect impacts in other electronics markets. "
(page 68) "The current status of this evolution does not bode
well for the future competitiveness of the U.S. electronics
industry Continued weakness of the Untied States in
development and production of consumer electronics will become an
increasing handicap to U.S. competitiveness in the other
electronics sectors."
mgB
POLITICS & POLICY
THE THAW IN
di
rt
a'
to
WASHINGTON
SI
di
B
И
There's a truce in the conflict between business and government. The White House is mapping
C.
out a partnership that stops short of heavy-handed industrial policy.
by Edmund Faltermayer
C
F
a
H, TO BE a businessman
O
in Japan or Germany. In
those juggernauts, it's com-
monly said, government
and industry collaborate
over green tea and Rhine
wine. with results that may yet reduce
America to a hollowed-out branch-office
backwater. As for the U.S., listen to CEO
George Hatsopoulos of Thermo Electron,
which operates in all three countries: "If
anything. the U.S. government shows ani-
mosity toward industry." Or an economist
from Munich at a recent symposium in
Washington. who says he can't understand
why the American political system "hates"
corporations.
George Bush may be getting the message.
His "technology policy" unveiled last Sep-
tember. the first ever from a U.S. President,
aims to safeguard American industry's im-
periled technological lead. Washington has
traditionally poured its huge research and
development budget ($67 billion this year)
into defense. space, medicine. and basic sci-
ence. including megaprojects designed to
benefit all humanity-a superconducting
supercollider. a human genome inventory,
someday even a voyage to Mars.
Here on earth. companies in the commer-
cial sector. including those with leading-
edge technologies that generate good jobs,
were on their own. But now the Administra-
tion is willing to sprinkle a little money on
corporations and consortiums to determine
whether new technologies can be turned
into products. "In this way," the President
said recently. "we can help leverage the
R&D of the private sector, helping whole in-
The U.S. wants to nurture such technologies as
high-definition flat-panel displays. That's a 60-
inch monochrome screen at Photonics in Ohio,
which also has a 19-inch color version.
46 FORTUNE 1991
dustries advance in an increasingly competi-
technologies "essential to national defense
lawmakers played a part. So did industry-
tive global market."
as well as economic prosperity." Among
supported study groups that have raised
Can this be the same George Bush who
them: composite materials, flexible comput-
more alarms about the nation's technologi-
recoiled from anything resembling industri-
er-integrated manufacturing, and high-defi-
cal slide than a whole posse of Paul Reveres.
al policy? The same Administration that
nition electronic displays. The list is meant
Among them:
torpedoed a proposal to help revive the con-
to guide the Critical Technologies Institute,
The National Coalition for Advanced
sumer electronics industry? The same Presi-
mandated last year by Congress and direct-
Manufacturing has called for a revived in-
dent whose chief economic adviser, Michael
ed by D. Allan Bromley, assistant to the
vestment tax credit and "a major national
Boskin, used to say it makes no difference
President for science and technology and
effort" to make U.S. factories worldclass.
whether the country turns out computer
mastermind of the new Bush policy. One of
The National Advisory Committee on
chips or potato chips?
the institute's tasks, Bromley says: "To do
Semiconductors (NACS) has characterized
In words, at least, the Administration has
long-range strategic planning, working very
the problems facing U.S. chipmakers as "se-
crossed a divide. A special White House
closely with the private sector to develop
rious and growing worse." In a 1991 report
panel of experts from industry, academe,
these technologies."
it advocates federal help in creating high-
and government has just released a list of 22
What induced the change? Concerned
volume electronics markets that would lift
demand for American-made chips.
The Computer Systems Policy Project,
supported by 11 American computer mak-
ers, has urged Washington to shift its R&D
spending to "technologies with known com-
mercial relevance."
The Council on Competitiveness, a coali-
tion of CEOs, educators, and labor leaders,
has called for government-supported "pre-
competitive" research by industry, just as
the President now wants.
ASHINGTON, of course, has
W
long maintained industrial pol-
icies for agriculture and hous-
ing. It has also supported
R&D that helps commercial aviation. Heavy
spending on medical science partly accounts
for the strength of the U.S. pharmaceuticals
industry. But in other areas America's Niag-
ara of basic research, most of it freely avail-
able to the world, yields a comparative
trickle of new American products.
It can take years to prove the practical
usefulness of a discovery, such as high-tem-
perature superconductors or the ability of
light-sensitive crystals to store immense
amounts of computer data in holographic
form. U.S. corporations, goaded by Wall
Street to keep earnings on the rise, are of-
ten loath to stay the course. So are startup
companies. As a rule, unless their venture
capital backers foresee handsome returns in
a few years, nothing is ventured.
So why not put a dollop of government
money in the neglected zone between pure
research and product development? The
principle of competition would not be com-
promised, because the object would be the
development of "generic" or "enabling"
technologies useful to several companies or
industries. Rivals that normally battle for
REPORTER ASSOCIATES Rosalind Klein Berlin
and Alicia Hills Moore
PHOTOGRAPH BY MICHAEL ABRAMSON
POLITICS & POLICY
customers could collaborate peaceably un-
York, for example, cutting the molds for
That takes capital, and the country needs far
til, as the Council on Competitiveness puts
making such items as refrigerator shelves
more of it. Nothing short of a White House-
it, "technical uncertainties are sufficiently
used to take eight weeks. With the help of
led crusade to promote saving, similar to Ja-
reduced to permit preliminary assessment
experts from the government's Northeast
pan's campaign after World War II, will curb
of commercial potential." At that point,
Manufacturing Technology Center in Troy,
the nation's obsession with consumption.
each participant would design its own wid-
50 miles away, the company turned to CAD/
And what a difference capital makes. Dur-
get and come out swinging.
CAM equipment-and telescoped mold-
ing much of the Eighties, Chicago Pneumatic
That's how it has worked in Japan, where
making time to ten days. The Troy center is
Tool Co. was milked to finance an acquisi-
cooperative industrial research with govern-
one of five around the country, with more
tion spree. Then Sweden's Atlas Copco
ment support helped spark successful global
planned; meanwhile, technology-diffusion
bought the company in 1987 and gave a green
offensives in chips and computers. Europe
efforts by the states are far more extensive
light to modernization. Says Chicago Pneu-
is also on the consortium bandwagon (see
than Washington's (see box).
matic CEO Richard Besser of his overseas
table). Short of a world in which all govern-
owners: "They're enlightened enough to say,
ments agree to keep hands off civilian high-
OVERNMENT offers other
G
'If you can find the money, invest it.' Any-
tech industries-an ideal still worth pursu-
kinds of help. The Bush Admin-
thing over the dividend requirement, we
ing-the U.S. has little choice but to do
istration wants to liberalize a tax
keep." At the company's plant at Utica, New
likewise. Too many high-value-added North
credit that rewards companies
York, productivity has doubled wherever
American jobs are at stake.
for increasing their R&D. Washington as-
new equipment has been installed.
So is America's world leadership role.
sists industry export drives, and the Presi-
Hatsopoulos of Thermo Electron, who
Amid the euphoria over operation Desert
dent strongly supports the efforts of Trade
built his Massachusetts company into a
Storm, it has sunk in that most weapon in-
Representative Carla Hills to pry open
$708-million-a-year leader in environmental
novations now feed off commercial R&D,
closed markets around the globe. Approv-
instruments, heart-assist devices, and other
not vice versa. In the 15 years it took to de-
ingly, he calls her "tough as nails."
high-tech products, believes a dearth of
velop the Patriot missile, memory-chip mak-
But while government can exhort, inform,
"soft investments" is especially crippling for
ers raced through four product cycles. Says
deregulate, and pound the negotiating table,
the U.S. These investments-research
George Fisher, chairman of the Council on
only business can build competitive goods.
product development, marketing, and em-
Competitiveness and CEO of
ployee training-cannot be
Motorola: "Much of the elec-
tronics used in Gulf war weap-
MICHAEL GREENLAR
used as collateral for borrowing
and must be financed from cor-
ons is not at the leading edge of
porate equity.
di
technology today."
Since the Eighties, Hatso-
Serious implementation of
poulos notes, increased flows of
o
Bush's new policy has yet to
debt capital across borders have
start. Senator Jeff Bingaman
brought an "almost complete
h
(D-New Mexico) complains that
convergence" of real, after-tax
C
the Administration is still drag-
interest rates among countries.
di
ging its feet. Others see the seed
But international flows of equi-
p
of a sequoia-size boondoggle.
ty capital remain "insignifi-
Jeffrey Hamilton of Westford
cant," because stocks are inher-
C
Technology Ventures, a New
ently riskier than debt and
1'
Jersey venture capital firm,
equity investors prefer familiar
S
trembles at how Congress might
companies on native soil.
distort a technology policy:
The anemic U.S. savings rate
C
"They could micromanage and
is the main reason for the high
n
pork-barrel it to death."
equity costs American business
A small-scale technology pol-
faces, he contends. Just how
icy need not flout the principles
high has been estimated by
n
of the free market. A resurrect-
Robert McCauley and Steven
h
ed Adam Smith would find little
Zimmer of the New York Fed-
n
fault with the U.S. Commerce
eral Reserve Bank, in an analy-
11
Department's Malcolm Bal-
drige quality awards, which cast
More companies need productivity-
c
government in the role of cheer-
boosting equipment like this com-
n
leader and judge. Also beyond
puterized installation at Chicago
cavil are the Commerce Depart-
Pneumatic Tool in Utica, New York,
g
ment's programs that dissemi-
which performs a series of opera-
e
nate technical wisdom to any
tions on a batch of housings for
n
manufacturer that asks.
air-powered tools. It's part of a
on
At Kintz Plastics, a 90-person
$1 million machining center from
outfit in rural Howes Cave, New
Milwaukee's Kearney & Trecker.
E
48 FORTUNE 1991
sis based on adjusted price/earnings
sound like command and control," says
multiples in several countries' stock mar-
uity was more than 12% in the U.S., VS. 7%
in Germany and less than 6% in Japan.
BRAD MARKEL GAMMA/LIAISON
Bromley. In 1989 the White House shot
kets. In 1988, they calculated, the cost of eq-
down a Pentagon plan calling for military
procurement programs to help spawn a ci-
vilian high-definition TV industry.
(The gap has narrowed, but most experts
One object of the new technology policy,
say it is still substantial.)
Bromley says, is to clear up "a fair amount of
"If your competition has to make 6% or
confusion as to where the Bush Administra-
8% but you have to make 12%, can you sur-
tion really stands" in the wake of that fracas.
vive?" Hatsopoulos asks. Thermo Electron
The HDTV scheme was "unfortunately han-
has because its P/E multiple is above the
dled." he says. Had it been put forth not as "a
U.S. average. But in general, he argues, the
White House aide Allan Bromley took the Bush
specific application" called HDTV but as
high cost of equity dictates the short time
Administration down a new policy path.
several generic technologies with broad po-
horizons for which American managers
tential-high-resolution displays, special in-
have been maligned.
this ideological minefield. He has convinced
tegrated circuits, sophisticated software-
Hatsopoulos wants the savings rate to rise.
the White House that it can plunge deeper
the White House would have gone along. As
He advocates cutting taxes on long-term cap-
into supporting key technologies without in-
it turns out. all three technologies are getting
ital gains, which he regards as an extra levy
tervening in the market's selection of win-
federal support at congressional insistence.
on retained earnings that raises the cost of
ners and losers. Once companies reach the
It all sounds reasonable-a pragmatic
equity. Long-term gains are tax-free in Ger-
point of competing with products and ser-
middle course as befits a pragmatic Presi-
many and taxed only lightly in Japan. To
vices, Bromley says, customers should de-
dent. The proposed $76 billion federal R&D
avoid an immediate jolt to federal revenues,
cide the outcome.
budget for fiscal 1992 would still overwhelm-
Hatsopoulos would apply the tax cut only to
Still out of bounds is a pet notion of in-
ingly support defense, space, and medical re-
future gains on assets held at least five years
dustrial policy advocates: the use of govern-
search. The only major item related to
from the day the law passes. That's quite a
ment purchasing power to provide critical
industrial competitiveness is a $638 million
gesture from an entrepreneur who acquired
mass for new industries. "That begins to
request for research on high-performance
most of his Thermo Electron stock at 30
cents a share and saw it grow 130-fold.
RESEARCH CONSORTIUMS:
EVERYBODY'S GOT THEM
The Council on Competitiveness has a
ORGANIZATION
YEAR
BUDGET
AREAS OF INVESTIGATION
different solution to the capital problem:
FORMED
(% from gov't)
faster depreciation in "priority technol-
SEMATECH
1987
$200 million
Methods, materials, and
ogies." If any industry qualifies, it's chip-
a year
equipment for making
making equipment, the initial link in the
(50%)
advanced semiconductors
huge electronic industry's productive "food
NATIONAL CENTER FOR
1986
$80 million
U.S.
Improved machine tools,
chain." With the rise of Japan's semicon-
MANUFACTURING SCIENCES
a year
software, better machining
ductor industry, says G. Dan Hutcheson,
(NCMS)
(35%)
methods, new materials
president of VLSI Research in Silicon Val-
MICROELECTRONICS &
1983
$60 million
Advanced computing, software,
ley, the U.S. share of the world market for
COMPUTER TECHNOLOGY
a year
computer-aided design,
chipmaking gear has fallen from 61% in
CORP. (MCC)
(10%-15%)
semiconductor packaging
1985 to 45% in 1990. Michael Ciesinski of
ADVANCED TELEPHONY
1986
$70 million
Hardware and software for
SEMI, the chipmaking equipment and ma-
PROJECT
a year
telephones capable of
terials trade association, adds that some
(70%)
translating languages
companies with heavy R&D and expansion
JAPAN
SYNCHROTRON ORBITAL
1986
$15 million
X-ray lithography for advanced
needs "are in desperate need of capital."
RADIATION TECHNOLOGY
a year
semiconductors; includes devel-
Bromley and other influential members of
CENTER (SORTEC)
(70%)
opment of small atom smasher
the Administration are sympathetic to the
OPTOELECTRONICS
1986
$7.5 million
Optoelectronic parallel processor,
notion of faster write-offs, but the proposal
TECHNOLOGY RESEARCH
a year
ten-gigabit-per-second switch
highlights a major dilemma for the Bush Ad-
CORP. (OTRC)
(70%)
for communications networks
ministration. By shrinking the federal deficit,
EUR. STRATEGIC PROGRAM
1987
$4.2 billion
More than 400 projects in infor-
it can free up capital for all business. But that
FOR R&D IN INFORMATION
through 1992
mation technologies, microelec-
will take time. "If you wait until the cost of
TECHNOLOGY (ESPRIT II)
(50%)
tronics, computer-integrated mfg.
capital goes down for the whole nation, you
may wait forever," says CEO John Young of
EUROPE
R&D IN ADVANCED
1987
$1.6 billion
Integrated broad-band
COMMUNICATIONS IN
through 1992
telecommunications network
Hewlett-Packard. A selective tax policy that
EUROPE (RACE)
(under 50%)
FORTUNE TABLE SOURCES: IEEE SPECTRUM. EUROPEAN COMMUNITY
grants faster depreciation to, say, a half-doz-
EUROPEAN RESEARCH
1985
$8 billion
Encompasses 370 industrial
en critical industries would limit the govern-
COOPERATION AGENCY
committed
technology projects, including
ment's cost. But that puts Washington in the
(EUREKA)
(30%)
a chip initiative called Jessi
game of favoring some sectors over others.
Throughout the industrialized world, governments are banding together with corporations to develop
In formulating the new technology policy,
commercially promising advanced technologies. In this sampler of consortiums, the heaviest spender
Bromley found an elegant way to traverse
is Europe, which is using them to play high-technology catch-up with the United States and Japan.
THE NEW AMERICAN CENTURY / 1991 FORTUNE 49
POLITICS & POLICY
computing and a fiber-optic network
that could become tomorrow's infor-
JOHN ABBOTT
of Stamford, Connecticut, "compa-
sa
mation superhighway.
nies don't have fat, healthy profit mar-
pu
Ian Ross, president of Bell Labs
gins to plow back into R&D." All the
th
and chairman of NACS, complains
more remarkable, then, that one par-
m.
that industrial competitiveness re-
ticipant is a thriving toolmaker that
wl
mains an "orphan" in the budget. But
would seem to have the least to gain
ah
huge shifts in federal R&D spending
from joint research.
may not be necessary. Since 1984,
Giddings & Lewis of Fond du Lac,
when Congress relaxed antitrust laws,
Wisconsin, spent 10% of sales on
rival companies in the same industry
R&D last year. "We're a light-year
have felt freer to band together for
ahead of Germany" in software for
precompetitive research. Often the
flexible manufacturing systems and
fa-
economics are so compelling that no
production cells, and "two light-years
CO
government help is needed. When it
ahead of Japan," declares CEO Bill
an
is, Washington wisely insists in most
Fife. So why NCMS? Says Jim Simon,
of
The best thing government can do, says Hatsopoulos of Thermo
cases that industry put up at least half
Giddings's vice president for engineer-
Electron, is spur saving and cut the tax on long-term gains.
the money. Japan's Ministry of Inter-
ing who attends the consortium's
SO
national Trade and Industry no longer doles
meetings: "We can't by ourselves keep
eq
Corporations that have chosen to partici-
out large sums for industrial research. Says
pace with everything."
eq
pate are betting that three important
Motorola's Fisher on Japan: "Government-
Founded in 1986, the consortium gets
Sc
government-supported consortiums-for
sponsored consortiums don't so much do
more than a third of its $80 million annual
W(
manufacturing, microelectronics, and chip-
the research as spell out the direction."
budget from the Air Force and parcels out
an
making-can be made to pay off.
Bromley has big hopes for consortiums in
all its research money to outside contrac-
bc
The 120 members of the National Center
the U.S. Their members, he says, don't have
tors. President Edward Miller expects the
eq
for Manufacturing Sciences (NCMS), in
budget to ramp up to $500 million in the
W
to waste time and money by separately "re-
Ann Arbor, Michigan, range in size from
inventing the technological wheel." But pit-
next five years. NCMS has already achieved
th
General Motors to family-owned firms.
falls exist. In individualistic America, will
some real breakthroughs, including a meth-
m.
Many projects are in machine tools where, in
companies share knowledge or withhold it?
od for hardening cutting tools by coating
ba
the words of consultant William Copeland
them with diamond film.
ab
NEW ASSISTANCE FROM THE STATES
HE MICROELECTRONICS &
do
States have long been notorious
T
Computer Technology Corp. in
ty
Austin, Texas, was founded in 1983
th
Any Georgia company can get up to
for the zero-sum game called
partly as an answer to Japan's
m
five days of free manufacturing advice
smokestack chasing, in which they
fifth-generation computer project. The $60-
A
from any of 12 regional offices operat-
million-a-year organization has 57 partici-
TI
compete for factories by offering tax
ed by Georgia Tech, a state school.
breaks and facilities. But the recession
pants, which can pick and choose among 34
an
Steris Corp. of Painesville, Ohio,
of 1982 brought something new: pro-
projects; federal research contracts account
or
was born in 1987 after inventor Ray-
grams that boost the competitiveness
for about 10% to 15% of the budget.
bit
mond Kralovic won a state grant to
of companies already on the scene and
Nothing huge has come out of MCC. But
work with Case Western Reserve Uni-
hatch new ones.
members are pleased with some lesser de-
in:
versity in nearby Cleveland. He had an
Such efforts accounted for a sizable
velopments already incorporated into com-
idea for quick sterilization of the deli-
puter-aided design programs, artificial
intelligence systems, and "packaging" of
example, 3M developed an improved meth-
89
CI
chunk of the $550 million states spent
th
cate instruments used in new types of
on technology development in 1988.
TI
endoscopic surgery. Conventional ster-
Companies generally pay at least half
semiconductors. By working with MCC, for
ilization took hours and required toxic
pa
the cost of participating in the pro-
no
gases. The Steris process does the job
grams, which provide a variety of ser-
od of "tape-automated bonding" for joining
no
in 20 minutes using a proprietary
vices: information about new manufac-
semiconductors to surrounding circuitry.
co
chemical solution. The development
turing technology, links to university
The most promising news about MCC is
CC
money came from Ohio's Thomas Edi-
experts, "incubators" that offer re-
its new boss, Craig Fields, a whiz who for-
te
son Program, which operates eight
duced-cost factory and office space,
merly ran the Defense Advanced Research
ic
technology centers around the state.
and even seed money.
Projects Agency (Darpa). "I want MCC to
tie
The U.S. Commerce Department
Pennsylvania's Ben Franklin Part-
be the best there is," says Fields, who talks
to
runs a clearinghouse on state pro-
nership, which operates four industry-
at jet-plane speed. He prefers to undertake
grams (202-377-8100). To learn about
university research consortiums, has
projects for their business impact rather
an
those in your state, you can also con-
created 765 new companies and
than their technólogical effect. Some should
ru
sult its department of commerce or of-
helped 909 others expand since 1983.
be planned for "shorter time-bites," he says,
fice of economic development.
because member companies' plans often
Co
change. And instead of always trying to win
te
by a mile with big breakthroughs, Fields
COI
50 FORTUNE 1991 / THE NEW AMERICAN CENTURY
says, MCC should "try to win by an inch,
up. Only niche companies survive. though
distribute $36 million next year. Any good
putting priority on process improvements
they boast some superior techniques that
idea the applicants come up with has a
that can get you that inch ahead in time to
could yet be incorporated into tomorrow's
chance, says NIST director John Lyons: "We
market, that inch ahead in price and quality,
big-screen TV sets. Photonics Imaging. a
let them set the agenda.
which lead to much more than an inch
member of a consortium receiving an ATP
Sad. but true: Distrust of Japan is one of
ahead in market share."
grant, sells big, high-resolution monochro-
the forces driving U.S. business and govern-
matic screens using gas plasma technology
ment together. A rational reason for closer
ASHINGTON, through Dar-
W
to the armed services in the U.S., Britain.
ties. says George Heilmeier, head of Bell-
pa, contributes $100 million a
Germany, and Japan.
core research labs, is to make sure U.S. com-
year to Sematech, a consor-
The ATP grant of $1.35 million to the
panies are not dependent on overseas
tium of semiconductor manu-
consortium looks puny. Says Robert Costel-
competitors for critical components.
facturers in Austin. Its 14 member
lo, a former Defense Department official
This doesn't mean the U.S. should sur-
companies match the grant dollar for dollar
now at the Hudson Institute in Indianapolis,
round itself with a technological fence.
and lend talent. Robert Galvin, former chief
who has visited Hitachi, a big Japanese sup-
Global tie-ups by business are an unstop-
of Motorola, recently became chairman.
plier of displays: "They spend far more for
pable trend. Bromley says that at some
One objective of the four-year-old con-
R&D in flat-panel displays in that one com-
point the U.S. might want to share with
sortium is to shore up the chipmaking
pany than the whole ATP program."
other countries what's coming out of con-
equipment industry. CEO James Morgan of
Because of a cascade effect from industry
sortiums like Sematech. But he adds that in
equipment maker Applied Materials says
matching and follow-up grants. the ATP's
return, "we must be much more aggressive
Sematech "has developed a much better
initial $9 million will trigger $100 million of
in seeing that we get something of compa-
working relationship between customers
research, and the program will grow. The
rable benefit." That sounds like a nation
and suppliers." Several consortium mem-
National Institute of Standards and Tech-
looking to its own interests-something Ja-
bers have placed big orders with American
nology (NIST), which administers it. will
pan has done for years.
equipment makers, and Sematech CEO
William Spencer, formerly at Xerox, asserts
MILNER
that without the consortium U.S. chip-
makers "would have lost their equipment
base."
Sematech's other goal is to develop reli-
able methods for making the world's most
densely printed chips, thereby reaching pari-
ty with Japan. Spencer says he's confident
the consortium can meet its target of 0.35-
micron line widths by 1993, using made-in-
America equipment at each critical step.
That would allow members to manufacture
an aspirin-size chip with a 64-megabit mem-
ory, an enormous jump from the one-mega-
bit chips that are the standard today.
These consortiums are trying to put exist-
ing U.S. industries out front. Could judi-
ciously awarded government grants lead to
the creation of entirely new industries?
That's one of the aims of the Commerce De-
partment's closely watched Advanced Tech-
nology Program (ATP), which recently an-
nounced its first $9 million in grants to 11
consortiums, joint ventures, and individual
companies. Among the precompetitive
technologies to be supported are holograph-
ic memory systems, a handwriting-recogni-
tion system for computers, and better ways
to make flat-panel displays.
These displays, used in laptop computers,
are another U.S. technology that Japan has
run with after giant American players gave
Consortium research bears fruit in Texas: MCC's
technique for automatically mating microchips to
connecting circuits on a filmlike backing.
THE NEW AMERICAN CENTURY / 1991 FORTUNE 51
OFFICE OF SCIENCE AND TECHNOLOGY POLICY
SUMMARY OF COMMENTS ON "SCOPE DOCUMENT"
On July 31, 1990, the Office of Science and Technology Policy published for comment
in the Federal Register, a document entitled, "Principles for Federal Oversight of
Biotechnology: Planned Introduction Into the Environment of Organisms with
Modified Hereditary Traits," (55 FR 31118). Forty letters of comment were received
by the October 1, 1990 deadline; another four letters were received past this date.
The following is a brief summary of these comments.
OVERVIEW
General response to the "Scope Document" was positive--the Administration's effort
to define a common basis for regulation of planned introductions was applauded.
There was strong support for the principles outlined in the body of the document
which emphasized a risk-based approach to regulation.
The majority of criticisms focused on the "Examples of Potential Exclusion
Categories" while other comments related to ensuring implementation of the
principles through the regulatory process. Particular words or phrases were cited
as vague or otherwise problematic.
SPECIFIC ISSUES
Risk-based Approach
Thirty-two letters specifically noted the wisdom of a risk-based approach,
particularly if the level of oversight is commensurate with the degree of potential
risk.
The "Criteria for Evaluating Risk" were deemed adequate and appropriate in that
they focused on characteristics of the organism and the environment into which it
is being released, rather than on the process by which the organism is produced.
Several respondents stated that there is a sufficient body of scientific experience to
support risk evaluation as a means for determining need for oversight.
Examples of Potential Exclusion Categories
Several respondents supported the principle of categories of introductions that
could be excluded from oversight as a move away from case-by-case regulatory
review.
The most frequent objection to the exclusion categories (10 letters) was that
categories 1-5 were process-based, in contradiction with the principles contained in
the body of the document. Thus, several respondents proposed deleting the
Scope Comments - Page 2
"Examples of Potential Exclusion Categories."
At least 3 commenters were opposed to any regulatory scheme that did not include
all of the exclusion categories on the premise that current regulatory
inconsistencies and confusion would be retained otherwise.
Others (5) suggested retaining category 6 as the cornerstone for policy on
exemptions.
It was pointed out that many organisms produced using methods described in
categories 1-5 would be subsumed under category 6 if the resulting product posed
greater risk to the target environment than the parental organism.
Evidence was offered that organisms produced via methods proposed for possible
exclusion may still pose health or environmental hazards and, thus, should not be
exempted.
One commenter felt that category 2 should be modified to cover only those
exchanges "known to occur in nature" and another suggested adding viruses.
There was a proposal to add "organisms resulting from mutagenesis by
transposable elements" to category 5.
A new category was proposed comprised of organisms developed using recombinant
techniques (such as PCR, in vitro mutagenesis, homologous recombination, or other
self-cloning methods) which result in phenotypes identical to those obtainable
through traditional techniques.
One letter suggested adding three organisms to the exempt list indicating interest
in a process similar to that used by NIH whereby conditions under which certain
experiments may be performed are considered by petition to the Recombinant DNA
Advisory Committee.
Implementation
A recurring theme was the need for consistent implementation across agencies. It
was suggested that OSTP remain visible and involved in order to ensure
interagency consistency.
Three letters noted the past delays in proposing agency regulations and encouraged
rapid implementation of the "Scope Document."
Four commenters predicted that it would be difficult or impossible to implement
this scheme because it was not clear who was responsible for determining the need
for oversight.
Scope Comments - Page 3
IBCs were proposed as a venue for preliminary determination of risk and need for
further oversight.
It was suggested (2) that notification be deleted from the description of oversight
methods in order to allow for categories of exemption from other, more
burdensome forms of oversight.
Several respondents stated that a system of licenses or permits was not
appropriate for research activities.
Definitions
The most problematic word was "similar" when used to describe the situation in
which "the level of risk of an introduction is the same as or less than a previous
safe introduction." Suggested alternative language in 3 letters was "comparable to
or less than."
Two letters questioned the adoption of the term "modified hereditary traits" as
opposed to "genetically modified organisms," which implies that modified traits are
heritable, regardless of how the modification was achieved.
There was a question as to whether or not contained field tests would be included
under "planned introductions into the environment."
Additional Issues
Four respondents proposed alternate schemes, three of which involved the
development of lists of exempt organisms or introductions. Suggested criteria for
inclusion on such a list were "familiarity" or inclusion on the list currently
maintained by CDC and NIH.
OSTP was reminded that this document will play an important role in
international negotiations and product export.
INNOVATION MICHAEL SCHRAGE
Meaningless Lists of 'Critical' Technologies
L. A. Times
D
rawing inspiration from both Santa
cal to the national needs that have been
surrounding America's massive public and
Claus and People magazine, the
identified." These included software, bio-
private investments in technology. Your
champions of competitiveness are
technology. pollution minimization and re-
tax dollars at work. (Calls to the chairman
making up lists and checking them twice.
mediation, high-definition imaging and
of the White House panel were not re-
These hsts-generated with much fan-
displays, ceramics, composites and several
turned.)
fare by the good folks at the White House
other obvious candidates.
By the way, don't think that it's simply a
Office of Science and Technology Policy,
May 9, 1991
Come on! This IS techno-pablum being
happy coincidence that federal funding for
the Commerce Department and the indus-
served up as meaningful analysis. Saying
most of these "critical technologies" just
try-based Council on Competitiveness.
that "software" is a critical technology is
happens to have been increased. These lists
among others-are intended to show which
precisely like saying that physics IS a
aren't just obvious; they're also politically
technologies are naughty and nice. In other
critical science. It's true, but SO what? Does
correct. There's nothing challenging.
words, what are the 25 Most Intriguing
listing software-or biotechnology or com-
counter-intuitive or provocative about
l'echnologies? Where is the United States
posites-as a critical technology give one
them.
thead and Japan behind? What is the
any sense of how to prioritize research in
Sexiest Technology Alive? Inquiring minds
"I don't think these lists have any
the area? Does it offer any insights into the
want to know.
intrinsic merit at all," asserts Michael Odza,
commercialization process? Does it send
They'll find no titillating technologies
a technology transfer consultant and pub-
any kind of meaningful message to the
here. The National Critical Technologies
lisher of the Berkeley-based Technology
investment community about how resourc-
Panel (mandated by Congress and appoint-
Access Report. "They don't seem to change
es should be best allocated?
it by White House Science Adviser D.
people's thinking in any way."
Of course not. What we have here is
Alan Bromley). for example, selected no
"In general. lists force people to give at
"information" that adds virtually nothing
fewer than 22 technologies "deemed criti-
least some level of priority," says Robert
to the debate over the critical issues
Costello, an undersecretary of de-
ing up with a list has no value.
fense in the Reagan Administra-
Instead of coming up with a list,
tion who championed using Penta-
you need a strategic plan."
gon procurement polices as a prod
Plans don't begin with lists of
to industrial competitiveness. "But.
"critical" technologies. says Se.
if you don't explicitly link them to
kora; they begin with an objec-
MJB-
an action agenda, they're pretty
tive "and then you figure out how
marginal."
you're going to effectively utilize
These lists are as marginal as
worldwide technology to achieve
they come. If you wanted to write
that objective."
something important. you wouldn't
It's at that point that you begin
FYI
make a list of the nouns, verbs and
to make the hard decisions about
adjectives you planned to use;
what technologies should be inter-
-HGB
you'd figure out what you really
nally developed. externally ac-
wanted to say. The problem here is
quired or jointly created with part-
that people are focusing on the
ners. Competitiveness comes from
technologies rather than on the
the ability to cost-effectively bal-
economic, industrial. governmental
and scientific processes that create
ance paths. these different technology
them.
Needless to say, the various
America isn't the undisputed
global leader in software because
critical technologies lists barely
touch the issue of cost-effective-
the Defense Advanced Research
ness. What price is America pre-
Projects Agency, IBM and Micro-
pared to pay to be "competitive" in
soft sat around in their respective
new materials and biotechnology?
offices coming up with lists of
Will this price be borne by taxpay-
critical systems software and ap-
ers? Or will innovative govern-
plications to develop. This country
ment policies put industry in a
dominates the field because it
position to cost-effectively com.
evolved the appropriate infra.
pete in global high-tech markets
structures of hardware. capital,
by better leveraging existing re-
academic research and entrepre-
sources?
neurs that stimulate state-of-the-
art innovations.
There's no way to know the
Technology isn't a product. It's a
answers to those questions because
process-but you'd never know it
they aren't being asked. Instead of
from scanning these lists.
thought-provoking ideas, we're
"We never make up lists," says
getting laundry lists of technologi-
Michael C. Sekora. who once ran
cal cliches. That's hardly shocking.
the Pentagon's Project Socrates
But cliches do nothing to boost
technology planning support soft-
either our awareness or competi-
ware and is now providing support
tiveness. The real debate isn't
to American technology firms as
about which technologies are eco-
president of Florida-based Tech-
nomically important: it's about how
nology Strategic Planning. "Com-
best to manage those technologies
to boost the quality of national life.
EXECUTIVE OFFICE OF THE PRESIDENT
OFFICE OF SCIENCE AND TECHNOLOGY POLICY
WASHINGTON, D.C. 20506
Date: April 26, 1991
TO:
Michael Boskin
FROM: KENNETH Chief of Staff P. YALE Ky
I had a good conversation with your staffer,
Harry Broadman, about the recently released
Critical Technologies Report.
I understand there may have been some
confusion regarding the review and release of
the report, and I would like to work with you
to ensure that no such problems occur in the
future. In addition, I would like to obtain
your thoughts on any future activities
involving issues raised by this report.
Attached is a copy of a draft statement we
considered releasing to assist in clarifying
the issues raised at the report's release.
Because we have not received any press
inquiries, we will probably hold off on the
release of the statement.
questions. Please feel free to call if you have any
Thank you.
TO:
CC: Harry Broadman
FIZE
Documents originally attached
to following page.
DRAFT DRAFT DRAFT
STATEMENT BY DR. D. ALLAN BROMLEY
ON THE REPORT OF THE
NATIONAL CRITICAL TECHNOLOGIES PANEL
APRIL 26, 1991
The report of the National Critical Technologies Panel, formally
released yesterday, was mandated by Congress in the Fiscal Year
1990 Defense Authorization Act. Under the legislation, the
Director of the Office of Science and Technology Policy is
required to appoint a panel solely for the purpose of developing
the report.
I appointed Dr. William D. Phillips, the Associate Director for
Industrial Technology of the Office of Science and Technology
Policy as the panel chairman. The panel is an independent group
of public and private sector members who are responsible for
technology development and application.
The report sets forth the panel's interest in and concerns about
certain key critical technologies. The panel has expressed its
views, which will be reviewed by the Administration in its
discussions of science and technology issues. This and other
documents provide useful information that can assist in the
further development of comprehensive national technology
policies.
04/26/91
SENT BY:Xerox Telecopier 7021 ; 3-15-91 ; 17:44 ;
2023953261-
2023956947:# 1
EXECUTIVE OFFICE OF THE PRESIDENT
OFFICE OF SCIENCE AND TECHNOLOGY POLIC
WASHINGTON, D.C. 20506
DATE: 3/15/91
TO:
Michael J. Boskin
ADDRESS:
CEA
Telephone Number:
5042
Fax Number:
6947
FROM:
Allan Bromley
Telephone Number:
7396
Fax Number: (202) 395-3719
Number of Pages (including cover sheet):
2
SPECIAL INSTRUCTIONS:
SENT BY:Xerox Telecopier 7021 ; 3-15-91 ; 17:45 ;
2023953261-
2023956947;# 2
EXECUTIVE OFFICE OF THE PRESIDENT
OFFICE OF SCIENCE AND TECHNOLOGY POLICY
WASHINGTON, D.C. 20506
March 14, 1991
MEMORANDUM FOR DISTRIBUTION
Dran
Bromley
FROM:
D. ALLAN BROMLEY, DIRECTOR
SUBJECT:
APPOINTMENT OF DR. PIERRE PERROLLE AS
ASSISTANT DIRECTOR
It gives me great pleasure to inform you of my appointment of Dr. Pierre Perrolle
as Assistant Director of the Office of Science and Technology Policy (OSTP). He serves
in our Division of Policy and International Affairs, headed by OSTP Associate Director,
Dr. J. Thomas Ratchford. Dr. Perrolle's primary responsibility will be for the social
from the social sciences are included in and brought to bear on the formulation of
sciences. His mandate is to help ensure that appropriate persepectives and expertise
national science and technology policy, and to assist in the coordination of social science
research across the Federal agencies.
Dr. Perrolle, a political scientist with special area expertise on China, has a
distinguished record of Government service. He is a member of the Senior Executive
Service and has held positions in the National Science Foundation's Division of
International Programs since 1980. Dr. Perrolle has also served in the Senior Foreign
Beijing (1986-88). In the late 1970's he was on the senior staff of the Committee on
Service as Counselor for Scientific and Technological Affairs at the U.S. Embassy in
of Sciences. Prior to coming to Washington, Dr. Perrolle was on the faculty of Wheaton
Scholarly Communication with The People's Republic of China at the National Academy
College in Massachusetts. He holds undergraduate and doctoral degrees in political
science from MIT and Brown University, respectively.
interagency coordination efforts and help ensure that the current and potential
I am confident that in his new position at OSTP Dr. Perrolle will both catalyze
I know that you share with me support for these efforts.
contributions of social science research are appropriately considered in the policy process.
Documentoriginally attached to following page.
Cerculate to John + Dock +
/ to me al memotion
Sin alan
EXECUTIVE OFFICE OF THE PRESIDENT
OSTP
OFFICE OF SCIENCE AND TECHNOLOGY POLICY
WASHINGTON, D.C. 20506
March 21, 1990
MEMORANDUM FOR MICHAEL BOSKIN
FROM:
James B. Wyngaarden, M.D.
Associate Director for Life Sciences
SUBJECT:
Comments on Remarks by Mr. Robert Swanson, Chairman
of the Board, Genentech
I was pleased that you were able to attend Bob Swanson's
presentation on March 20, and I was interested in your comments
highlighting Administration efforts that he had not had time to
mention. One point you cited was the Administration's proposal to
double the NSF budget in five years, which incidentally I strongly
support. I was not sure whether that remark was intended to relate
to the support of biotechnology research, or to science in general.
But I thought I should mention that it is really NIH's sponsored
research that has both created the biotech industry and nourished
it.
The biotechnology industry is essentially a spin-off of NIH-
sponsored research in genetics and immunology. About 80 percent of
current federally supported research that relates to biotechnology
and its science base is conducted through the NIH (Exhibit 1). The
total basic science budget of the NIH is the largest of non-defense
departments or agencies (Exhibit 2), yet in the Administrations'
commitment to expanding basic science research, the NIH budget has
not participated in parallel with most other science Departments.
In fact if one subtracts out the AIDS and Human Genome initiatives
at NIH, the request for the rest of the NIH increases only 3.7
percent this year. It is within that 3.7 percent increase that the
bulk of the research relating to biotechnology is to be found.
2
I would hope that the same emphasis would be put on the life
sciences as on the physical sciences, and that the Administration
would propose the same order of increase for the basic NIH budget
over the next five years that it has publicly requested for the
budget of the NSF. Progress in the health sciences and preserva-
tion of our competitive position in biotechnology would be enhanced
by such a development.
Attachments
cc: Mr. Richard Darman, OMB
EXHIBIT 1
TABLE 2
Federal Support for
Biotechnology Research,
1989-1991
(current dollars in thousands)
Agency
FY 1989 FY 1990 FY 1991
National Institutes of Health
2,660
2,741
2,862
Alcohol, Drug Abuse, and Mental
Health Administration
107
141
183
Department of Defense
129
122.6
126.6
National Science Foundation
119.5
124.5
129.5
Department of Agriculture
96.7
100.7
125
Department of Energy
80.1
92.5
115.3
Others
9.2
41.7
37.5
TOTAL
3,201.5
3,364.0
3,578.9
EXHIBIT 2
Page 2 (GH - WASFAX 3/21/90)
PRESIDENT REQUESTS INCREASES FOR
BASIC RESEARCH IN FY 91
The Administration has requested increases in basic research spending
for FY 91. Below is a chart of the President's request compared to FY
90 amounts. (Figures are in billions.)
(Note: the definition of basic research can vary dramatically from
agency to agency and even within agency departments.)
FY 90
President's
request
National Institutes of Health
4.256
4.499
57%
National Science Foundation
1.651
12.2
1.853
Department of Energy
1.750
108
1.939
NASA
1.462
1.823
24.7
Department of Agriculture
.511
.553
82
Environmental Protection Agency
.104
.136
30.7
Department of Commerce
.029
.030
34
NAS ANNOUNCES 1990 OUTSTANDING
CONTRIBUTIONS TO SCIENCE AWARD WINNERS
The National Academy of Science (NAS) has announced the winners of it
1990 awards for outstanding contributions to science.
Among the winners are Stanford professor Peter Sturrock, who will
receive the Arctowski Medal and $15,000 for increasing our
understanding of solar magnetic activity, especially the origin and
effects of solar flares. The Memorial Lecture prize of $7500 will go
to Klaus Hasselmann, director of the Max Planck Institute for
Meteorology, for quantifying ocean waves through satellite
observations and for his pioneering work in ocean modelling.
NAS's $15,000 Award for Initiative in Research will be split between
MIT professor James Fujimoto and Wayne Knox of AT&T Bell Laboratories
for their work in femtosecond quantum electronics and for developing
subpicosecond laser applications.
The awards will be presented April 23 at NAS's 127th annual meeting.
Compiled and Published by
WASHINGTON FAX: AN INFORMATION SERVICE
Publisher & Editor: Bradie Metheny Managing Editor: Kar Lesko
Copy & Makeup Editor: David Sullivan Staff Writers: Jim Monahan,
Cindy Mosher and Joanne Bedard Marketing and Sales: Darby Lytle
Phone: 508-999-6097 Fax: 508-994-9366
CC; J.L.
RS
THE WHITE house
WASHINGTON
OSTP
July20 40
Mano to Michael Boskin
Ham: Anau Bromley
Re : Response gthe Semiconductor
headers.
Herearth capus (3) often letter
repart thature dumind atom
recont mecting. Please fu that
Richar a and John get theirs.
time tometenth meand my
Agacu my thanks for taking
penior palliagues. Mr should
domare John!
But reg ar is
AT&T
JUN 13 1990
Bell Laboratories
lan M. Ross
J. R. JUNKINS
Crawfords Corner Road
President
Holmcel NJ 07733
201 349-3242
June 6. 1990
The Honorable John H. Sununu
Chief of Staff
The White House
1500 Pennsylvania Avenue
Washington, DC 20500
Dear John:
When members of the National Advisory Comminee on Semiconductors (NACS) met with you
and Dick Darman. Michael Boskin, and Roger Porter on March 20, we agreed to assess the
various proposals of the administration affecting capital formation and elaborate on some of our
key electronic industry strategies. Attsched are three studies: a brief summary of each is given
here.
Capital Formation
The Administration has proposed several programs to help improve capital formation in U.S.
Industry, including lowering the tax rate on capital gains, making the R&D tax cut permanent and
increasing incentives for personal savings. increased Investment is important to all American
industry, but particularly for the capital intensive semiconductor industry. In the past five years.
the Japanese industry has spent $12 billion more on capital equipment and R&D than the U.S.
merchant semiconductor industry. This under-investment by the domestic industry, relative to the
global competition, has been 1 key reason for the loss of U.S. market share described in the
NACS Annual Report.
NACS has studied the effects of the Administration proposals on the semiconductor industry and
finds that although their effects would be significant, they would not be enough to reverse the
projected condnuing loss in U.S. semiconductor market share. But. & further change in tax
policy. to allow faster depreciation of capital equipment, could have a major effect on capital
spending and could substantially narrow the difference in investment rates between the U.S. and
Japan. NACS estimates the cost to the Treasury in 1991 of reducing depreciation schedules on
semiconductor processing equipment from five to three years is $180 million. and would result in
an additional $450 million in new capital spending by U.S. merchant and captive producers (an
increase of 11 percent). Detailed estimates of the effect on capital investment and research and
development spending expected from each proposal are shown in the summary attached to this
letter. The full report will be available in about two months.
Broadband Information Services
The acceleration of Broadband ISDN and fiber to the end user would be an important stimulant to
the electronics Industry and the nation's information services infrastructure. The U.S.
Government can take various actions, which are described In some detail in the attachment, that
would be very helpful. For instance. NACS believes that the U.S.G should declare that 2
202 AEISHONI I J - NY 08:44 ce
N
nationwide Broadband information services network is a national goal. Such 1 goal would still
allow the hardware/service vendor to choose the media (copper, coax, fiber) best suited to the
application. Also, the U.S.G should use its considerable procurement leverage. and R&D
funding, to encourage the widespread utilization of Broadbend hardware and services. In
addition, the National Research and Education Network (NREN). now addressing supercomputer
networking. should develop long-term plans to move towards Broadband ISDN and this R&E
network should be expanded into many colleges and high schools with the purpose of raising the
quality of college/high school science and mathematics instruction.
Broadband services are an Important infrastructural element in the global race to remain
competitive. NACS believes that this area is a near ideal place for the government to take a
leadership role, and at very little COSL The attached study of critical factors affecting Broadband
ISDN and fiber deployment is a statement of the issues, which are complex. We've identified the
various bottlenecks that are restraining forward movement in this area We believe that we have
gone about as far as we can without some help regarding the practicality of our suggested actions.
Working with someone in your office, on these matters, would be helpful.
Semiconductor Materials and Equipment Industry
The health and moustness of this industry remains crucial to the long-term viability of U.S.-based
sillcon chip and electronics equipment manufacturing. NACS believes that this Industry needs
very urgent attention, as the industry trends show further weakening. NACS has now done &
more detailed study (the full report will also be available in about two months) of these trends,
and we are including 3 summary of the full 1990 report which is aimed at providing a more
thorough analysis of this industry. We have also proposed a set of recommendations that. if
implemented, would help to correct the disturbing downward slide of this Industry. The NACS
report of November 1989 recommended that an additional $100M dollars ($50M from
government and $50M matched from industry) be channelled to SEMATECH. These funds were
to be spent on various high-priority materials and equipment programs. I an attaching a lener
from R. Noyce, CEO of SEMATECH, to John Annstrong of IBM, the technology subgroup
chairman for NACS. This letter provides a list of programs that needs extra funds. NACS
believes that SEMATECH Is an important element of an overall national semiconductor strategy.
and that these additional funds are critical to assure that our materials/equipment program
underway at SEMATECH continues to have 3 high likelihood of success.
Since these various recommended actions are both broad-ranging and yet detailed, you may find it
destrable to Identify someone in your office to work with us. Such an assignment would help to
move events siong more quickly.
Sincerely,
Ian
Attachments
(I IV)
Copy to (w/atts.)
Blird copy to (w/atts.)
Dr. D. Allan Bromley
J. Armstrong
or is Gatvin
J. R. Junkins
T. J. Murrin
C. E. Sparck
POS AMISOONI AM 35190
P. 1 of 7
NATIONAL ADVISORY COMMITTEE ON SEMICONDUCTORS (NACS)
ANALYSIS OF THE IMPACT OF TAX POLICY CHANGES
ON CAPITAL FORMATION IN THE U.S. SEMICONDUCTOR INDUSTRY
Background: Since 1984,' the Japanese semiconductor industry has outspent the U.S.
merchant semiconductor industry--in terms of total spending for investment (buildings and
equipment) and R&D-by a total of $12 billion This capital formation gap translated into
a decrease in U.S. world market share from $3 percent in 1980 to 37 percent in 1989.
Between 1990 and 1995, the gap 10 capital formation will widen to over $15 billion, further
eroding the U.S. industry's global competitive position in world markets.
Issue Analyzed by the NACS: Is it possible through changes in U.S. tax policy to closs or
completely eliminate the capital investment gap between the U.S. and Japan's
semiconductor industries in order to sustain U.S. technological preeminence and arrest the
slide in the U.S. semiconductor industry's giobal competitive position?
Four Tax Policy Changes Were Analyzed by the NACS
Changing the R&D Tax Credit
--
The NACS analysis examined the level of semiconductor R&D spending
resulting from the current tax credit for R&D spending- which is essentially
the same as evaluating the impact of the proposal to make the R&D tex
credit permanent--and the required increase in the size of the credit to
elevate the industry's rate of R&D spending to the same rate achieved by
Japan's semiconductor industry.
--
The NACS also evaluated an alternative method for calculating the
appropriate credit applicable for all R&D spending.
Reducing Taxes on Capital Gains
::
The NACS evaluated the impact of the Administration's proposal or capital
gains.
Aligning Depreciation Rules for Semiconductor Equipment to Economic Life
:
Depreciable life for tax purposes for semiconductor equipment is currently
five years-this is frequencly longer than economic life.
--
The NACS evaluated: (1) allowing = three-year life for tax depresiation of
equipment.-a period closer to the realistic life for many types of equipment;
2nd (2) allowing a one-year life for tax purposes--a period shorter than
realistic life but used to illustrate the responsiveness of investment to this
policy change.
Increasing Personal Saving Incentives (Reducing Real Interest Rates)
The rate of personal savings in the U.S. is lower than among its major
competitors, including Japan. The NACS believes that increased savings
must be 2 priority (or the U.S.
To evaluate the benefits of increased ravings, the NACS assessed the Impact
of a reduction in real interest rates of ; percent (i.c., 200 basis points).
'The first-year dats 00 Japanese spending on both RaD and investment is available.
201 AMISNONI I I *
2. 2 of /
Table A provides a summary of the impact of the four tax policy changes on the
industry's user cost of capital and level of espital formation.2
What Will It Take to Close the Capital Formation Gap With the Japanese Industry?:
Figure A indicates for the tax proposals that impact the industry's rate of
investment that they can substantially increase the industry's rate of investment spending
relative to the rate of Japanese capital spending. This clearly indicates that through
appropriate tax policy changes. the capital formation 822 with the 18230230 semiconductor
industry can be significantly reduced. However, just achieving the same rate of investment
as the Japanese semiconductor industry by 1995 would still leave 3 capital formation RaD,
investment and R&D spending combined. of 59 billion between 1990 and 1995. and fail to
arrest the slide in the U.S. global market share,
With the current capital formation environment unchanged, the U.S. share of total
capital investment will fall to 32 percent by 1995-compared to an average of 36
percent between 1984 and 1989. (See Figure B, which shows the relationship
between changes in the U.S. share of global investment and the U.S. global market
share.) If U.S. tax policies were changed to raise the U.S rate of investment
spending relative to sales to the same rate achieved by the Japanese firms, the
decline in market share would be slower..only a 2 percent loss over the next five
years. If sufficient stimulus to investment were provided to raise U.S. capital
spending to the same level 83 the Japanese capital spending. then the U.S. global
market share would remain nearly stable over the next five years.
With regard to R&D, the analysis suggests that the R&D tax credit, however
fashioned, is not a sufficient policy 1001. by itself, to completely close the R&D
spending 28P with the Japanese industry. For example. the rate under the current
incremental form of the R&D tax credit would have to be more than double just to
lift R&D spending to the same rate as Japan--but would still leave a gap of $3
billion in R&D spending over the next five years. (See Figure C.)
Major Conclusions of the NACS Analysis of the Four Tax Proposais:
Through tax policy changes, the environment for capital formation in the U.S.
semiconductor industry can be substantially improved. At a minimum, it is feasible
to raise the rate of investment (relative to industry revenues) to the same rate 21 the
Japanese with some combination of changes in U.S. tax policy. However, even with
this improvement. there would still be 2 shortfall of 56 billion relative to projected
total Japanese investment spending. Thus, the NACS concludes that changes in tax
policy alone, while beneficial cannot arrest the decline in the U.S. global market
position.
While changes in U.S. IBX policy could substantially benefit capital investment, there
would still be a major shortfall in U.S. R&D spending of $3 billion.
Given the above two conclusions, the NACS concludes that additional stimulus to
the U.S. semiconductor industry's rate of capital Cormation is required from the
other NACS recommendations in order to fully address the NACS goals of
sustaining U.S. technology preeminence in semiconductors and arresting the slide in
the Industry's global competitive position. The additional stimulus needed to
stabilize the industry's global market share would be equivalent to $ 1 billion in
investment spending over the next five years.
The results shown in Table A do not include accounting for any changes in the overail
macroeconomic climate that the change might create; nor do they include in the potential
cumulative impact of higher industry output due to the higher investment levels
-
POR AALSHONI I I * 0891/20
P. 3 of 7
TABLE A
Summary of Impact of Capital Formation Proposals(1,2)
Percent Change
Proposal
Cost of Capital
Capital Investment
R&D Spending(3)
A. R&D Tax Credit
Continue Current(4)
-2to-7
not estimated
+1 to +2
Increase Rate(5)
-44
not estimated
+5
Change Base(6)
-5
not estimated
+5
B. Capital Gains Tax Cut
not estimated
+7
not estimated
C. Improving Depreciation
Rules
3-Year
-16
+11
not estimated
1-Year
-29
+26
not estimated
1
D. Personal Savings
-15
+3
not estimated
Incentives(7)
Notes:
(1) Appendix 1 to the complete NACS report on Capital Formation has a detailed discussion of
each proposal.
(2) Appendix 2 to the complete NACS report on Capital Formation discusses the "Tobin Q
Theory", which was used to estimate the impact of each proposal on investment.
(3) Percentage increase relative to estimated 1990 level of merchant semiconductor R&D
spending.
(4) Assume a permanent tax credit. Changes in the cost of capital apply only to incremental
R&D spending which is eligible for the tax credit.
(5) Credit increased to 50 percent--a rate sufficient to achieve parity with the 1988 Japanese rate
of R&D spending relative to sales. Changes in the cost of capital apply only to incremental
R&D spending which is eligible for the tax credit.
(6) Assumes a 3 percent credit applies to the total base of R&D spending--8 rate sufficient to
achieve parity with the 1988 Japanese rate of R&D spending relative to sales. Changes in
the cost of capital apply to all R&D spending.
(7) Assumes a 200 basis point decline in real interest rates.
AXISOONI
IMPACT OF TAX PROPOSALS ON U.S. MERCHANT
SEMICONDUCTOR CAPITAL EXPENDITURES
(Increase Above Current U.S. Rate of 18.5 Percent)
INCREASED
PERSONAL SAVINGS
20% CAPITAL
GAINS TAX RATE
3-YR DEPRECIATION
1-YR DEPRECIATION
JAPAN
18.5
19.5
20.5
21.5
22.5
23.5
24.5
25.5
p. 4 of ,
CAPITAL EXPENDITURES/SALES RATIO (%)
,
INCREASING THE U.S. SHARE OF WORLDWIDE INVESTMENT IS NECESSARY
TO MAINTAIN U.S. WORLDWIDE MARKET SHARE AT ITS CURRENT LEVEL
38
CURRENT U.S. MARKET SHARE
37
HISTORIC INVESTMENT-
MARKET SHARE RELATIONSHIP
36
U.S. SHARE
35
OF WORLDWIDE
SEMICONDUCTOR
REVENUES
NO CHANGE IN
(1990-1995) 34
U.S. CAPITAL
FORMATION
U.S. & JAPAN
POLICIES
EQUAL LEVEL
33
U.S. & JAPAN
EQUAL RATE
32
31
32
33
34
35
36
37
38
U.S. WORLDWIDE SHARE OF CAPITAL INVESTMENT-AVERAGE 1990-1995
5 of 7 5 of 7
1
FIGURE C
AN EFFECTIVE R&D CREDIT CAN HELP CLOSE
PO9
THE R&D SPENDING GAP WITH JAPAN
5.5
U.S. MERCHANTS
5
AT JAPANESE RATE
(DOUBLING THE
U.S. R&D CREDIT)
4.5
7. 07. 8 9 90 07.18.90 8 08:44 AM T *TI D U $ T INDUSTRY F F I AFFAIRS
JAPANESE
4
BILLIONS
OF R&D 3.5
DOLLARS
3
2.5
U.S. MERCHANTS
AT CURRENT RATE
2
1.5
L 10 9 'd
85
87
89
91
93
95
Attachment I
p. 7 of 7
QUICK, FINAN & ASSOCIATES, INC.
SUITE 200
1133 - 21ST STREET, NW
WASHINGTON, DC 20036
-
TELEPHONE (202) 223-4044
TELECOPIER (202) 296-0085
May 31, 1990
MEMORANDUM FOR: JIM PETERMAN
FROM
: BILL FINAN
CHRIS AMUNDSEN
SUBJECT
: COST TO TREASURY (TAX REVENUE LOST) OF
THREE-YEAR DEPRECIATION OPTION
We prepared the following analysis of the cost to the U.S.
Treasury (tax revenue lost) of implementing a three-year
depreciation schedule for semiconductor equipment. The analysis
compares the estimated current tax payment by both merchants and
captive estimated producers to the estimated payments made with the
three-year rule in place.
Several points should be noted. First, the estimates provided
below represent a change following the first full year of
implementation of the revised depreciation policy--in our analysis
the first full year would be 1991. The revenue loss can be
expected to grow at approximately the same rate as the long-term
growth rate of the semiconductor industry--about 13 percent
annually. Second, we have made a conservative estimate of the
revenue loss in that it assumes that total U.S. semiconductor
revenues do not change in response to the accelerated depreciation
allowances. As noted in the NACS study, the change in depreciation
rules will spur increased U.S. capital investments, which in turn
will increase the worldwide market share of U.S.-based firms. This
increase in U.S.-based semiconductor revenues would generate
additional tax revenues.
(1) Estimated Tax Payments in 1991
(Base Case)
$690 million
(2) Estimated Tax Payment in 1991
Under Shortened Depreciation Life
Scenario
$510 million
(3) Cost to Treasury of Three-Year Life
$180 million
We estimate that the three-year depreciation allowance would
raise U.S. capital investment by approximately 11 percent. This is
equivalent to a $450 million increase in capital investment outlays
in 1991 relative to an estimated cost to U.S. Treasury of $180
million. This represents a $2.50 increase in investment for each
dollar lost to Treasury.
07.18.90 08:44 AM *TI INDUSTRY AFFAIRS P10
AT&T
JUN 13 1990
Bell Laboratories
lan M. Ross
do R. JUNKINS
Crawfords Corner Road
President
Holmcel NJ 07733
201 949-3242
June 6. 1990
The Honorable John H. Sununu
Chief of Staff
The White House
1500 Pennsylvania Avenue
Washington, DC 20500
Dear John:
When members of the National Advisory Committee on Semiconductors (NACS) met with you
and Dick Darman. Michael Boskin, and Roger Porter on March 20, we agreed to assess the
various proposals of the administration affecting capital formation and elaborate on some of our
key electronic industry strategies. Attsched are three studies: a brief summary of each is given
here.
Capital Formation
The Administration has proposed several programs to help improve capital formation in U.S.
Industry, including lowering the tax rate on capital gains, making the R&D tax cut permanent and
increasing incentives for personal savings. increased Investment is important to all American
industry, but particularly for the capital intensive semiconductor industry. In the past five years.
the Japanese industry has spent $12 billion more on capital equipment and R&D than the U.S.
merchant semiconductor industry. This under-investment by the domestic industry, relative to the
global competition, has been 1 key reason for the loss of U.S. market share described in the
NACS Annual Report.
NACS has studied the effects of the Administration proposals on the semiconductor industry and
finds that although their effects would be significant, they would not be enough to reverse the
projected condnuing loss in U.S. semiconductor market share. But. & further change in tax
policy. to allow faster deprectation of capital equipment, could have a major effect on capital
spending and could substantially narrow the difference in investment rates between the U.S. and
Japan. NACS estimates the cost to the Treasury in 1991 of reducing depreciation schedules on
semiconductor processing equipment from five to three years is $180 million. and would result in
an additional $450 million in new capital spending by U.S. merchant and captive producers (an
increase of 11 percent). Detailed estimates of the effect on capital investment and research and
development spending expected from each proposal are shown in the summary attached to this
letter. The full report will be available in about two months.
Broadband Information Services
The acceleration of Broadband ISDN and liber to the end user would be an important stimulant to
the electronics Industry and the nation's information services infrastructure. The U.S.
Government can take various actions, which are described In some detail in the attachment, that
would be very helpful. For instance. NACS believes that the U.S.G should declare that a
202 AELSHONI I J - NY 08:44 ce
nationwide Broadband information services nerwork is 2 national goal. Such 1 goal would still
allow the hardware/service vendor to choose the media (copper, coax, fiber) best suited to the
application. Also, the U.S.O should use its considerable procurement leverage. and R&D
funding, to encourage the widespread utilization of Broadbend hardware and services. In
addition, the National Research and Education Network (NREN). now addressing supercomputer
networking. should develop long-term plans to move towards Broadband ISDN and this R&E
network should be expanded into many colleges and high schools with the purpose of raising the
quality of college/high school science and mathematics instruction.
Broadband services are an Important infrastructural element in the global race to remain
competitive. NACS believes that this area is a near ideal place for the government to take &
leadership role, and at very little COSL The attached study of critical factors affecting Broadband
ISDN and fiber deployment is a statement of the issues, which are complex. We've identified the
various bottlenecks that are restraining forward movement in this area We believe that we have
gone about as far as we can without some help regarding the practicality of our suggested actions.
Working with someone in your office, on these matters, would be helpful.
Semiconductor Materials and Equipment Industry
The health and moustness of this industry remains crucial to the long-term viability of U.S.-based
sillcon chip and electronics equipment manufacturing. NACS believes that this Industry needs
very urgent attention, as the industry trends show further weakening. NACS has now done &
more detailed study (the full report will also be available in about two months) of these trends,
and we are including 3 summary of the full 1990 report which is aimed at providing a more
thorough analysis of this industry. We have also proposed a set of recommendations that. if
implemented, would help to correct the disturbing downward slide of this Industry. The NACS
report of November 1989 recommended that an additional $100M dollars ($50M from
government and $50M matched from industry) be channelled to SEMATECH. These funds were
to be spent on various high-priority materials and equipment programs. I an attaching a lener
from R. Noyce, CEO of SEMATECH, to John Armstrong of IBM, the technology subgroup
chairman for NACS. This letter provides a list of programs that needs extra funds. NACS
believes that SEMATECH is an important element of an overall national semiconductor strategy.
and that these additional funds are critical to assure that our materials/equipment program
underway at SEMATECH continues to have 3 high likelihood of success.
Since these various recommended actions are both broad-ranging and yet detailed, you may find it
desirable to Identify someone in your office to work with us. Such an assignment would help to
move events siong more quickly.
Sincerely,
Jan
Attachments
(I- IV)
Copy to (w/atts.)
Blird copy to (w/atts.)
Dr. D. Allan Bromley
J. Armstrong
R. W. Galvin
J. R. Junkins
T. J. Murrin
:. E. Sparck
POR AMISOGNI I d, or AM 35190 06
a. 1 of 7
NATIONAL ADVISORY COMMITTEE ON SEMICONDUCTORS (NACS)
ANALYSIS OF THE IMPACT OF TAX POLICY CHANGES
ON CAPITAL FORMATION IN THE U.S. SEMICONDUCTOR INDUSTRY
Background: Since 1984,' the Japanese semiconductor industry has outspent the U.S.
merchant semiconductor industry--in terms of total spending for investment (buildings and
equipment) and R&D-by a total of $12 billion This capital formation gap translated into
a decrease in U.S. world market share from $3 percent in 1980 to 37 percent in 1989.
Between 1990 and 1995, the gap jo capital formation will widen to over $15 billion, further
eroding the U.S. industry's global competitive position in world markets.
Issue Analyzed by the NACS: Is it possible through changes in U.S. tax policy to closs or
completely eliminate the capital investment gap between the U.S. and Japan's
semiconductor industries in order to sustain U.S. technological preeminence and arrest the
slide in the U.S. semiconductor industry's giobal competitive position?
Four Tax Policy Changes Were Analyzed by the NACS
Changing the R&D Tax Credit
:-
The NACS analysis examined the leve: of semiconductor R&D spending
resulting from the current tax credit for R&D spending- which is essentially
the same as evaluating the impact of the proposti to make the R&D tex
credit permanent--and the required increase in the size of the credit to
elevate the industry's rate of R&D spending to the same rate achieved by
Japan's semiconductor industry.
:-
The NACS also evaluated An alternative method for calculating the
appropriate credit applicable for all R&D spending.
Reducing Taxes on Capital Gains
--
The NACS evaluated the impact of the Administration's proposal or capital
gains.
Aligning Depreciation Rules for Semiconductor Equipment to Economic Life
..
Depreciable life for tax purposes for semiconductor equipment is currently
five years-this is frequencly longer than economic life.
:
The NACS evaluated: (1) allowing = three-year life for tax depresiation of
equipment.-a period closer to the realistic life for many types of equipment;
2nd (2) allowing a one-year tife for INX purposes--a period shorter than
realistic life but used to illustrate the responsiveness of investment to this
policy change.
Increasing Personal Saving Incentives (Reducing Real Interest Rates)
:-
The rate of personal savings in the U.S. is lower then among its major
competitors, including Japan. The NACS believes that increased savings
must be 2 priority (or the U.S.
..
To evaluate the benefits of increased envings, the NACS assessed the impact
of a reduction in real interest ratos of ; percent (ic, 200 basis points).
'The first-year dats 00 Japanese spending on both RaD and investment is available.
ASISNONI
I I *
-
2. 2 of 7
Table A provides a summary of the impact of the four tax policy changes on the
industry's user cost of capital and level of capital formation."
What Will It Take to Close the Capital Formation Gao With the Japanese Industry?:
Figure A indicates for the tax proposals that impact the industry's rate of
Investment that they can substantially increase the industry's rate of investment spending
relative to the rate of Japanese capital spending. This clearly indicates that through
appropriate tax policy changes the capital formation 832 with the 18230230 semiconductor
industry can be significantly reduced. However, just achieving the same rate of investment
as the Japanese semiconductor industry by 1995 would still leave 3 capital formation RaD,
investment and R&D spending combined. of 59 billion between 1990 and 1995. and fail to
arrest the slide in the U.S. global market share,
With the current capital formation environment unchanged, the U.S. share of total
capital investment will fall to 32 percent by 1995-compared to an average of 36
percent between 1984 and 1989. (See Figure B, which shows the relationship
between changes in the U.S. share of global investment and the U.S. global market
share.) If U.S. tax policies were changed to raise the U.S rate of Investment
spending relative to sales to the same rate achieved by the Japanese firms, the
decline in market share would be slower-only a 2 percent loss over the next five
years. If sufficient stimulus to investment were provided to raise U.S. capital
spending to the same level 83 the Japanese capital spending. then the U.S. global
market share would remain nearly stable over the next five years.
With regard to R&D, the analysis suggests that the R&D tax credit, however
fashioned, is not a sufficient policy 1001. by itself, to completely close the R&D
spending 280 with the Japanese industry. For example. the rate under the current
incremental form of the R&D tax credit would have to be more than double just to
lift R&D spending to the same rate as Japan-but would still leave a gap of $3
billion in R&D spending over the next five years. (See Figure C.)
Major Conclusions of the NACS Analysis of the Four Tax Proposais:
Through tax policy changes, the environment for capital formation in the U.S.
semiconductor industry can be substantially improved. At a minimum, it is feasible
to raise the rate of investment (relative to industry revenues) to the same rate 21 the
Japanese with some combination of changes in U.S. tax policy. However, even with
this improvement. there would still be 2 shortfall of $6 billion relative to projected
total Japanese investment spending. Thus, the NACS concludes that changes in tax
policy alone, while beneficial, cannot arrest the decline in the U.S. global market
position.
While changes in U.S. IEX policy could substantially benefit capital investment, there
would still be a major shortfall in U.S. R&D spending of $3 billion.
Given the above two conclusions, the NACS concludes that additional stimulus to
the U.S. semiconducter industry's rate of capital Cormation is required from the
other NACS recommendations in order to fully address the NACS goals of
sustaining U.S. technology preeminence in semiconductors and arresting the slide in
the Industry's global competitive position. The additional stimulus needed to
stabilize the industry's global marker share would be equivalent to $4 billion in
investment spending over the next five years.
'The results shown in Table A do not include accounting for any changes in the overall
macroeconomic climate that the change might create; nor do they include in the potential
cumulative impact of higher industry output due to the higher investment levels
-
POR AALSOONI IL* AV
P. 3 of 7
TABLE A
Summary of Impact of Capital Formation Proposals(1,2)
Percent Change
Proposal
Cost of Capital
Capital Investment
R&D Spending(3)
A. R&D Tax Credit
Continue Current(4)
-2 to -7
not estimated
+1 to +2
Increase Rate(5)
-44
not estimated
+5
Change Base(6)
-5
not estimated
+5
B. Capital Gains Tax Cut
not estimated
+7
not estimated
C. Improving Depreciation
Rules
3-Year
-16
+11
not estimated
1-Year
-29
+26
not estimated
i
D. Personal Savings
-15
+3
not estimated
Incentives(7)
Notes:
(1) Appendix 1 to the complete NACS report on Capital Formation has a detailed discussion of
each proposal.
(2) Appendix 2 to the complete NACS report on Capital Formation discusses the "Tobin Q
Theory", which was used to estimate the impact of each proposal on investment.
(3) Percentage increase relative to estimated 1990 level of merchant semiconductor R&D
spending.
(4) Assume a permanent tax credit. Changes in the cost of capital apply only to incremental
R&D spending which is eligible for the tax credit.
(5) Credit increased to 50 percent--a rate sufficient to achieve parity with the 1988 Japanese rate
of R&D spending relative to sales. Changes in the cost of capital apply only to incremental
R&D spending which is eligible for the tax credit.
(6) Assumes a 3 percent credit applies to the total base of R&D spending--a rate sufficient to
achieve parity with the 1988 Japanese rate of R&D spending relative to sales. Changes in
the cost of capital apply to all R&D spending.
(7) Assumes a 200 basis point decline in real interest rates.
07. 18.90 08:44 AM *TI INDUSTRY AFFAIRS
IMPACT OF TAX PROPOSALS ON U.S. MERCHANT
SEMICONDUCTOR CAPITAL EXPENDITURES
(Increase Above Current U.S. Rate of 18.5 Percent)
INCREASED
PERSONAL SAVINGS
20% CAPITAL
GAINS TAX RATE
3-YR DEPRECIATION
1-YR DEPRECIATION
JAPAN
0
O
18.5
19.5
20.5
(1)
21.5
22.5
23.5
24.5
25.5
p. 4 of 7
0
CAPITAL EXPENDITURES/SALES RATIO (%)
-
INCREASING THE U.S. SHARE OF WORLDWIDE INVESTMENT IS NECESSARY
TO MAINTAIN U.S. WORLDWIDE MARKET SHARE AT ITS CURRENT LEVEL
38
CURRENT U.S. MARKET SHARE
37
HISTORIC INVESTMENT-
MARKET SHARE RELATIONSHIP
36
U.S. SHARE
35
OF WORLDWIDE
SEMICONDUCTOR
REVENUES
NO CHANGE IN
(1990-1995)
34
U.S. CAPITAL
FORMATION
U.S. & JAPAN
POLICIES
EQUAL LEVEL
33
U.S. & JAPAN
EQUAL RATE
32
00
31
32
33
34
O
35
36
37
38
(1)
U.S. WORLDWIDE SHARE OF CAPITAL INVESTMENT-AVERAGE 1990-1995
5 of 7
0
- actacnnent
O
FIGURE C
AN EFFECTIVE R&D CREDIT CAN HELP CLOSE
(T)
THE R&D SPENDING GAP WITH JAPAN
5.5
U.S. MERCHANTS
5
AT JAPANESE RATE
(DOUBLING THE
7. 07. B 9 90 8 08:44 AM T *TI T INDUSTRY F F I S AFFAIRS P P09
U.S. R&D CREDIT)
4.5
JAPANESE
4
BILLIONS
OF R&D 3.5
DOLLARS
3
2.5
U.S. MERCHANTS
AT CURRENT RATE
2
1.5
P. of 7
85
87
89
91
93
95
Attachment I
p. 7 of 7
QUICK, FINAN & ASSOCIATES, INC.
SUITE 200
1133. 21ST STREET, NW
WASHINGTON, DC 20036
-
TELEPHONE (202) 223-4044
TELECOPIER (202) 296-0085
May 31, 1990
MEMORANDUM FOR: JIM PETERMAN
FROM
: BILL FINAN
CHRIS AMUNDSEN
SUBJECT
: COST TO TREASURY (TAX REVENUE LOST) OF
THREE-YEAR DEPRECIATION OPTION
We prepared the following analysis of the cost to the U.S.
Treasury (tax revenue lost) of implementing a three-year
depreciation schedule for semiconductor equipment. The analysis
compares the estimated current tax payment by both merchants and
captive estimated producers to the estimated payments made with the
three-year rule in place.
Several points should be noted. First, the estimates provided
below represent a change following the first full year of
implementation of the revised depreciation policy--in our analysis
the first full year would be 1991. The revenue loss can be
expected to grow at approximately the same rate as the long-term
growth rate of the semiconductor industry--about 13 percent
annually. Second, we have made a conservative estimate of the
revenue loss in that it assumes that total U.S. semiconductor
revenues do not change in response to the accelerated depreciation
allowances. As noted in the NACS study, the change in depreciation
rules will spur increased U.S. capital investments, which in turn
will increase the worldwide market share of U.S. -based firms. This
increase in U.S.-based semiconductor revenues would generate
additional tax revenues.
(1) Estimated Tax Payments in 1991
(Base Case)
$690 million
(2) Estimated Tax Payment in 1991
Under Shortened Depreciation Life
Scenario
$510 million
(3) Cost to Treasury of Three-Year Life
$180 million
We estimate that the three-year depreciation allowance would
raise U.S. capital investment by approximately 11 percent. This is
equivalent to a $450 million increase in capital investment outlays
in 1991 relative to an estimated cost to U.S. Treasury of $180
million. This represents a $2.50 increase in investment for each
dollar lost to Treasury.
08:44 AM *TI INDUSTRY AFFAIRS P10
AT&T
JUN 13 1990
Bell Laboratories
lan M. Ross
do R. JUNKINS
Crawfords Corner Road
President
Holmcel NJ 07733
201 949-3242
June 6. 1990
The Honorable John H. Sununu
Chief of Staff
The White House
1500 Pennsylvania Avenue
Washington, DC 20500
Dear John:
When members of the National Advisory Committee on Semiconductors (NACS) met with you
and Dick Darman. Michael Boskin, and Reger Porter on March 20, we agreed to assess the
various proposais of the administration affecting capital formation and elaborate on some of our
key electronic industry strategies. Attsched are three studies: 2 brief summary of each is given
here.
Capital Formation
The Administration has proposed several programs to help improve capital formation in U.S.
Industry, including lowering the tax rate on capital gains, making the R&D tax cut permanent and
increasing incentives for personal savings. increased Investment is important to all American
industry, but particularly for the capital intensive semiconductor industry. In the past five years.
the Japanese industry has spent $12 billion more on capital equipment and R&D than the U.S.
merchant semiconductor industry. This under-investment by the domestic industry, relative to the
global competition, has been & key reason for the loss of U.S. market share described in the
NACS Annual Report.
NACS has studied the effects of the Administration proposals on the semiconductor industry and
finds that although their effects would be significant, they would not be enough to reverse the
projected condnuing loss in U.S. semiconductor market share. But. & further change in tax
policy. to allow faster deprectation of capital equipment, could have a major effect on capital
spending and could substantially narrow the difference in investment rates between the U.S. and
Japan. NACS estimates the cost to the Treasury in 1991 of reducing depreciation schedules on
semiconductor processing equipment from five to three years is $180 million. and would result in
an additional $450 million in new capital spending by U.S. merchant and captive producers (an
increase of 11 percent). Detailed estim Bles of the effect on capital investment and research and
development spending expected from each proposal are shown in the summary attached to this
letter. The full report will be available in about two months.
Broadband Information Services
The acceleration of Broadband ISDN and liber to the end user would be an important stimulant to
the electronics Industry and the nadon's information services infrastructure. The U.S.
Government can take various actions, which are described In some detail in the attachment, that
would be very helpful. For instance. NACS believes that the U.S.G should declare that &
202 SHIVEY I J - NY 08:44 ce::9t:20
nationwide Broadband information services network is a national goal. Such 1 goal would still
allow the hardware/service vendor to choose the media (copper, coax, fiber) best suited to the
application. Also, the U.S.O should use its considerable procurement leverage. and R&D
funding, to encourage the widespread utilization of Broadbend hardware and services. In
addition, the National Research and Education Network (NREN). now addressing supercomputer
networking. should develop long-term plans to move towards Broadband ISDN and this R&E
network should be expanded into many colleges and high schools with the purpose of raising the
quality of college/high school science and mathematics instruction.
Broadband services are an Important infrastructural element in the global race to remain
competitive. NACS believes that this area is a near ideal place for the government to take &
leadership role, and at very little COSL The attached study of critical factors affecting Broadband
ISDN and fiber deployment is a statement of the Issues, which are complex. We've identified the
various bottlenecks that are restraining forward movement in this area We believe that we have
gone about as far as we can without some help regarding the practicality of our suggested actions.
Working with someone in your office, on these matters, would be helpful.
Semiconductor Materials and Equipment Industry
The health and moustness of this Industry remains crucial to the long-term viability of U.S.-based
sillcon chip and electronics equipment manufacturing. NACS believes that this Industry needs
very urgent attention, as the industry trends show further weakening. NACS has now done a
more detailed study (the full report will also be available in about two months) of these trends,
and we are including 3 summary of the full 1990 report which is aimed at providing a more
thorough analysis of this industry. We have also proposed a set of recommendations that. if
implemented, would help to correct the disturbing downward slide of this Industry. The NACS
report of November 1989 recommended that an additional $100M dollars ($50M from
government and $50M matched from industry) be channelled to SEMATECH. These funds were
to be spent on various high-priority materials and equipment programs. I an attaching a lener
from R. Noyce, CEO of SEMATECH, to John Armstrong of IBM, the technology subgroup
chairman for NACS. This letter provides a list of programs that needs extra funds. NACS
believes that SEMATECH Is an important element of an overall national semiconductor strategy.
and that these additional funds are critical to assure that our materials/equipment program
underway at SEMATECH continues to have 3 high likelihood of success.
Since these various recommended actions are both broad-ranging and yet detailed, you may find it
destrable to Identify someone in your office to work with us. Such an assignment would help to
move events siong more quickly.
Sincerely,
Ian
Attachments
(I - IV)
Copy to (w/atts.)
Blird copy to (w/atts.)
Dr. D. Allan Dromley
J. Armstrong
R. W. Galvin
J. R. Junkins
T. J. Murrin
: E. Sparck
18 06:44 AM "TI INDUSTRY AFFAIRS P03
8. 1 of 7
NATIONAL ADVISORY COMMITTEE ON SEMICONDUCTORS (NACS)
ANALYSIS OF THE IMPACT OF TAX POLICY CHANGES
ON CAPITAL FORMATION IN THE U.S. SEMICONDUCTOR INDUSTRY
Background: Since 1984,' the Japanese semiconductor industry has outspent the U.S.
merchant semiconductor industry--in terms of total spending for investment (buildings and
equipment) and R&D-by a total of $12 billion This capital formation gap translated into
a decrease in U.S. world market share from 53 percent in 1980 to 37 percent in 1989.
Between 1990 and 1995, the gap is capital formation will widen to over $15 billion, further
eroding the U.S. industry's global competitive position in world markets.
Issue Analyzed by the NACS: Is it possible through changes in U.S. tax policy to closs or
completely eliminate the capital investment gap between the U.S. and Japan's
semiconductor industries in order to sustain U.S. technological preeminence and arrest the
slide in the U.S. semiconductor industry's giobal competitive position?
Four Tax Policy Changes Were Analyzed by the NACS
Changing the R&D Tax Credit
--
The NACS analysis examined the leve: of semiconductor R&D spending
resulting from the current tax credit for R&D spending--which is essentially
the same as evaluating the impact of the proposal to make the R&D tex
credit permanent-and the required increase in the size of the credit to
elevate the industry's rate of R&D spending 10 the same rate achieved by
Japan's semiconductor industry.
:-
The NACS also evaluated An alternative method for calculating the
appropriate credit applicable for all R&D spending.
Reducing Taxes on Capital Gains
:
The NACS evaluated the impact of the Administration's proposal or capital
gains.
Aligning Depreciation Rules for Semiconductor Equipment to Economic Life
..
Depreciable life for tax purposes for semiconductor equipment is currently
five years-this is frequencly longer than economic life.
--
The NACS evaluated: (1) allowing = three-year life for tax depresiation of
equipment--s period closer to the realistic life for many types of equipment;
2nd (2) allowing a one-year tife for INX purposes--a period shorter than
realistic life but used to illustrate the responsiveness of investment to this
policy change.
Increasing Personal Saving Incentives (Reducing Real Interest Rates)
:-
The rate of personal savings in the U.S. is lower then among its major
competitors, including Japan. The NACS believes that increased savings
must be 2 priority Cor the U.S.
.0
To evaluate the benefits of increased envings, the NACS assessed the impact
of a reduction in real interest rates of : percent (i.c., 200 basis points).
'The first-year dats 00 Japanese spending on both R&D and investment is available.
204
AFFAIRS
AMISOONI
I I *
P. 2 of 7
Table A provides a summary of the impact of the four tax policy changes on the
industry's user cost of capital and level of capital formation."
What Will It Take to Close the Capital Formation Gao With the Japanese Industry?:
Figure A indicates for the tax proposals that impact the industry's rate of
Investment that they can substantially increase the industry's rate of investment spending
relative to the rate of Japanese capital spending. This clearly indicates that through
appropriate tax policy changes the capital formation 822 with the Irornese semiconductor
industry can be significantly reduced. However, just achieving the same rate of investment
as the Japanese semiconductor industry by 1995 would still leave 3 capital formation RAD,
investment and R&D spending combined. of 59 billion between 1990 and 1995. and fail to
arrest the slide in the U.S. global market share,
With the current capital formation environment unchanged, the U.S. share of total
capital investment will fall to 32 percent by 1995-compared to an average of 36
percent between 1984 and 1989. (See Figure B, which shows the relationship
between changes in the U.S. share of global investment and the U.S. global market
share.) If U.S. tax policies were changed to raise the U.S rate of investment
spending relative to sales to the same rate achieved by the Japanese firms, the
decline in market share would be slower..only a 2 percent loss over the next five
years. If sufficient stimulus to investment were provided to raise U.S. capital
spending to the same level 83 the Japanese capital spending. then the U.S. global
market share would remain nearly stable over the next five years.
With regard to R&D, the analysis suggests that the R&D tax credit, however
fashioned, is not a sufficient policy 1001. by itself, to completely close the R&D
spending 28D with the Japanese industry. For example. the rate under the current
incremental form of the R&D tax credit would have to be more than double just to
lift R&D spending to the same rate as Japan--but would still leave a gap of $3
billion in R&D spending over the next five years. (See Figure C.)
Major Conclusions of the NACS Analysis of the Four Tax Proposais:
Through tax policy changes, the environment for capital formation in the U.S.
semiconductor industry can be substantially improved. At a minimum, it is feasible
to raise the rate of investment (relative to industry revenues) to the same rate 21 the
Japanese with some combination of changes in U.S. tax policy. However, even with
this improvement. there would still be 2 shortfall of 56 billion relative to projected
total Japanese investment spending. Thus, the NACS concludes that changes in tax
policy alone, while beneficial, cannot arrest the decline in the U.S. global market
position.
While changes in U.S. TEX policy could substantially benefit capital investment, there
would still be a major shortfall in U.S. R&D spending of $3 billion.
Given the above two conclusions, the NACS concludes that additional stimulus to
the U.S. semiconducter industry's rate of capital Cormation is required from the
other NACS recommendations in order to fully address the NACS goals of
sustaining U.S. technology preeminence in semiconductors and arresting the slide in
the Industry's global competitive position. The additional stimulus needed to
stabilize the industry's global marker share would be equivalent to $0 billion in
investment spending over the next five years.
The results shown in Table A do not include accounting for any changes in the overall
macroeconomic climate that the change might create; nor do they include in the potential
cumulative impact of higher industry output due to the higher investment levels
-
POR AALSOONI I L * AM 08191120
P. 3 of 7
TABLE A
Summary of Impact of Capital Formation Proposals(1,2)
Percent Change
Proposal
Cost of Capital
Capital Investment
R&D Spending(3)
A. R&D Tax Credit
Continue Current(4)
-2to-7
not estimated
+1 to +2
Increase Rate(5)
-44
not estimated
+5
Change Base(6)
-5
not estimated
+5
B. Capital Gains Tax Cut
not estimated
+7
not estimated
C. Improving Depreciation
Rules
3-Year
-16
+11
not estimated
1-Year
-29
+26
not estimated
1
D. Personal Savings
-15
+3
not estimated
Incentives(7)
Notes:
(1) Appendix 1 to the complete NACS report on Capital Formation has a detailed discussion of
each proposal.
(2) Appendix 2 to the complete NACS report on Capital Formation discusses the "Tobin Q
Theory", which was used to estimate the impact of each proposal on investment.
(3) Percentage increase relative to estimated 1990 level of merchant semiconductor R&D
spending.
(4) Assume a permanent tax credit. Changes in the cost of capital apply only to incremental
R&D spending which is eligible for the tax credit.
(5) Credit increased to 50 percent--a rate sufficient to achieve parity with the 1988 Japanese rate
of R&D spending relative to sales. Changes in the cost of capital apply only to incremental
R&D spending which is eligible for the tax credit.
(6) Assumes a 3 percent credit applies to the total base of R&D spending--s rate sufficient to
achieve parity with the 1988 Japanese rate of R&D spending relative to sales. Changes in
the cost of capital apply to all R&D spending.
(7) Assumes a 200 basis point decline in real interest rates.
07. 18.90 08:44 AM *TI INDUSTRY AFFAIRS
IMPACT OF TAX PROPOSALS ON U.S. MERCHANT
SEMICONDUCTOR CAPITAL EXPENDITURES
(Increase Above Current U.S. Rate of 18.5 Percent)
INCREASED
PERSONAL SAVINGS
20% CAPITAL
GAINS TAX RATE
3-YR DEPRECIATION
1-YR DEPRECIATION
JAPAN
18.5
19.5
20.5
21.5
22.5
23.5
24.5
25.5
P. 4 of ,
CAPITAL EXPENDITURES/SALES RATIO (%)
-
INCREASING THE U.S. SHARE OF WORLDWIDE INVESTMENT IS NECESSARY
TO MAINTAIN U.S. WORLDWIDE MARKET SHARE AT ITS CURRENT LEVEL
38
CURRENT U.S. MARKET SHARE
37
HISTORIC INVESTMENT-
MARKET SHARE RELATIONSHIP
36
U.S. SHARE
35
OF WORLDWIDE
SEMICONDUCTOR
REVENUES
NO CHANGE IN
(1990-1995) 34
U.S. CAPITAL
FORMATION
U.S. & JAPAN
POLICIES
EQUAL LEVEL
33
U.S. & JAPAN
EQUAL RATE
32
31
32
33
34
35
36
37
38
U.S. WORLDWIDE SHARE OF CAPITAL INVESTMENT-AVERAGE 1990-1995
5 of 7
1
FIGURE C
AN EFFECTIVE R&D CREDIT CAN HELP CLOSE
(1)
PO9
THE R&D SPENDING GAP WITH JAPAN
5.5
U.S. MERCHANTS
5
AT JAPANESE RATE
(DOUBLING THE
U.S. R&D CREDIT)
07. $ 90 8 08:44 AM * T *TI INDUSTRY I AFFAIRS P
4.5
JAPANESE
4
BILLIONS
OF R&D 3.5
DOLLARS
3
2.5
U.S. MERCHANTS
AT CURRENT RATE
2
1.5
P. of 7
85
87
89
91
93
95
00 i
Attachment I
p. 7 of 7
QUICK, FINAN & ASSOCIATES, INC.
SUITE 200
1133. 21ST STREET, NW
WASHINGTON, DC 20036
-
TELEPHONE (202) 223-4044
TELECOPIER (202) 296-0085
May 31, 1990
MEMORANDUM FOR: JIM PETERMAN
FROM
: BILL FINAN
CHRIS AMUNDSEN
SUBJECT
: COST TO TREASURY (TAX REVENUE LOST) OF
THREE-YEAR DEPRECIATION OPTION
We prepared the following analysis of the cost to the U.S.
Treasury (tax revenue lost) of implementing a three-year
depreciation schedule for semiconductor equipment. The analysis
compares the estimated current tax payment by both merchants and
captive estimated producers to the estimated payments made with the
three-year rule in place.
Several points should be noted. First, the estimates provided
below represent a change following the first full year of
implementation of the revised depreciation policy--in our analysis
the first full year would be 1991. The revenue loss can be
expected to grow at approximately the same rate as the long-term
growth rate of the semiconductor industry--about 13 percent
annually. Second, we have made a conservative estimate of the
revenue loss in that it assumes that total U.S. semiconductor
revenues do not change in response to the accelerated depreciation
allowances. As noted in the NACS study, the change in depreciation
rules will spur increased U.S. capital investments, which in turn
will increase the worldwide market share of U.S. -based firms. This
increase in U.S.-based semiconductor revenues would generate
additional tax revenues.
(1) Estimated Tax Payments in 1991
(Base Case)
$690 million
(2) Estimated Tax Payment in 1991
Under Shortened Depreciation Life
Scenario
$510 million
(3) Cost to Treasury of Three-Year Life
$180 million
We estimate that the three-year depreciation allowance would
raise U.S. capital investment by approximately 11 percent. This is
equivalent to a $450 million increase in capital investment outlays
in 1991 relative to an estimated cost to U.S. Treasury of $180
million. This represents a $2.50 increase in investment for each
dollar lost to Treasury.
0691'20