June 28, 1983 The Honorable Robert W. Kastenmeier 2232 Rayburn House of Representatives Washington, D.C. 20515 Dear Mr. Kastenmeier: I appeared with Dr. Christopher K. Layton, Vice President-RTP Operations, Intersil, Inc., who testified on May 19, 1983 on behalf of Intersil and the Semiconductor Industry Association in support of Senate Bill 1201. I recently recognized that we had failed to supply you with a copy of Dr. Layton's testimony and forward a copy herewith. I am glad to hear that hearings will be held on SCC: br Enclosure cc: Dr. C. K. Layton Sincerely, Stanley C. Corwin Intersil, Inc., 10710 North Tantau Ave., Cupertino, CA 95014 Phone (408) 996-5000 TWX 910 338 0228 TESTIMONY OF DR. CHRISTOPHER K. LAYTON SUMMARY My testimony addresses the economic impact on a semiconductor company when its original integrated circuit design is copied. The investment in originating the design of an integrated circuit is substantial. Recoupment of that investment becomes tenuous at best when competition comes in the form of copies of the design, the copy, having been brought to the market for as little as ten percent of the originator's investment. And while a new integrated circuit design affects many different industries as it constitutes a new building block for many new products, the copy of the design offers nothing more than an imitation of the original. Innovation in the semiconductor industry requires positive protection for mask works the blueprint of the design of an integrated circuit. The Semiconductor Industry Association strongly supports enactment of the Semiconductor Chip Protection Act of 1983 as providing the definitive protection that is needed. Good morning, Mr. Chairman and members of the subcommittee. My name is Christopher K. Layton and I am Vice President of Operations Research Triangle Park for Intersil, Inc., a sub sidiary of General Electric Company. I thank you for the opportunity to testify today on behalf of the Semiconductor Industry Association (SIA). SIA is a trade association of small and large United Statesbased companies. The members include diversified companies like General Electric and companies like Intersil who are exclusively manufacturers of semiconductor products. SIA represents an association of 57 member companies constituting approximately 95% of all United States-based semiconductor companies. The primary focus of SIA is semiconductor industry problems. SIA strongly supports enactment of S.1201. Intersil and General Electric Company also support enact ment of S.1201. While my testimony today is on behalf of the Semiconductor Industry Association, I will draw upon our experiences at Intersil, Inc. Intersil, headquartered in Cupertino, California, in the heart of "Silicon Valley", is a small to medium size company, employing approximately 2700 employees. Intersil is engaged in the design, development, manufacture and sale of various integrated circuit products including analog circuits, data acquisition products and digital, low power CMOS and bipolar LSI circuits. Intersil is an originator of unique standard and custom integrated circuits, yet faces intense and widespread competition, both domestic and foreign. While most of this competition comes from continuous introduction of new products into the marketplace, some of this competition has been experienced by Intersil in the form of having its products copied. To this end, I will focus my testimony today on: 1. The economic impact on a chip originator when I will secondarily address: In the late 1970's, Intersil originated the design of a family of analog to digital converter chips. These were the first chips of their kind, where both the analog circuitry and the digital circuitry were on the same chip. These chips are approximately one-eighth inch square and contain approximately 1200 transistors. (Today, this would be considered a relatively simple chip.) These chips have many uses, the most common being to drive a multimeter. These are the types of meters used by electronics engineers and technicians to measure voltage, current and resistance. When these chips were introduced into the market, they were a huge success. Then they were copied and this led to litigation, now settled, which I will touch on later. In order to realize what it means financially to a company like Intersil to have one of its designs copied and then appear in the marketplace as a competitive product, I think we should first look at the investment it takes, not only in dollars, but also in time and effort, to originate a design and bring it to market. Again, my point of reference is a typical chip of the order and complexity of Intersil's family of single chip analog to digital converters. Such a typical chip would go through the following design and development cycle: a) b) c) e) Marketing makes a study to define product need. Engineering prepares logic diagram. d) Engineering prepares detailed circuit diagram. £) Design engineers work with the layout designers to g) A detailed layout plan is prepared for certain h) The composite drawing is prepared. The composite |