Research and development

Rising in the East

Asia is steadily eroding America’s leadership in research spending

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smiling-face tiger

The American manufacturing & Technology News reports (May 2008)
by Richard McCormack

The American georgia Institute of Technology "Bi-Annual High-tech Indicators" finds that China has surpassed the USA on key measures of high-tech competitiveness

This study shows that China has scored 82.8 points to the US 76.1 points

Quote from Prof Alan Porter, the Director of the Georgia Institute of Technology's Policy and Assessment Centre, who said, " This G.I "high-Tech Indicators" study discover that in areas such as "NANOTECHNOLGY" China now leads the world in published articles, but what impressed me is China getting better at marrying that research to their low-cost production process . When you put these together with our buzzword of "INNOVATION", China is big, they are tough, and they are cheap"


Chris Hooper

Tracing the origins of techological products is tricky.Technology is indeed a global industry. A semiconductor company may be American, but some of their products (software and hardware) may be fully developed by Asian design houses.As well, many large Asian companies have design houses in North America.What will make a difference is investment in education and technology. Unfortunately for North America, the last decase of greed saw many promising minds going toward finance. Hopefully that will change.

Darden Cavalcade

The truly astonishing aspect of this article is its focus on IT.

According to recent American government statistics, 75 per cent of worldwide patents involving nanotechnology were granted to American firms, research centers, and universities. 25 per cent of all nanotech R&D is American.

According to American documentary television, the machine most likely to create usable energy from nuclear fusion is under construction Europe.

When one looks at technological advance, one should not neglect the areas of advance that are most likely to result in step-function improvements in living standards, life span, income, and the environment. Is IT among those?

Why should anyone care who develops the next generation office copier or cell phone as long as they work without off-gasing carcinogens?


I think you are doing down Europe here. Maybe a lot of the iPhone components come from Asia, but what is the most important? The part that gets high-speed data from the Internet by way of mobile telephony, in other words the 3G chipset which comes from Infineon here in Europe. It was not the first iPhone or the iTouch which created a storm but iPhone 3G. And that was made possible by a German company.


This article caught my eye because of the R&D subject matter; but disappointed in the reading because of the thinness with which it defines "research". The question is R&D spending for what - this seems to be IT and wired technologies and not a good deal more. What about biotech, life sciences, bio-engineering, alternative energy, chemistry etc. While I admit that computer engineering, flat screens, and printers are all very important, it seems to me you are working yourself up into a lather about a rather slime piece of the pie. There is a lot going on in other areas of research in which the west is leader by a wide margin. I think a definition of "R&D spending" to start the article would have been a good idea. Let's make sure we're looking at the same bug.

catech 22

Correct, R&D will continue but, because of being detached from manufacturing will slowly disappear. A interesting modern exapmle is OLED. First invented by Kodak in the 70s. The polymer OLED in the 80's in cambridge. E-ink, another example invented by Xerox.

Display companies in the west outsourced LCD production long ago. However the Japanese, Korean and Taiwainese companies contined to perfect the art of manufacturing with larger and larger bits of glass and finer and finer patterns. Boring stuff. Now those factories are huge robotized multi-billion dollar fabs.

The OLED and E-ink inventors, without local knowledge of the mundane business of flat panel making found that they could no longer mass produce displays without going to the Asian LCD makers. They further found that the Asian companies had patented fabrication techniques, back panel thin film transistors, circuits for those transistors.

The western companies invention of OLED and E-ink turns out to be such a small fragment of the totality of flat panel making that it was practically worthless. Besides, once the Asian companies decided to go the OLED and E-ink route, it turned out to be trivial to invent a new OLED molecule or E-ink technique. After 20 years of effort Cambridge Display Technology was sold to Sumitomo Chemicals for $285 million. No small amount of money. However, the market for large flat panel displays was $60-$70 billion in 2007.

The people in cambridge no doubt worked very hard and are very smart but without manufactuing, supply chain etc the odds were stacked against them.

The same kind of thing will happen to fabless chip houses. For a fab to invest in chip design requires some smart people workstations and ideas for chips to design. For a fabless chip house to start making chips requires a couple of billion dollars for the fab, followed by a few years of experimentation with all that expensive equipment to get yield. It is clear which way the trend will go.

You are correct R&D will remain in the US for a long while, generating wealth that will be reaped in other countries and by investors in the US that invest in those countries. better to be a invester than a researcher in the US just now.

It is just disapointing for people like me that are very good at and love making machines and technology. I have a mortgage to pay and a family to keep. Filing patents in the US for Asians is at present, on average, more lucrative than inventing stuff in the US.


Catech22, I enjoyed reading your detailed response. You must be a fellow engineer. While I agree with your line of thinking on manufacturing processes and improvements, I still feel that the US has a chance to remain in the game in sciences and cutting edge R&D for many years to come.

Historically there are two ways countries have captured leads in technical innovation. They have either focused on technical education and infrastructure from focused initiatives - thus getting a higher percentage of their population into R&D OR they have created open societies that attract international talent - thus creating immigrant R&D labor pools.

As this article points out correctly, Asia is catching up very quickly in R&D to the west - but Asian countries follow the build from within model and the US follows the open society model. Thus there is some natural ceiling to where the US will not fall completely behind as long as immigration and visa's programmes dont detoriate further. At the end of the day a top enginnering student from Kenya, Serbia, Sri Lanka, Singapore or many other countries is more likely to move to the US than China or South Korea for research.

So I would expect the catchup curve to flatten at somepoint but not soon; India and China have huge internal populations and their pools still have a long way to run.

However - even if this super-elite R&D machine in the US delivers breakthroughs, as catech22 illustrates, the US will no longer have a domestic engineering force thats in a position to fabricate and ramp up production to profit on many of its own idea's. Here is the story from our family:

The theories and initial modeling of practical fibre optic transmission was developed by very few people in 50's in US and UK universities. However it was Corning and Bell Labs that in the 60's put together large teams to design the manufacturing processes, machinery, quality control, storage, delivery and testing of glass fibre. This took hundreds and hundreds of engineers. In the future the US will be able to do the theory but not the production.

catech 22

Interesting article, however, is not the rise of Asian research and the fall of Western research precisely what one would expect from free markets and economics?

First a point to note is that Samsung in one measure may already have surpassed IBM. In the granted patent listings for 2007 there are four Samsung companies listed. The combined patents from these four companies do in fact exceed the number filed by IBM. As a former IBM researcher, who now works on filing US patents for mainly Asian clients that is interesting but expected. IBM sold most of their patents for hardware, and now probably files few hardware patents. Software and services patents are more difficult to obtain given that the US patent system allows the patenting of machines, materials and processes. Further, even if one can express one’s software or services invention as a machine, a material or a process, it is difficult to distinguish, for example, some fancy transaction on Wall Street, from some transaction the you or I might do at the local car dealer. Unless one added the phrase “the transaction performed with enough money to bring down a decent sized western power.” (Given the last 6 months this feature is now obvious). Patenting an extra wire, chip or connector in an LCD display, like Asian companies are now doing is relatively easy.

Here are 3 reasons that I have experienced in my long career for moving of technology:

1. Most important innovation is incremental not revolutionary. Technology works like a building, the foundation being manufacturing, and people on the ground shifting boxes. Those people are in the best position to see the next increment that will impact on the business most. The top of the building is the services. These people are the last to see the innovation. If your company/country is only at the top of the technology building it will constantly miss the key incremental steps. Slowly but surely down you go.

Examples that I experienced in a long career working in technology companies around the world include:
i) Samsung and Toshiba being the two companies that make both hard disk drives and flash memory being the first to invest heavily in flash to displace disk drives. Hitachi, Fujitsu Seagate, Western digital and Maxtor which made only disk drives did not until well after Samsung and Toshiba had established a considerable lead. Intel, that made only flash also came late. Samsung and Toshiba had people shifting “flash” and “disk drive” boxes.
ii) While working in a European R&D lab I noted that all the software R&D research projects proposed for the next year by researchers were already for sale in California. Yet, the researches were unaware of this. California had far more internet infrastructure installed – i.e. more people shifting boxes.
iii) I noted that three years after the US experts in plastic molding lost access to a manufacturing line, their knowledge was already far surpassed by the engineers operating the machines in Singapore.

Companies for very good reasons outsource non-profitable parts of their businesses, in order to compete with peers. Thus, economics of competition with peer companies pushes the mundane innovation to cheaper places.

2. It is far easier to innovate from the foundations of the technology building up, than it is to build down. If one makes cheap plastic toys moving up to more expensive toys is not difficult. One is in possession of all the technology, for the next small step and cheaper than competition in richer companies. Thus, companies in wealthy countries are relentlessly pushed up the value chain, and out the top. Hence, the moves of US companies like IBM to software and services. IBM is forced up the value chain and to businesses that require people to be in the same location as the customer, (where cheap labor, land etc. are no help). As the Economist article notes much of the iphone are made by Samsung. Samsung is in a good position to make the iphone beater.

3. Individuals in a country make rational, market based decisions, as to what to do with their careers. Out of my friends that were in possession of decent degrees in Physics, I was the only one that carried on to a PhD. The rest made very rational decisions to become accountants. They are all no doubt now richer me. Out of my friends that obtained PhDs I am the only one that used that knowledge in my career for any period of time because I left the UK. Manufacturing requires very smart people behind it to remain competitive. However, in a country like the UK there are opportunities which are far less arduous and better paid for smart people to be interested in than manufacturing.

In summary, the movement of technology and R&D to Asia is a natural evolution that takes place because of reasonable decisions made daily by individuals and companies that move technology development from more developed countries to less developed and people in rich countries away from tech careers.


Dear "The Seeker",The explanation for that is obvious: The Guardian is a miserably decadent newspaper, vulnerable to lobbyists of all kind. It's a long time decadence. I have denounced to the Guardian's editors many doubtful articles clearly guided by interest groups. The newspaper is indeed a trash vehicle, so no longer be surprised is reading such false information in it. That's it!


A good factual article, but if we stand back and look at the world hi-tech situation, we are looking at the end of the American empire. The UK is in the same situation as the US with hi-tech, but this is an overcrowded little island which cannot feed itself. Consequently the government has to deal with their loss of industry. It will be interesting to watch the incentives of the British government to improve R&D along with new manufacturing. Their government has seen the problem and is starting to implement change.The fist problem the US has to deal with is trade unions which kill the employer. Maggie Thatcher dealt with this in the UK over 20 years ago, and the US now needs the next Maggie Thatcher. My prediction is that in the US no action will be taken, and the situation will get worse as the US cannot get back to being a democracy and end governing by lobby from large and wealthy special interest groups.

The Seeker

Just a few weeks back, there was an article in the Guardian which said that China had no creativity, spent almost nothing on R&D, simply pirated everyone else's technology, and that this would lead to the collapse of growth in the Chinese economy. Now, we read that China is close to surpassing Japan in R&D spending?! Maybe the Western press ought to spend a little more on its R&D or at least the research part!!!


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