When US national investments succeed and fail

Key new technologies sectors that were born in the US are now located abroad. & nbsp,

After 2000, the US trade balance for technology items changed from a deficit to an increasing shortage due to the production migration. Concerns about the US’s reliance on foreign sources for corporate products have been raised due to both a significant trade deficit and the risk to national security. & nbsp,

In effect, the US government has provided greater financial support for corporate technical industries, such as the CHIPS and Science Act of 2022, which pledges US$ 52.7 billion to support the domestic semiconductor manufacturing sector. & nbsp,

Although it is too early to evaluate its effectiveness, there have been earlier initiatives to support strategic different sectors that have both succeeded and failed. Their teachings ought to be taken away. & nbsp,

The silicon and light industries’ long-term support, which began in the 1970s, was the biggest success. The Defense Advanced Research Projects Agency( DARPA ) of the US Defense Department was then in charge of laying the groundwork for the modern electronic world in chips, lasers, and communications technologies in collaboration with industrial organizations. & nbsp,

However, smaller, more prior initiatives to support new industries, including clean energy, have notable failures. Solar panels were created by numerous startups in the early 2000s using & nbsp, Invented in US.

One of these new businesses, Solyndra & nbsp, built its goods on cutting-edge thin film technology, which was ultimately unworkable for business. It was given a$ 525 million federal loan to help with solar panel production, but it fell short and shut down in 2011.

installation of the circular thermal module design used by Solyndra prior to the company’s demise. Featured image: Solyndra

In the US, solar panels supply is currently very low. The majority of them are produced in China using a silicon technology that is completely different from Solyndra. This industry is worth$ 30 billion annually, with much of it being exported to the US. Rates have drastically decreased as a result, and no American organization can thrive with foreign businesses. & nbsp,

An attempt to manufacture batteries for electric vehicles in the US was another loss. With a novel lithium-ion technology, & nbsp, A123 was born out of the Massachusetts Institute of Technology( MIT ) in the early 2000s and entered the market for rechargeable consumer electronic batteries, which was dominated by Asian producers like LG.

A123, on the other hand, concentrated on large systems, specifically on batteries for electric vehicles( EVs ), which were expected to eventually grow into a sizable market, presuming the availability of useful and reasonably priced rechargeable batteries. & nbsp,

The business entered into supply agreements with EV-focused businesses like General Motors ( GM ), but it continued to concentrate on the materials side of battery technology and delegated system integration to its partners. Because it affected its customers’ EV capabilities, this was a significant strategic mistake.

Tesla, which collaborated with well-known Eastern cell manufacturers’ battery technology, was noticeably absent from its client list. Its proprietary system technology made it possible for it to produce and market early electric vehicles( EVs ). Fisker, a significant A123 business, filed for bankruptcy in the interim, and the business was unable to produce profitable products. & nbsp,

A123 was undoubtedly a clear achievement at first. The business raised almost a billion dollars through an initial public offering( IPO ), including$ 250 million from the US government as part of the Federal Recovery Act of 2009. & nbsp,

Despite investing in high-quality development services, the company continued to lose money on the goods it sold. A123 declared bankruptcy in 2012 after failing to raise enough money to continue operating due to ongoing costs. & nbsp, It was eventually purchased by a significant manufacturer of Chinese automotive parts. & nbsp,

A123 Systems R & amp, D Laboratory’s NHR 9200 battery test systems. Photo: Facebook

These are all blatant examples of industrial policy intended to support different sectors and all involved public financing supplementing personal funds.

While the other two industries failed, the silicon company’s expansion was a large success. The most gifted individuals in the world were drawn to the semiconductor system. & nbsp,

Its performance was attributable to maintaining lucrative activities in business, education, and research facilities with wise US federal funding, primarily managed through DARPA, to address pressing issues and make the findings widely accessible to spur manufacturing. & nbsp,

Venture capital, public markets, and business funds were drawn to the good opportunities presented by the technology in order to meet capital needs. Good ideas could be turned into fantastic new items with the help of all the necessary components. & nbsp,

The two unsuccessful products had significantly fewer resources. With limited resources, the innumerable companies focused primarily on creating innovative new methods for building solar panels. A complete reworking of the components and techniques to reduce costs through clever vertical integration was ultimately successful in creating China’s low-cost, high-performance solar panels industry.

To design and construct for businesses, billions of dollars were needed. In China, the necessary cash was available. The difference is that this level of industry building was always included in the program here. China’s choice program was extensive and clever after deciding to build the solar panels industry. & nbsp,

The choice in Solyndra, on the other hand, was an innovative strategy that ultimately failed with limited financing. & nbsp,

The solar panels industry in China has expanded by leaps and bounds. Supplied picture

The power course is subject to the same criticism. A123 was essentially the only company attempting to establish a home EV power supplier in the US. There were no viable businesses to offer options, so it was unclear what techniques or tactics it used to achieve. Additionally, there was no concept development relative to DARPA. & nbsp,

My opinion: Two things are necessary to repeat the success of the transistor company’s development with government support.

The ability to capture and asset the highest levels of technologies and business skill by combining business, academia, and government is the first requirement. Also, don’t overlook the part DARPA played in directing technology progress.

Technologist, engineer, poet, and long-time private equity investor Henry Kressel. & nbsp,