Friday, April 17, 2009

Intel's Andy Grove: Government Must Help Auto Business Just Like They Did Chip Industry

Intel's Andy Grove wrote the following column for Fortune magazine. It was posted on CNN Money today. Here's an excerpt:
Developing a domestic car-battery industry should be the focus of both corporations and the U.S. government. There is a model that may point to the way to build a new battery industry: the early days of the microprocessor. The history of the chip industry is a combination of the private sector overcoming technical challenges, with government playing a supporting role. In 1947 scientists at Bell Labs, which owed its existence to a government-granted monopoly, invented the transistor, the essential ingredient that in time led to the integrated circuit and the microprocessor. Bell Labs licensed the technology to all comers.

As a start, Energy Secretary Steven Chu should organize an industry council - like the World War II Production Board - and run it as if we were under wartime pressure. He can pull in the National Academy of Engineering and the National Science Foundation and have them recommend the technical approach. He can use the National Labs for R&D.

But the critical limitation is going to be battery production. To get an adequate supply of batteries for U.S. automobiles will require new manufacturing capacity that costs billions. Let us create a government-owned foundry organization that supplies, say, the first few million batteries, until the electric car and battery industries reach a critical size. Then let this organization license the manufacturing technology to private companies and let it go out of business.

When the government helped American chip companies, the industry did all right. It hung in as other industries left the U.S., and it still leads globally. We can do the same for transportation. We must.

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