For most of the semiconductor industry's history, U.S. producers were undisputed leaders in market share, product introduction, and process technology advance. After losing this dominant position and enduring significant market share losses during the early 1980s, U.S. semiconductor firms and the federal government took corrective actions on several fronts. A concerted effort in improving product quality and manufacturing process yields narrowed the gaps between U.S. and foreign competitors. U.S. firms also exited from product lines in which their historic skills at product innovation provided limited competitive advantage. Federal government initiatives, ranging from trade policy to financial support for university research and R&D consortia, also played a role of uncertain magnitude in the industry's revival. The resurgence of the industry is an impressive feat, but the unexpected nature of this revival, its complex causes, and the fragility of its foundation suggest that U.S. semiconductor firm strength cannot be taken for granted.
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