Dale Jorgenson's Presidential address to the American Economic Association (2001) makes a convincing case that accelerated technological change in the production of semiconductors, microprocessors in particular, has driven the recent increased productivity growth in the U.S. economy. But, while semiconductors now gure prominently in accounts of economic growth, Jorgenson points out that there is not a fully satisfactory economic model of the industry that produces them. This paper is our attempt to rise to Jorgenson's challenge.