Forget solar panels and batteries. The Obama administration is now looking to electronic chips as a way to boost America's manufacturing base -- while potentially improving energy use at the same time.

President Obama was in North Carolina yesterday, where he unveiled the first of three manufacturing institutes he promised in his State of the Union address nearly one year ago. 

The first hub will focus on improving wide-bandgap (WBG) semiconductor technologies, which use non-silicon materials for conducting electricity. These semiconductors can handle ten times more voltage, reduce power conversion losses by up to 90 percent, and potentially reduce the size of consumer electronics by 80 percent.

Speaking at North Carolina State University, where the Next Generation Power Electronics Institute will be headquartered, Obama said the decision to focus on new semiconductor technologies was as much an efficiency play as a manufacturing-competitiveness play.

"These can be focused on certain areas that will vastly improve energy efficiency and vastly improve the quality of our lives," said Obama in his speech.

The most obvious efficiency application is in solid-state LED lighting, where WBG semiconductors are central to creating bulbs that consume 75 percent less energy than traditional incandescents. That's why Cree, the North Carolina-based firm helping drive cost reductions in the LED market, will be a key part of the institute.

There are endless applications for WBG semiconductors. The technology could make consumer electronics even smaller and more efficient, improve the efficiency of inverters, boost the performance of industrial motors and raise the efficiency of EV battery charging.

While WBG semiconductors have been in commercial use for technologies like LEDs, there are still some manufacturing challenges to address. According to the Department of Energy, those challenges include high costs of large-diameter wafers, lack of packaging materials to accommodate high-temperature WBG products and limited "systems integration" to enable drop-in replacement for silicon-based semiconductors.

The Power Electronics Institute is a regional hub that will bring together eighteen companies, six universities and the National Renewable Energy Laboratory. It's designed to address those specific barriers by bringing research and commercial product development under one roof.

"This hub is going to make it easier for these wide-bandgap semiconductors to go from the drawing board to the factory floor to the store shelves," said Obama.

The hub concept is an about-face for the Obama administration, which is trying a different approach to boost manufacturing in the country. This approach treats clean energy as a byproduct, rather than the goal itself.

The administration's first direct push into clean energy manufacturing, driven by the stimulus, produced a number of disappointing results.

The high-profile failures of A123 Systems, Abound Solar, Solyndra and Fisker Automotive occurred largely because there was a limited (and volatile) market for their products. Although the White House and Department of Energy did their best to create demand with incentives, market take-up was limited. It was very difficult to make that kind of capital-intensive manufacturing work in a market vacuum.

The hub approach is a more organic way of building manufacturing. It utilizes the regional expertise of companies with mature supply chains and a direct need for the product -- in this case, better semiconductors. It connects research underway in labs to a tangible need in the market, helping to identify specific deployment barriers. 

Although innovation hubs have some critics who call them "artificial" and "outdated," history has shown that geographic clusters can bring a major boost to technology innovation. Silicon Valley has the internet and venture capital. Boston has biotech. Washington state has the aerospace industry. And Detroit once had the automotive industry.

The White House is betting on innovation hubs. Last spring, the Obama administration drew together $200 million from the Departments of Energy, Defense and Commerce, as well as NASA and the National Science Foundation. It established a competitive process wherein states, cities and universities could compete to host an institute. The other two hubs will be focused on digital manufacturing and modern metals manufacturing -- both of which could impact how energy-related products are designed.

With Congressional approval, Obama wants to eventually create 45 diversified hubs around the country.

The Department of Energy has set aside $70 million to support the Next Generation Power Electronics Institute in North Carolina over the next five years, which will be matched by the companies and universities participating in the hub.

The eighteen companies involved include: ABB, APEI, Avogy, Cree, Delphi, Delta Products, DfR Solutions, GridBridge, Hesse Mechatronics, II-VI Inc., IQE, John Deere, Monolith Semiconductor, RF Micro Devices, Toshiba International, Transphorm, United Silicon Carbide, and Vacon.

The universities and labs include: North Carolina State (the host), The University of North Carolina, Arizona State University, Florida State University, University of California at Santa Barbara, Virginia Polytechnic Institute and the National Renewable Energy Laboratory.

Watch Obama introduce the new high-tech manufacturing hub (via AOL On):