Tech investors searching for the next NVIDIA (Nasdaq: NVDA) among domestic firms could soon find returns a lot harder to come by.

That's the takeaway from the remarks made by Semiconductor Industry Association (SIA) president George Scalise recently:

Other countries and regions have put in place generous incentives to attract investment, including cash grants, tax holidays, and liberal R&D tax credits. ... The U.S. still enjoys a lead in technology, but leadership is not a birthright -- it must be earned through action.

Yet Uncle Sam may as well be on the couch with a bag of Cheetos, the SIA concludes.

Here's why. A tax credit meant to help American firms fund job-creating innovation expired on Dec. 31. Advanced research in fields such as nanoelectronics -- a fancy term for creating really small chips and other tiny devices -- could suffer as a result, the SIA says.

Where is Uncle Sam when we need him?
To be fair, the SIA is a trade group that has a political axe to grind. But independent studies have long made clear that, when it comes to funding innovation, one-time "third-worlders" are now built to compete.

And they're getting more competitive by the day, reports the Organization for Economic Cooperation and Development (OECD). Its research shows that emerging economies such as Singapore accounted for 21.5% of the world's R&D expenditure in 2005, up from 17% four years earlier.

China is leading the expansion. OECD analysts say that, in 2005, the Sino Superpower was responsible for 55% of R&D gains in non-member nations. (The OECD is comprised of many of the world's established economies, such as the U.S., the member countries of the European Union, and Japan.)

And more could growth be on the way. Beijing has a long-term goal of dedicating 2.5% of gross domestic product to research and development. Spending has risen rapidly as a result. For example, from 2000 to 2005, China's R&D outlay grew by 18.5% a year, up from 16.4% annually in the five years prior.

More developed countries like ours -- home to the aforementioned NVIDIA and dozens of other tech titans, such as Google (Nasdaq: GOOG) and Microsoft (Nasdaq: MSFT) -- boosted R&D budgets by an average of 2.2% a year over the same period. No signs of accelerated spending are forthcoming.

So what's a tech investor to do?

The answer ...
Go global. Here are three tips to help you start your trip:

  1. Read a newspaper. Frankly, there's no better way to know what's going on in the world then to read a global newspaper. The Wall Street Journal has an excellent international section. Cherry-picking from its Asia coverage recently helped me to learn that SanDisk (Nasdaq: SNDK) has licensed mobile TV technology from Korea's SK Telecom.
  2. Travel. Get on a plane as the Motley Fool Global Gains team did in December. And if you can't? Get on a discussion board and chat it up with locals, expats, and interested observers who have experience in the country you're interested in.
  3. Get ideas from top global funds. Experienced international investors will openly share their best ideas with you if you know where to look. My favorite tool? Morningstar. Its screener provides an inside look at hundreds of funds, such as Janus Global Technology (JAGTX). Its top holdings include NDS Group (Nasdaq: NNDS) and ARM Holdings (Nasdaq: ARMHY) from the United Kingdom, as well as Canada's Research In Motion.

And, of course, there's our own Global Gains service, whose picks are outperforming the American S&P 500 by more than 15 percentage points on average.

I love my country. I love American tech stocks. My preference is to see the finger-pointing star-spangled patriot off the couch and giving a push to U.S. innovation. But, as investors, we have to accept that the next set of high-tech discoveries may occur abroad.

That's why our portfolios need foreign exposure. So if you're looking for the best ideas, try the three tips above and consider checking out Global Gains. You can read all of the team's research and recommendations free for 30 days. Click here for more information.

This article was originally published on Dec. 28, 2007. It has been updated.

Fool contributor Tim Beyers didn't own shares in any of the companies mentioned in this article at the time of publication. ARM Holdings and NVIDIA are Stock Advisor selections. Microsoft is an Inside Value pick. The Motley Fool's disclosure policy jet-sets with the best.