Japanese semiconductor makers could lose out to competitors from Korea, Taiwan and the US unless they change their business approach, according to a report by the Japan Development Bank. A separate report by chip-making equipment vendors comes to the same conclusion.
The bank report says that if Japanese chipmakers are to survive they need to focus on specific products such as system chips that perform multiple functions for digital consumer electronics equipment. It said overextended operations during tough economic times left chipmakers focusing on too many products, many of which lost money, and they missed out on the international trend toward taking a more focused approach to concentrate on areas of strength.
Manufacturers should act boldly to merge or team up with other firms to target their operations, the bank says. It produced statistics showing the world market share of Japanese chipmakers slid to 22% in 1998 from 39% in 1991, while the combined share of other Asian economies rose to 36% from 25%, and that of the US to 33% from 27%.
Semiconductor manufacturing equipment makers go further and say the local chipmaking industry is being too passive in investing in new equipment at a time when overseas competitors are rapidly expanding and modernizing their operations. Japanese makers’ investments are so passive they look almost dead, except for Toshiba Corp and Sony Corp which are making preparations for producing microchips for the PlayStation2, said Nikon Corp project manager Tetsuji Tomokiyo.
Figures released recently by the Semiconductor Equipment Association of Japan (SEAJ) showed the total amount of orders received by member companies in April and May increased by 120% and 134% respectively year-on-year, but the growth was due to orders from overseas makers.
The dominance by overseas makers will rapidly accelerate, outpacing Japanese makers which have been left behind both in precision technology and production capacity, according to Yoichi Akasaka, president of Applied Materials Japan Ltd. He said Japan’s major semiconductor makers have not made the same huge investments as foreign rivals because they are deficit-ridden business units of major electronics conglomerates which are undergoing drastic restructuring.
