What lies behind the massive new investments in semiconductor capacity by Japanese manufacturers (CI No 1,055)? The consensus is that it is not inspired by the Ministry of International Trade & Industry, but by the fierce sibling rivalry between the likes of Toshiba Corp, NEC Corp, Hitachi Ltd et al, and there is a strong suspicion that the cash is there to invest largely as a direct result of the ineffable US-Japan Semiconductor Trade Agreement, which put an artificially high floor under memory chip prices and thereby made their manufacture hugely more profitable for the Japanese – so that it can be said that US chip users are directly financing a massive expansion of the Japanese industry that will ensure that it is not worthwhile US firms returning to the memory chip business; the Japanese investment seems to fly in the face of all logic since a downturn over the next couple of years seems almost inevitable, but Japanese manufacturers are forecasting enormously increased demand for memory from the motor industry and high-definition TV.
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