View all newsletters
Receive our newsletter - data, insights and analysis delivered to you
  1. Technology
June 6, 1988

THE REASONS WHY THE SEMICONDUCTOR INDUSTRY ASSOCIATION’s WAR WITH JAPAN WILL FAIL

By CBR Staff Writer

Following the breakdown of those talks with its Japanese counterpart (CI No 943), the ineffable US Semiconductor Industry Association is now demanding additional sanctions on Japanese manufacturers for their alleged failure to buy more US chips. There is reported evidence that individual US chipmakers have been less than enthusiastic about meeting Japanese quality control and delivery date requirements at times when they’ve been able to sell all the chips they are making in more complaisant markets – and there is a little issue of quality: it shouldn’t be forgotten that in the early 1980s, a major US chip user, Hewlett Packard Co, was regularly complaining that it was having to give more and more of its business to Japanese manufacturers because it couldn’t get the consistent quality it needed from US manufacturers. In the wake of the chip pact, there hasn’t exactly been a rush of US companies moving back into the memory chip market, and the Semiconductor Industry Association’s call for additional sanctions is an open invitation for all Japanese memory chip makers to ensure that as long as the memory chip shortage continues, the requirements of all customers in every other country are met in full before their US customers get any but then as the Semiconductor Association represents only chip manufacturers and not users, perhaps it wouldn’t mind very much. Although the foreign share of the Japanese market remains stubbornly stuck at 9.8%, the market grew so fast last year that foreign shipments of chips to Japan still rose by 38% in value. The Semiconductor Industry Association wants the foreign share of the Japanese market to rise to 20% by 1991, and behind the latest row appears to be the fact that while the top seven really big companies – the Hitachis and Toshibas – have made an effort to buy more US chips, the next 53 companies in the top 60 have been much less enthusiastic. But to anyone who has any awaremess of Japanese corporate culture, that should come as little surprise, and is a far from easy problem to overcome: it is part of the Japanese corporate ethos to return favours by spreading one’s business around among one’s customers – so a medium-sized company that does substantial business with NEC, Mitsubishi and Toshiba is more than likely to get its mainframes from NEC, its workstations from Toshiba-Sun and its personal computers from Mitsubishi. And it is much more important for such companies to keep their mighty domestic customers sweet than it is to worry about an international row quite outside their orbit. The real problem for the US semiconductor industry, as we have pointed out before, is that so many of the leading companies are dedicated semiconductor manufacturers, and are scarcely users at all. Lives or dies Can anyone name a single substantial Japanese company that lives or dies by manufacturing integrated circuits? The Japanese semiconductor industry is overwhelmingly dominated by the local counterparts of IBM, General Electric Co, Westinghouse Electric, Unisys Corp. Yet of those four only IBM has a big chipmaking business, only General Electric sells any chips on the merchant market – and has steadily been reducing its exposure to the semiconductor business for years. AT&T has made tentative efforts to sell chips on the merchant market, but could do a whole lot more, and from a US national point of view, it could be argued that IBM’s policy of manufacturing only enough chips to meet its internal needs is frankly selfish. Nor is the structure of the Japanese industry in any way aberrant: which companies are the major European semiconductor manufacturers? Siemens AG, which has a profile almost identical with that of Hitachi. Philips NV, on which Matsushita Electric Industrial Co or Sony Corp might have modelled themselves, so close are their corporate profiles and product mixes. Thomson SA, which has eliminated the nonsense of Italy trying to support a stand-alone state-owned chipmaker by throwing in its semiconductor interests with those of SGS SpA. And the thrusting new South Korean companies le

d by Samsung are even more diversified conglomerates, making things like cars as well as consumer electronics. And Korea looks set to inherit the US commodity chip market in the wake of the row with Japan: is that what the Semiconductor Industry Association wanted?

Topics in this article :
Websites in our network
Select and enter your corporate email address Tech Monitor's research, insight and analysis examines the frontiers of digital transformation to help tech leaders navigate the future. Our Changelog newsletter delivers our best work to your inbox every week.
  • CIO
  • CTO
  • CISO
  • CSO
  • CFO
  • CDO
  • CEO
  • Architect Founder
  • MD
  • Director
  • Manager
  • Other
Visit our privacy policy for more information about our services, how New Statesman Media Group may use, process and share your personal data, including information on your rights in respect of your personal data and how you can unsubscribe from future marketing communications. Our services are intended for corporate subscribers and you warrant that the email address submitted is your corporate email address.
THANK YOU