Sign up for our newsletter
Technology / AI and automation


A total dependence on one Japanese company for ceramic packages for semiconductors used by the National Security Agency, retention of the fastest chips for use in their own supercomputers by NEC, Hitachi and Fujitsu, and a growing dependence by the US military space programme on chips only available from Japan are among a number of pieces of documentary evidence collected by the New York Times as part of its investigation into the state of the US industry that is fuelling the clamorous demand for a national recovery programme. The premier US daily newspaper has had early sight of the report – not yet published – of the US Defense Science Board, which, as already widely reported, calls for the Pentagon to spend almost $2,000m over five years in an effort to play catch-up. The seriousness of the decline is underlined by the fact that IBM, a company that seldom lobbies on behalf of anyone other than itself, is leading the drive for a semiconductor co-operative that would pool the leading edge resources of the entire US industry to reduce the gap opened up by the Japanese (CI No 593). The Times quotes a Central Intelligence Agency assessment that concludes we believe the US semiconductor industry is at a crucial turning point in its history. It fundamentally cannot compete in its present form. The Science Board concludes that the Japanese now lead their US counterparts in every type of chip apart from microprocessors and custom logic, and even in those areas, the US lead is declining. Putting detail on the flesh-creeping headlines, the Defense Science Board says that out of 195 customised chips used by the shadowy National Security Agency, 171 have to be assembled into ceramic packages manufactured by world market leader Kyocera Corp. And at one point, Kyocera discontinued without notice the ceramic package required for a crucial component. The fear on the supercomputer front is that inevitably if the Japanese decline to sell their fastest chips on the world market, they will eventually produce the world’s fastest supercomputers and drive the likes of Cray Research and ETA Systems out of business. The Times also reports that of the 3,000 custom chips used by the Pentagon’s space program, 93 come from foreign companies, all but one of them Japanese, because they are available nowhere else.

Case unanswerable

The case for a concerted US national effort begins to look unanswerable when the lessons of the ludicrous bilateral semiconductor trade agreement with Japan are digested. The most striking development is that the US Commerce Department has had to scale its mandatory fair market prices for Japanese memory chips sharply down. The prices now set by the Department are on average a bare 35.5% of the prices it originally set last July, which were halved in October. The significance of the reduction is that it implies that Japanese manufacturing methods are incomparably more efficient than the Commerce Department had imagined at the inception of the agreement. It is thus clearly going to be extremely difficult to find legitimate ways of punishing the Japanese for being successful, and the only alternative is for the US to match Japanese manufacturing efficiency, which is where the plan for an industry consortium comes in, and national interest must override anti-trust considerations.

White papers from our partners

This article is from the CBROnline archive: some formatting and images may not be present.

CBR Staff Writer

CBR Online legacy content.