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June 7, 1987

US SEMICONDUCTOR INDUSTRY ARRIVES IN TOKYO BEARING PLATITUDES

By CBR Staff Writer

The US semiconductor industry will dedicate an even stronger effort in Japan to boost sales of its chips here, the president of the US Semiconductor Industry Association promised in Tokyo last week. But Andrew Procassini said the lack of progress to date was due in part to formal barriers, and private as well as government policies. During the last 25 years, individual American firms have worked hard to access the Japanese market. They have spent hundreds of millions of dollars in plant investment, design facilities, testing and application activities, and sales and service, he said. Our firms have hired thousands of Japanese managers, engineers and workers. We have learned the Japanese ways of doing business, as well as its cultural beliefs and principles. Despite those efforts, America’s share of the Japanese semiconductor market has continued to average about 10%. The problem that the Association prefers not to address as it demands something closer to 20% of the Japanese market is of course that a large part of that market is closed to them simply because its main consumption is of enormous volumes of commodity components that are simply not made any more by the US industry. This is particularly the case in the enormous consumer electronics industry that is estimated to account for about 40% of Japan’s total consumption of chips. The personal computer industry is also a very large consumer of commodity parts, perhaps accounting for another 10% of the market. Taking that into account, the US demand for 20% of the local market turns into a demand for more like 40% of the market that is available for the parts it produces, so tacit resistance is perhaps understandable. Reiterating the bizarre belief widespread in Silicon Valley that US firms have a divine right to dominate overseas semiconductor markets, he pointed out that in all other parts of the world, America has a 50% to 90% market share. Procassini was in Japan for an Industry Association board meeting over the weekend. The directors have also been talking with Japanese government officials, industry leaders and economic organisations. Irwin Frederman, chairman of the Semiconductor Industry Association board, declared Our purpose in coming to Japan is to reaffirm the commitment of US semiconductor manufacturers to serve the domestic Japanese market as long-term participants and players. Although individual US-based semiconductor manufacturing companies have been active in Japan for a long time, this is the first time we have come to Japan together, as an industry, said Frederman, also president of Monolithic Memories: Greater understanding will allow us to work together with reason and wisdom to eliminate friction in favour of prosperity for all.

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