Chip Buyers’ Pleas on Trade Pact Fail to Bring Response
Government officials apparently rejected pleas Tuesday from electronics industry leaders to take swift action to combat higher prices and a scarcity of Japanese-made semiconductors that have resulted from a new trade agreement with Japan.
American Electronics Assn. officials said, however, that they were pleased with the separate meetings with Michael Smith, deputy U.S. trade representative, who was a chief negotiator on the pact, and with Commerce Secretary Malcolm Baldrige, whose agency is responsible for enforcing the agreement.
Those present at the meetings declined to disclose details, suggesting that future “consultations” with Japanese government officials might be jeopardized.
The pact, reached Aug. 1 and signed Sept. 2, is designed to halt dumping of Japanese-made computer chips in this country and to give U.S. makers of chips a greater share of the Japanese market. As part of the agreement, Commerce is setting fair market values, or FMVs, for Japanese chips sold in the United States.
The FMVs are much higher--in some cases 600% higher, the AEA says--than chip prices before the agreement. U.S. chip makers also have raised their prices, but for the most part they remain below the FMVs.
AEA member companies--who together constitute the largest block of chip consumers in the country--have also complained of shortages of some Japanese-made chips. The hardships caused by the higher prices and scarcities have some makers of electronics products considering moving their manufacturing overseas, where they say their costs will be considerably lower and comparable to their offshore competition.
The AEA wants the floor prices dropped immediately, but trade group officials acknowledged that was unlikely. The next scheduled revision of the FMVs will take effect Oct. 16.
Ralph Thomson, senior vice president of the AEA, said the group was given assurances that those new prices will be considerably lower.
But a Commerce Department spokesman said no assurances have been made.
The meetings also included extensive discussion of the so-called third-country markets, places such as Hong Kong and Singapore, where Japanese-made chips are sold in quantity to the booming electronics industry. The agreement prohibits dumping--or selling at below fair market value--in those markets as well, but U.S. companies are beginning to compile evidence showing that predatory pricing is continuing in third-country markets.
Officials at the trade representative’s office and Commerce said they would work with the industry to collect information about the effects of the agreement, including offshore pricing problems.
Meanwhile, the Semiconductor Industry Assn. on Tuesday released figures showing that the deep-rooted recession in the semiconductor industry has not abated.
The group said its index of worldwide orders and shipments of the tiny electronic circuits had fallen again in August.
The SIA’s book-to-bill ratio stood at 0.92, which means that for every $100 worth of chips shipped, or billed, during the month, manufacturers received orders, or bookings, for $92.
Average monthly bookings for the three-month period ending in August totaled $660.4 million, a 5.1% drop from July and 19.1% below the most recent high point of $816.2 million, set in April, 1986. The August bookings level still stands nearly 40% above both the same figure last year and the cyclical low set in September, 1985.
August billings rose to $687.8 million, a 4.5% increase from July and an 11.4% improvement from a year ago.
