Japan Orders Microchip Cuts in Effort to Block U.S. Sanctions : Companies Told to Reduce Output as Much as a Third

Associated Press

Japan's trade ministry, seeking to avert U.S. retaliation against the Japanese semiconductor industry, has instructed the nation's microchip makers to cut production by as much a third for some products, a ministry official said today.

Minister of International Trade and Industry Hajime Tamura also has sent Secretary of State George P. Shultz and other top U.S. officials a letter intended to forestall "hasty action" aimed at Japan's microchip industry, said Masaji Yamamoto, deputy director general of the ministry's machinery information industries bureau.

In Washington, President Reagan's Economic Policy Council is scheduled to meet this week and decide what sanctions, if any, should be imposed on the Japanese chip makers for their alleged "dumping" of chips at unfairly low prices.

The U.S. semiconductor industry has urged the U.S. government to retaliate by imposing import duties on Japanese products containing semiconductors, such as personal computers and consumer electronics gear.

'We Must React'

Lower production by Japan is aimed at preventing price slashing and dumping resulting from excessive competition, Yamamoto said in a press briefing at the ministry.

He described the cuts and letters to U.S. government officials as part of the ministry's "utmost effort to ward off any possible catastrophe" in semiconductor trade between the two countries.

"If hasty action is taken against Japan, it would cause serious problems," Yamamoto said. He declined to elaborate, but added: "Of course we must react to action in the United States."

Yamamoto said the ministry has told the nation's chip manufacturers to curtail April-June production of 256-kilobit dynamic random access memory (D-RAM) chips to 111.8 million, down 32% from the preceding quarter. D-RAMs are the most widely used computer memory devices on the market.

The ministry has also asked manufacturers to produce 29% fewer 64-kilobit chips, 28% fewer 128-kilobit chips and 21% fewer EPROMs, or erasable programmable read-only memory chips, during the same period, he said.

Violation of July Pact

U.S. trade officials have charged that Japanese makers are dumping chips in other countries and that some of those chips have been re-exported to the United States in violation of a semiconductor agreement between the two countries reached in July.

Yamamoto said the nation's chip makers have been issued "strong administrative guidance" to comply with the production cuts.

U.S. Trade Representative Clayton K. Yeutter told reporters in New Zealand on Sunday that the United States is very close to taking retaliatory action against Japan "over two or three controversial issues."

He said those issues are Japan's opposition to public entities buying U.S. super-computers; the barring of U.S. firms from the multibillion-dollar Kansai Airport project, and Japanese semiconductors.

Japanese officials have said that foreign firms will be permitted to bid for contracts in the airport project and that U.S. firms have won consulting contracts.

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