Japan Is Too Calculating on Supercomputer

There is a Japanese supercomputer performing more than 1 billion mathematical calculations per second in Houston these days, and it represents a significant challenge to U.S. dominance of one of the highest peaks in high technology.

To get the order, NEC Corp. (formerly Nippon Electric Co.), a formidably competitive manufacturer of computers, telephone equipment and semiconductors, made a very attractive lease deal to the customer, the Houston Area Research Center. NEC asked the customer not to disclose the deal’s terms. But the company reportedly is giving what amounts to a $10-million discount on the $20-million computer by contracting to use the machine part-time itself and by giving a grant to the center, which serves as a common research facility for four Texas universities.

Cray Research, the Minneapolis-based company that pioneered the supercomputer industry and is now the world leader, acknowledges that NEC’s machine is technologically competitive--a distinction that no other foreign computer maker has yet been able to achieve. Cray remains ahead in the technology and far ahead in supercomputer sales, but it is not complacent. It is pushing to improve the capabilities of its own extremely powerful computers, which are used by government agencies and industries such as aerospace and petroleum that have massive computing needs. And Cray is carrying the competition to its NEC opponent by stepping up efforts to develop new customers in Asia.

So Texas universities get a discount from the one side, and new customers in Asia can expect attractive terms from the other. Competition is the life of trade, as they say.

Dark Side to Competition

But there is a dark side to the supercomputer competition. One shadow is what it reveals of the Japanese government’s duplicity in trade matters. Although Cray has sold seven supercomputers to Japanese private companies, until recently it couldn’t sell even one to any agency of the government or to any university in Japan. Why not? Because of Japanese government policy that discourages, or prohibits, buying from a foreign company any product that Japan wishes to develop for its own export. The U.S. government criticized the supercomputer policy specifically in April when Washington imposed sanctions on $300 million worth of imports from Japan, and that broke some ice. Cray has now received an order from Nippon Telegraph & Telephone Co., the government phone monopoly that is being sold to private ownership. But Tokyo’s trade stance remains predominantly protectionist.

On the other hand, Cray is often hurt by U.S. government policy. The government of India, for example, recently bought a Cray supercomputer but had to cancel the order when the Minneapolis company couldn’t get an export license. The U.S. Defense Department objected to the sale of a powerful Cray to a country that has military agreements with the Soviet Union. But if India now buys from NEC, the canceled sale will penalize Cray’s chances in a big potential market far more than it will curb the Soviet Union’s access to technology. And such U.S. myopia offers scant encouragement for Cray’s hopes in the vast China market.

Cray can’t afford that government handicap, because it is up against one of the best in NEC, an excellent company that has been guided to world leadership by the vision of its Chairman Koji Kobayashi. Kobayashi, who is now 80, saw clearly and early the emerging relationship between communications and computers and so steered NEC, a telephone equipment maker, into the computer field. But he didn’t merely copy IBM as did so many others, including Japan’s Fujitsu and Hitachi. Rather, says analyst Gary Smaby of the brokerage house Piper, Jaffray & Hopwood, “NEC took a concept, started from scratch and produced some real performance and originality.” That’s why Cray, founded 15 years ago by the entrepreneurial computer genius Seymour Cray, is respectful of this competitor.

And why you’re likely to be hearing more about NEC. It is now a 15% owner and the technological driving force in Honeywell’s independent computer company. NEC also has just announced that it will produce personal computers in Foxboro, Mass., and small portable computers at its plant in Atlanta. The company gets roughly $2 billion of its $13 billion in total sales in North America, and is clearly aiming for more.

Which is as it should be. Such a hard-working company deserves to make gains. But it also deserves to stand on its own two feet without a government stacking the odds to help it.

It’s time Japan stopped acting as if its aggressive, giant companies--in computers, in telecommunciations and electronics and every other major new industry--were still fledglings, needing the nurture and protection of the nest.