Loophole in Reagan Administration’s Sanctions : Toshiba Begins Shipping Laptop Computers to U.S.

Using a loophole in the Reagan Administration’s sanctions on Japanese electronics imports, Toshiba Corp. has begun shipping 5,000 to 10,000 laptop computers per month to the United States from its Tokyo-area plant, according to the company’s Irvine subsidiary.

The Toshiba T1000 laptop is exempt from the 100% import tariff imposed by the Administration on other Japanese-made computers because it uses a different microprocessor chip, a company spokesman said.

Billed as the smallest and lightest IBM-compatible portable computer, the machine sells for just under $1,200.

“We first discussed this machine 12 to 18 months ago, so it was in the works before President Reagan’s (April 17) sanctions,” said Daniel M. Crane, marketing vice president at the company’s Information Systems Division in Irvine.

The high tariff, imposed to punish Japan for allegedly breaking a semiconductor trade agreement, has largely served its purpose of forcing the Japanese to abide by the accord and may be dropped in the next few months, U.S. trade officials have said. Reagan already has lifted a portion of the sanctions.

Still, the tariff has nearly doubled the price of some Japanese imports, effectively removing the products from the American market and spurring some companies to open manufacturing plants here. Japanese products assembled in other countries, including the United States, are not subject to the tariff.

For Japanese-made computers, the tariff applies only to those with 16-bit or larger microprocessors. The T1000 is equipped with an eight-bit microprocessor and is therefore not subject to the tariff. The number of bits refers to the quantity of information a microprocessor can handle at one time.

Toshiba’s new laptop computers are arriving in the United States at the right time to tap an underserved but potentially lucrative market, say two industry analysts.

“I think it’s a good move,” said Peter Teige, an analyst with Dataquest Inc., a San Jose market analysis firm. “It’s priced at a point that is much below almost everything available, though it has less capability than the next line up.”

David Carnevale, an analyst at InfoCorp in San Jose, figured Toshiba’s closest competition would come from Tandy Corp., a Fort Worth, Tex., computer maker that offers a slightly higher-priced model.

The T1000 “is designed to meet the needs of students, writers and journalists, sales personnel and others who perform their work in and out of their homes or offices,” said Phil Vertin, Toshiba’s vice president for sales.

The new model is a foot wide, 11 inches deep and 2 inches high and weighs 6.4 pounds. The next model up in the Toshiba laptop line--the T1100 Plus--weighs more than 11 pounds, costs twice as much and no longer is being imported because of the tariffs, Crane said.

“Our initial projection following a trade show in Atlanta last June is that the T1000 will outsell our T1100 Plus by 2 to 1,” Crane said. He projected that the new model will sell 5,000 to 10,000 units a month for the next six months.

About 900 units were imported last month when shipments began, and Toshiba has a backlog of about 4,000 orders so far, he said.

Crane said T1000 assembly operations may be moved in the next year or two to the United States, where Toshiba’s annual sales are $2.2 billion. The Irvine plant, which employs 500 people and assembles the company’s high-end T3100/20 laptop, was built with excess manufacturing space to accommodate other production, he said.

Toshiba’s U.S. operations also may be boosted by a possible import ban resulting from sales by a Toshiba subsidiary of sensitive submarine technology to the Soviet Union. The U.S. Senate approved the ban last month, but the bill has yet to clear the House.

Analysts Carnevale and Teige expect, however, that any final bill would limit punishment to a fine or a ban on government purchases of Toshiba products. The Pentagon already has delayed awarding contracts to Toshiba, including a $100-million purchase of laptop computers.