U.S. Must Get in Race On High-Definition TV
During the Olympics, television viewers were exposed to a commercial by Samsung, which is aiming for a gold medal in what may well be the most significant upcoming development in consumer electronics: high-definition television, or HDTV.
The ad depicted a listless American viewer coming alive when his remote control switches to channels carrying images of unprecedented quality. The leading Pacific Rim electronics companies working furiously on HDTV, of which Samsung is one, have every right to feel confident that they will win this race on the next generation of consumer products, since the American team is seriously handicapped.
High-definition television is both a major opportunity for, and a threat to, the United States. It will bring picture and sound of breathtaking quality to the American home. But the technology of HDTV provides much more than just pretty pictures; it will advance medical imaging, the space program and air traffic control, to name just a few applications. The Japanese commercialized HDTV for their own use during this year’s Olympics. Now they are attempting worldwide penetration with a system built around seven-year-old technology.
America’s technological apostasy began 20 years ago when our consumer electronics industry moved offshore, primarily to the Pacific Rim. At the time, we thought that the availability of low-cost labor would save us. Instead, we have now almost totally lost this very basic industry as design, engineering and manufacturing know-how followed production overseas.
Much of our trade deficit with Japan results from our purchase of electronic goods invented by Americans but that are now manufactured overseas. These include cassette and video recorders, television sets and floppy-disk drives for computers. Admittedly, a large number of TV sets are manufactured by companies in the United States, but except for Zenith--which is now the target of Wall Street takeover attempts--all are Japanese-owned. Many people think that jobs are our only concern and therefore believe that it does not matter who owns the factories. My view is that it matters a great deal; the profits from these foreign-owned factories flow out of America and support the next generation of research performed offshore.
Richard Elkus, who invented the home video recorder at Ampex Corp. 20 years ago, recently told Congress, “If the United States does not ultimately become a . . . predominant supplier of products to the HDTV marketplace, the resulting change in technological leadership will have an extraordinarily negative effect on our standard of living, political and economic leadership, military preparedness and the general control of our destiny as a nation.”
Because of its highly sophisticated signal processing, HDTV requires extremely complex circuitry. The high volume of these sophisticated chips will generate huge revenues for the underlying semiconductor industry. These funds will in turn support research and development on the succeeding generation of chips. Should this next generation of semiconductor technology development be performed offshore, it will all but guarantee the demise of our domestic computer industry.
Lest this forecast sound too xenophobic or pessimistic, I do believe that there is hope for a U.S.-based industry. The Europeans, for example, have joined together in a consortium called Eureka, one of whose goals is to fight the Japanese HDTV invasion. They have already spent more than $200 million to develop a unique European system. Can we do any less, or will we give up without a fight?
HDTV, high-performance semiconductors and supercomputers are all markets targeted by the Japanese. Our successful competition with them will depend on establishing a long-range view and fostering cooperation among those in the academic, public and private sectors who can contribute to the development of a home-grown HDTV industry. The free market is incapable of driving an American HDTV industry, not only because we lack a significant domestic TV-set manufacturing base, but also because it cannot provide the driving force to bring together the divergent technologies that HDTV requires.
Congress enthusiastically supports efforts by American companies to re-enter the consumer electronics arena. But a successful program also requires the whole-hearted support of the President and his Cabinet. They must take advantage of such new legislation as the recently enacted trade bill, one of whose provisions contains the mechanism to bring together the underlying high-definition television support technologies. A truly broad-based consortium will also require funding and some changes in U.S. anti-trust laws.
The United States must go for the gold. And there is considerable gold at stake. HDTV receivers alone represent an estimated American domestic market in excess of $20 billion a year within 10 years. We must not hand the enormous potential of this industry to our trading partners. This contest has no silver medal.
