Texas Instruments Joins HDTV Race
The advent of high-definition television has refocused U.S. interest on the estimated $170-billion (in 1988) consumer electronics market that has been largely lost to the Japanese.
Although other market opportunities are strategically important, the long-term implications for the mainstay of the U.S. electronics market--data processing--make U.S. participation in this market a strategic imperative.
Recently, Texas Instruments announced that its Japanese unit agreed to receive advanced TV receiver technology from the Japan Broadcast Corp. Texas Instruments will develop semiconductor devices for the different HDTV signal transmission standards in Japan, Europe and the United States.
Both Europe and Japan have embraced the HDTV concept and are well along in their plans, while the United States is still engaged in political debate over the merits of the technology.
From a trade perspective, Texas Instruments’ approach answers one of the product deficiencies often cited by Japanese companies for not purchasing more U.S. semiconductors--that U.S. companies do not produce the consumer semiconductors that the Japanese companies need.
HDTV is expected to permeate other industries such as training and simulation, films, medicine, telecommunications and the military/aerospace industry. In addition, some see HDTV as the vehicle by which computers will become pervasive in the home--integrating telecommunications, entertainment and data processing. This convergence would represent a quantum leap over the personal computer of today.
Thailand’s Boom in Electronics
Thailand is emerging as an important, self-reliant manufacturing center that is becoming internationally competitive in a variety of products. Thailand’s strategic location, socioeconomic stability, supportive investment incentives and excellent work force have put it well on its way toward becoming Asia’s “Fifth Tiger,” joining South Korea, Taiwan, Hong Kong and Singapore.
Although growth and foreign investment have been strong in all areas of Thailand’s economy, manufacturing is in the lead, affecting the electronics industry. As Thailand’s boom takes hold in the late 1980s, major Japanese electronics companies are moving fast to establish manufacturing and office facilities there. European and U.S. companies clearly are not part of the move to Thailand, which is likely to be sustained during the 1990s.
Companies should assess the offshore manufacturing opportunities and potential markets that are on the rise in Thailand and other Southeast Asian newly industrialized economies. Matsushita, Minebea, Seagate, Sharp, Sony, Toshiba and others have chosen Thailand as their regional base. If the current trend continues, European and U.S. companies will be left out of yet another economic miracle in Asia, which will seriously hurt their global competitiveness.
Shifting Shares of Fax Market
The explosive fax-machine market is exceeding the expectations of even the more optimistic forecasts compiled over the last few years.
The installation of more than 1 million fax machines in 1988 represented a 145% increase over 1987. Since 1983, the compound annual growth rate for fax installations in the United States has averaged more than 95%. It is unlikely that these growth rates will be repeated, but the fax market is still expected to grow 23% annually through 1993.
The phenomenal explosion has been fueled by many factors, including growing awareness of the product and its inherent, unique capabilities. The recent trend to expand the use of faxes from medium and large offices to the estimated 13 million to 15 million smaller businesses and residential offices in the United States has also added to the rapid market expansion.
As is the case very often in new, high-growth industries, the market participants, as well as their relative share of the business, are likely to vary greatly from year to year. The fax market is no exception. In 1986, the top five market share leaders in the United States, based on installations, were Ricoh, Canon, Pitney Bowes, Sharp and Fujitsu, in that order. In 1988, the top five market leaders were Sharp, Murata, Canon, Ricoh and Pitney Bowes.
The market is growing so rapidly that doubling or even tripling an individual company’s shipments from year to year cannot guarantee that company’s relative market share position over the same period.
DRAMatic News on Computers
Dependence on dynamic random access memory, or DRAM, technology can cut computer system manufacturers’ revenues and profits. (A DEE-RAM is a semiconductor device in computers that stores information).
A group of U.S. DRAM users (Digital Equipment and Hewlett-Packard) has proposed the formation of U.S. Memories Inc. in alliance with IBM, a company that produces and uses relatively high volumes of 4 Megabyte DRAMs. (A 4Mb DRAM stores the equivalent of 2,400 pages of typewritten text). The aggressive goal of U.S. Memories is to produce 4Mb DRAMs in large quantities by the first half of 1991.
The venture will provide some protection against shortages, the perceived threat of foreign control over the market and government trade action that affects the market. The major risk of participation is the exposure of users’ confidential information. However, the risks of not participating in the venture include periodic spot shortages and premium pricing, more trade barriers to DRAM imports and competitive disadvantage compared to investors in U.S. Memories.
Foreign competitors that make electronic systems as well as DRAMs have demonstrated their ability to manage DRAM supply and pricing in the past. U.S. Memories offers users direct access to leading-edge DRAM technology from a U.S.-based supplier, IBM. The ultimate benefit of the venture really flows to the North American electronics industry as a whole because U.S. Memories aims to break the dependence of U.S. systems manufacturers on DRAM suppliers that also are competitors in systems businesses.
