U.S. Gains Ground in World Chip Market : Technology: But three Japanese firms remain at the top, a research firm found.
American companies last year increased their share of the worldwide computer chip market for the first time since 1979, largely as a result of strong performances by Intel and Motorola, according to the market research firm Dataquest.
But three Japanese companies--NEC, Toshiba and Hitachi--retained the top spots in the annual market share rankings, and analysts said the U.S. gains did not necessarily represent a reversal of the decade-long decline of the American chip industry.
“U.S. companies have probably seen the trough in terms of losing market share,” said Jerry Banks, director of the semiconductor group at San Jose-based Dataquest. “But I don’t know that their share will grow again. Over the next four or five years it will probably remain around the same.”
Semiconductor chips, complex slivers of silicon that control functions of computers and many other electronic products, were invented in the United States, and the industry was long dominated by American companies. But since the 1970s, Japanese firms gained ground against their American and European competitors, and they controlled 52.1% of the market in 1989 before slipping to 49.5% last year.
North American companies--almost exclusively U.S. firms--held 57.7% of the world market as recently as 1980, but that share reached a low of 34.9% in 1989 before recovering to 36.5% last year. The chip industry has become a symbol of America’s struggle to compete with Japan in high technology and the focus of a long-running trade conflict between the two countries.
The modest increase in U.S. market share last year resulted from a shift in the relative value of different categories of chip products. The market for large, complex chips--such as the microprocessors that form the brain inside personal computers--grew by 23% last year, and U.S. firms are very strong in those areas.
Intel, whose hot-selling line of microprocessors has become a standard for personal computers, leaped from eighth place to fifth place among all chip companies on a 29% gain in revenue. Motorola, also a major player in microprocessors and related products, remained in fourth place and posted an 11% revenue gain.
By contrast, the market for widely used memory chips, the largest single chip category, fell by 17% as a result of heavy competition and price cutting. U.S. companies have all but abandoned most segments of the memory chip business, so it was the Japanese firms that bore the brunt of the decline.
Dataquest said the overall chip market grew 2% last year to $58.4 billion. The figures do not measure the chips major computer firms, such as International Business Machines, produce exclusively for use in their own products.
Analysts said that U.S. companies should continue to benefit from the boom in demand for microprocessors and related products, but cautioned that memory chip prices were likely to rebound, and that it will be very difficult for U.S. firms to make further gains.
“The things U.S. companies do well have tended to increase as a percentage of total chip sales,” said Andrew Rappaport, president of Technology Research Group in Boston. He added, however, that Japanese companies are making huge investments to improve their capabilities in these areas, and thus “it would be very dangerous to get a false sense of security.”
And Richard Shaffer, president of Technologic Partners in New York, said that memory chips would continue to grow in importance as faster, memory-hungry computers emerge.
CHIP RANKINGS Worldwide semiconductor market share rankings
1989 1990 1990 revenue revenue market Company (in billions) share (%) NEC $5.0 $5.0 8.5 Toshiba 4.9 4.9 8.4 Hitachi 4.0 3.9 6.7 Motorola 3.3 3.7 6.3 Intel 2.4 3.1 5.4 Fujitsu 3.0 3.0 5.2 Texas Instruments 2.8 2.6 4.4 Mitsubishi 2.6 2.5 4.2 Matsushita 1.9 1.9 3.3 Philips 1.7 1.9 3.3 National Semiconductor 1.6 1.7 2.9 SGS-Thomson 1.3 1.5 2.5 Sanyo 1.4 1.4 2.4 Sharp 1.2 1.4 2.3 Samsung 1.3 1.3 2.3 Siemens 1.2 1.2 2.1 Sony 1.1 1.2 2.0 Oki 1.2 1.1 1.8 Advanced Micro Devices 1.2 1.1 1.8 AT&T; 0.9 0.8 1.4
Source: Dataquest
