NEWS ANALYSIS : U.S., Japan on a Collision Course Over Chip Trade : Technology: Officials from the two nations will meet to discuss the intractable problem of market access.

The United States and Japan are on a collision course on semiconductor trade.

And when officials from the two nations meet Thursday to consider new measures to boost lagging American chip sales in Japan, an effort the U.S. chip industry considers critical to its long-term competitiveness, they will be hard pressed to avert a crash.

Japanese officials say they will intensify current efforts to boost American chip sales, but they have no new proposals to offer at the upcoming talks here.

Meanwhile, American trade negotiators are showing impatience with promises that appear sincere but produce few results. “We are extremely troubled by the lack of progress in improving access to the Japanese market for foreign semiconductors,” U.S. Trade Representative Carla Anderson Hills said in a statement last week.

She announced a special review to determine whether Japan is abiding by a 1991 semiconductor agreement, a move that could result in new U.S. sanctions.

Under the pact, Japan agreed to make its chip market more accessible to foreign companies and to try to boost the foreign share of its chip market to 20% by the end of 1992.

Today, with foreign vendors’ share of the Japanese market stagnated at about 14%, few believe that the target can be reached.

In April, the latest month for which Japanese data is available, sales of American-made chips plunged 22.4% from the year before, while overall chip sales fell by only 5%. Those numbers suggest that U.S. chip makers are losing, rather than gaining, ground in the Japanese market.

The chip agreement is written in ambiguous terms and it will be difficult for Hills to determine conclusively that Japan has failed to implement it. But industry observers say Hills’ action is the first in a series of steps toward new sanctions against Japan. The announcement, coming just a week before the talks, seemed designed to spur greater Japanese action.

The Reagan Administration imposed $300 million in tariffs on a wide variety of electronics after determining in 1987 that Japan was not making progress toward meeting terms of a 1986 agreement, which had set a 20% market share goal for U.S. vendors.

The sanctions did seem to motivate the Japanese. U.S. market share rose to 13% by 1990 from 8.5% in 1986 (where it had been stuck for nearly a decade).

American companies have a 56% share of semiconductor markets outside Japan and have argued that they would have at least a 20% share of the Japanese market if it was as open as European and U.S. markets.

Japanese officials say the United States should be more appreciative of Japan’s efforts. “The Japanese government and Japanese industry have made great efforts to increase access to the market,” said Setuo Iiuchi, deputy director of the America’s division at the Ministry of International Trade and Industry.

Iiuchi said Japanese companies have designed American semiconductors into dozens of products, from the electronic systems of automobiles to camcorders, moves that he said will result in increased U.S. exports to Japan over the long term.

But Japanese executives are increasingly expressing defiance.

“There is no reason why we should have to listen to MITI’s demands,” one Toshiba executive said. He said Americans can’t sell more in Japan because their semiconductors simply don’t meet Japanese market requirements for consumer electronics.

Some Japanese executives warn that the veiled American threat of sanctions will prove self-defeating.

“It is dangerous to think restrictions will lead to better results,” warned Nobuo Kanoi, deputy President of Sony Corp. and vice chairman of the User’s Committee of Foreign Semiconductors, a group created to promote foreign chip sales. Kanoi said he and others are now trying to persuade young engineers in smaller companies to use foreign chips.

“If restrictions discourage engineers, then automatically the number of (foreign chips designed into Japanese products) will fall,” Kanoi said.

Kanoi said it is unreasonable for the United States to expect increased market share when Japanese companies are facing falling demand, mounting inventories and huge overcapacity.

American executives complain that no conditions appear appropriate for boosting market share. When Japan’s market was booming, the Japanese said it was unrealistic to expect gains in market share because it would require an astronomical jump in sales, said Norman Neureiter, director of Texas Instruments’ Asia office in Tokyo.

The more fundamental problem may be Japanese companies’ reluctance to depend on foreign companies for crucial components in their products.

“The whole history of Japan’s technical development has been the effort to achieve technological independence. As soon as they can make something, they don’t want to buy it,” Neureiter said.