Japan Hesitant to Buy More Foreign Chips : International trade: It may face new confrontation with U.S. unless it boosts purchases from foreign manufacturers.
Foreign companies’ share of the Japanese semiconductor market fell slightly in the July-September quarter, raising the chances of another major confrontation between the United States and Japan over the computer chip trade.
As part of a 1991 agreement aimed at opening the huge Japanese chip market to overseas producers, Japan agreed that foreign companies should have at least 20% of its market by the end of 1992. But figures released Tuesday by the U.S. and Japanese governments show foreign producers--mostly U.S. firms--with 15.9% of the market, down from 16% in the April-June period.
If foreign market share doesn’t increase significantly in the fourth quarter, the incoming Clinton Administration will have to decide whether to retaliate with import duties on Japanese products or other sanctions.
The chip trade issue could provide an early signal of Clinton’s willingness to take a tough line on trade, as many of his supporters hope. Though the Reagan and Bush administrations generally opposed trade actions that could be construed as protectionist, they have backed the U.S. semiconductor industry in its long campaign against allegedly unfair Japanese trade practices.
U.S. Trade Representative Carla Anderson Hills said Tuesday that the lack of improvement in the latest market-share figures “calls into question Japan’s resolve” to meet the 20% goal. “Japan’s efforts simply must be intensified if we are to avert a serious confrontation on this issue,” she added.
Andrew A. Procassini, president of the Semiconductor Industry Assn., a trade group, called the latest figures “extremely disappointing.” He added: “Our hopes for improved access to Japan’s market have once again been dashed.”
Semiconductors are used in most electronic products, from VCRs and camcorders to personal computers.
The chip trade controversy dates to the early 1980s, when American companies began losing big chunks of the U.S. market to Japanese producers such as Hitachi, Fujitsu, Toshiba and NEC. In 1986, the United States and Japan agreed to regulate semiconductor trade after Japanese firms were found guilty of “dumping,” or selling memory chips abroad below cost.
One year later, the United States imposed punitive duties on $300 million worth of Japanese electronics products in retaliation for Japanese violations of that accord.
The 1991 agreement extended the earlier accord but did not include controversial provisions fixing the prices of imported memory chips. Hills and the semiconductor industry regard the 20% figure as a binding target at the heart of the 1991 deal.
But Tokyo has maintained that 20% is merely a goal and that progress is being made. A year ago, foreign producers’ share stood at 14.3%. Japan also contends that chips produced by U.S. companies for use in their own computer systems--notably by International Business Machines--should be included in the foreign market share calculation.
Statistics for the October-December period are due out in March. If there is not a major improvement in Japan’s purchases of foreign chips, the U.S. semiconductor industry is expected to lobby hard for punitive sanctions.
Although Clinton has indicated that he may take a tougher stance on trade than his predecessors, the chip industry was disappointed when its chief political strategist, Washington attorney Alan Wolfe, was passed over for the job of U.S. trade representative. Instead, Clinton selected his former campaign chairman, Mickey Kantor, whose views on computer chip trade are not known.
