Will Japan’s Success on Chip Pact Short-Circuit? : Technology: Officials worry that a newfound market-share peace reached with the United States could be short-lived.

You might have thought Japan would be heaving a collective sigh of relief.

Japan’s unexpected success in boosting foreign companies’ share of its semiconductor market to 20% in late 1992 seemed likely to end a long-running trade battle with the United States.

But Japanese government and industry officials fret that the newfound trade peace could be short-lived. They worry that Japan will be unable to maintain the 20% market-share goal, set in a 1986 trade agreement between Washington and Tokyo. There are also concerns that the Clinton Administration may try to apply the lessons of the chip agreement--the successful use of market-share targets--to other industries in which the United States is demanding greater access, such as automobile parts.

Officials here say the leap in foreign share of Japan’s computer chip market during the last three months of 1992 came only after a senior Ministry of Trade and Industry official called in representatives from 70 major Japanese companies to ask them to buy more foreign chips.

Japanese companies went on a buying binge of U.S. products, contributing to recent complaints that American manufacturers couldn’t supply Japan with chips in a timely fashion.

Another factor in the growth of foreign market share in semiconductors was the unusually rapid shrinkage in overall chip sales in Japan. Japan’s semiconductor market shrunk last year by 6%, to about $21 billion.

Japanese companies, which make virtually all the chips used for stereos, televisions and other consumer electronics, were hurt by a steep slump in sales of those products.

That reduced Japan’s share of domestic sales. While this gave U.S. companies a larger share of the Japanese market, industry officials say Japan’s share would probably rise again if consumer electronics sales pick up. “It is important not to become overly optimistic when the quarterly numbers rise or overly pessimistic when they do not,” warned Nobuo Kanoi, a Sony Corp. vice president.

Regardless of whether Japan manages to keep its share about 20%, few question that the agreement has helped break open the Japanese market.

While there is talk in Washington of using the semiconductor agreement as a model for other sectors, the pact may not be easily replicated. Few American industries are as well-organized or as competitive as the semiconductor business.

And Japanese officials still complain about what they regard as an attempt by the United States to deliberately distort the 1986 chip agreement. American trade officials have said they regarded the 20% market-share figure as an obligation on Japan’s part, while the Japanese have interpreted it more loosely.

“Even though it is clearly stated in the agreement as an ‘expectation,’ it was misunderstood in America (as a commitment),” said Sozaburo Okamatsu, director general of International Trade Policy at the Ministry of International Trade and Industry.

Okamatsu vows to never repeat that mistake. “We are not a state-planned economy,” he said. “We can’t promise market share.”