Japan, SIA clash expected; foreign semiconductor market share up just 0.1% in Q4

Electronic News, April 6, 1992 by Jack Robertson

Foreign semiconductor market share up just 0.1% in Q4

WASHINGTON -- Japan last week reported a minuscule change in the foreign share of its semiconductor market in the fourth quarter of 1991 -- at 14.4 percent -- setting the stage for a major confrontation with the Semiconductor Industry Association in June.

SIA last week continued to rail at Japan for again failing to live up to the promised goal of a 20 percent foreign market share. The U.S. association got added support from U.S. Trade Representative Carla Hills, who charged "The stagnation in foreign market share is a serious concern. It is critical that the Japanese government and industry intensify their efforts to improve access to their semiconductor market."

The latest foreign market share figures, released jointly by the U.S. and Japan, showed a 0.1 percent increase from the third quarter of 1991, but are still below a 15.5 percent market share reached in the second quarter of 1990.

The joint government release specifically excludes making any dollar or yen estimate of the total Japanese semiconductor market, but the World Semiconductor Trade Statistics (WSTS) program separately listed the total market in Japan in the 1991 fourth quarter at $5.3 billion. A 14.4 percent share of that total is $763 million.

The fourth-quarter results may portend a face-to-face showdown between the SIA Board of Directors and the Electronic Industries Association of Japan (EIAJ) the first week of June in Tokyo. Daryl Hatano, SIA international director, last week said "Every day that we don't see any major progress in getting closer to the expected market access in Japan creates greater pressure of counter-action. If the situation hasn't changed by the time we meet in June, the stage will be set for taking meaningful action."

For six years under two separate U.S.-Japan Semiconductor Agreements, the foreign semiconductor market share in Japan grew from about 8 percent at the beginning of 1986 to 14.4 percent at the end of 1991, but below the U.S. long-specified target of 20 percent. The American industry has complained that after a significant market rise in 1987-8 after the U.S. government levied sanctions against Japan, the foreign share hasn't grown much more than 1 percent in the last two years.

SIA's Mr. Hatano warned that sanctions could once again be levied against Japan if more progress is not forthcoming. He declined to comment on whether SIA would bring up the threat of sanctions in its June meeting with EIAJ. "We are in an education process talking with industry and government leaders. Before you discuss sanctions, you must establish your case."

Sanctions, however, are a sensitive issue with many parties involved on both sides of the Pacific. Even SIA itself cannot yet reach a consensus on imposing sanctions against Japan. Its board of directors meeting in Washington last month failed to come to any decision, even though some vocal factions within the association want strong action to force greater Japanese buying. SIA won't comment on any division of opinion within its ranks, but IBM, AT&T and Texas Instruments, among others, are seen as taking a cautious approach, while such firms as AMD, Micron Technologies and National Semiconductor are seeking stronger action.

Many product customers for SIA's merchant firms are watching the growing confrontation nervously. If the dispute did go so far as bringing U.S. trade sanctions into play, the U.S. systems customers could be directly impacted by punitive duties on items they may import from Japan. The Computer Systems Policy Project (CSPP) group of 13 computer company CEOs was formed when they felt their interests were severely affected by many provisions of the first U.S.-Japan Semiconductor Agreement.

The statistical ammunition is now loaded for both sides leading up to the June sessions of the two national industry associations, because any new figures on Japanese market access won't be available until the end of June. The totals showing foreign market share in the first quarter of 1992 could have the biggest impact of all on the next stage in the six-year access controversy.