Foreign share in Japan tops 20%

Electronic News, March 13, 1995

SAN JOSE, CALIF.--The year 1994 marked the first time that the average annual average foreign share of the Japanese semiconductor market in Japan exceeded 20 percent--an oft-stated goal of the U.S. semiconductor industry, according to figures released last week by the U.S. and Japanese governments.

For 4Q ended Dec. 31, 1994, the foreign semiconductor market share in Japan was 23.7 percent under the U.S.-favored Formula One and 24.7 percent under the Japan-favored Formula Two, based on calculations performed in accordance with two U.S.-Japan government-signed semiconductor trade arrangements covering 1986-91 and 1991-96 timeframes.

Nevertheless, using Formula One, the Semiconductor Industry Association (SIA), here, said one of the industry goals "has now been realized" by the recording of the nearly 22.4 percent average for 1994. The SIA said the annual average foreign share of the Japanese market during the years has been: 1986, 8.4 percent; 1987, 9.6 percent; 1988, 11.2 percent; 1989, 12.9 percent; 1990, 14.7 percent; 1991, 14.2 percent; 1992, 16.7 percent, and 1993, 19.4 percent.

"The credit for this (1994) achievement must be directed to a variety of sources, including the two trade agreements, the dedicated effort of U.S. semiconductor manufacturers, the participation of Japanese customers, and the monitoring and encouragement of the U.S. and Japanese governments," the SIA said.

From Washington D.C., the Users' Committee of Foreign Semiconductors (UCOM) of the Electronic Industries Association of Japan (EIAJ) maintained that "These results and recent market share trends illustrate that foreign semiconductors are firmly established in the Japanese market. At the same time, international alliances and other factors are resulting in an increasingly borderless global semiconductor market. These factors, while making it more and more difficult to assign a specific nationality to a semiconductor product, are vital for the long-term development of the semiconductor industry."

The SIA, however, again called for sustained enforcement by the U.S. Trade Representative and Japan's Ministry of International Trade and Industry "to ensure continued progress under the terms of the successful trade pact," increased focus on market access for those segments of the Japanese market (automotive and telecommunications) where "the gap is greatest between actual and potential sales based on U.S. competitiveness," and serious deliberations involving U.S. industry and government and Japanese industry, government and customers aimed at maintaining the rate of steady progress in opening Japan's semiconductor market in th e coming years."

"Now that we have reached this milestone, we must redouble our efforts to achieving the ultimate goal of a full and complete access for foreign producers to Japan's semiconductor market," the SIA said. "We have come a long way but there is still much more that must be done in the coming years. Some of these tasks, which will require the continued cooperation of U.S. chip producers, both governments, and Japanese customers include: continued efforts to fulfill the steady progress provision of the trade agreement, ensuring the achievement of the 20 percent annualized average is not a one-time occurrence; additional major design-in agreements, trade missions, promotional activities, and other joint efforts that lead to a further opening of the Japanese semiconductor market."

A UCOM/EIAJ statement pointed out that Formula One (the only number released by the U.S. government) does not reflect pure-captive sales in Japan, while Formula Two includes pure-captives in its calculation, and that Formula One defines the nationality of semiconductors as that of the headquarters of the final assembly manufacturer, while under Formula Two, nationality is defined by brand name. The Japanese government releases both sets of figures.

For 1994, the previous quarterly numbers under Formula One and Formula two respectively, have been: 1Q, 20.7 and 22.0 percent; 2Q, 21.9 percent and 22.5 percent, and 3Q, 23.2 percent and 23.4 percent.

In another development last week, the North American semiconductor industry's preliminary February book-to-bill ratio was 1.12--unchanged from the January ratio which was revised upward from 1.10 to 1.12, according to data collected by the World Semiconductor Trade Statistics and released by the SIA.

North American semiconductor bookings in February were $3.70 billion-3.8 percent over January's $3.58 billion and 44.2 percent over February 1994's $2.57 billion and February billings were $3.30 billion--a 3.4 percent hike over January's $3.20 billion and 38.2 percent over February 1994's of $2.39 billion.

The SIA said once during the last 9 years the February ratio rose--in 1991 from 0.99 to 1.05; 5 times it declined and 3 times it was unchanged. The February ratio for the last 9 years has always been at or above the break-even 1.00 mark, according to the SIA. Ratios for the past 13 months are as follows: February 1994-1.07. March 1994-1.08. April 1994-1.09. May 1994-1.09. June 1994-1.07. July 1994-1.08. August 1994-1.08. September 1994-1.08. October 1994-1.04. November 1994-1.05. December 1994-1.07. January 1995-1.12 (Revised). February 1995-1.12 (Preliminary).