SIA: accords push Japan market share to record

Electronic News, August 11, 1997 by Jim DeTar

San Jose, Calif.--The Semiconductor Industry Association (SIA) is saying that last week's numbers, when semiconductor foreign market share hit a record 32.6 percent in Japan, demonstrate that the trade accords hammered out so laboriously between the U.S. and Japan in a little over a decade have had a positive impact.

Increased foreign access to the Japanese market, coupled with a jump in the purchase of chips for computers, helped catapult foreign company sales in Japan to an all-time high during the first quarter of 1997, according to numbers released by United States Trade Representative (USTR) Charlene Barshefsky in Washington.

Commenting on these latest numbers, SIA president George Scalise said, "We're doing a better job of reaching customers in Japan because of the cooperative market access activities we established with Japan under the umbrella of the trade accord."

The first quarter foreign share number is 3.2 percentage points higher than the 29.4 percent number recorded in the fourth quarter of 1996. It also exceeds the prior all-time high of 29.6 percent that was set in 4Q95.

Referring to the trade accords signed between the U.S. and Japan beginning in 1986, than again in 1991 and 1996, an SIA spokesman said "This is not only a good sign for U.S. companies but also means the trade policies have had the impact they were supposed to, which was to encourage the opening of Japan despite Japan's reluctance to do so."

The spokesman conceded, however, that other factors are at work as well. "Realistically, there are some market reasons that this has happened as well. But, from our standpoint, this is proof that trade agreements work, and in particular the U.S.-Japan agreement."

The market reasons the spokesman alluded to include a vastly fluctuating yen and the recent strength of the Japanese market, which set the pace in terms of growth in semiconductor shipments last month (see related story on this page).

"There have been major fluctuations of the yen all year long. This has the reverse impact on the U.S. dollar. I hear estimates that some of the decline in sales in Japan is only happening because of the change in yen and does not reflect a decline in units. The idea of Japan's economy slowly rebuilding and increasing sales of consumer products like computers is all reasonable too," the spokesman said, before he returned to the theme that the trade accords set the stage for these other factors to also contribute to increased foreign market share.

"We attribute the increase in market share to a variety of reasons but, because the trade agreement was such a lightning rod, I think no one would argue it had no impact."

Since the most recent trade accord was approved by the U.S. and Japan negotiators last August, foreign market share in Japan has jumped 6.2 percentage points--the second highest three-quarter total recorded in Japan's market. The largest three-quarter jump occurred between the first and fourth quarters of 1995, when the number increased from 22.8 percent to 29.6 percent.

The trade agreement is designed--according to the SIA--to ensure continued progress in opening Japan's market to foreign competition and to improve cooperative programs between users and suppliers in Japan. While there have been three separate trade agreements--1986, 1991 and 1996--most of the change has occurred in the mid-1990s. Five years ago, for example, foreign market share was 14.6 percent, less than half what it is now.

"Obviously we are encouraged by this growth of share in Japan," Mr. Scalise said, adding, "But we believe that more progress can be made. We will continue to work with our Japanese customers on market access programs and with Ambassador Charlene Barshefsky to remove trade barriers in all markets around the world."

1Q Share: 1992-1997

1Q92    14.6
1Q93    19.6
1Q94    20.7
1Q95    22.8
1Q96    26.9
1Q97    32.6