share erosion unless the fundamentals of the situation can be turned around. Moreover, the entry of Japanese RISC microprocessor manufacturers and the shift to ''multimedia" computing and other memory-intensive systems will enhance the market strengths of Japanese chip makers who will compete with other Asian makers for global market share. However, the implications of the shift from logic to memory intensiveness are not as yet entirely clear. New assessments in early 1992 of a U.S. semiconductor industry resurgence were tempered by questions as to whether the real trend was toward "stalemate," or "stabilization" with neither Japanese nor American producers gaining much ground. 37

In sum, unless fundamental changes are made in the way business is done, the U.S. semiconductor industry seems likely to be headed for either Scenario 2 or perhaps the slippery slope of gradual decline outlined in Scenario 3. Of the two, Japanese companies probably would prefer to see Scenario 2 materialize; a continuation of the status quo would be less likely to aggravate potentially volatile trade tensions. To maintain the status quo, however, U.S. companies will have to pay greater attention to their competitive fundamentals, including the retention of a viable manufacturing infrastructure at home. Japanese corporations will have to do more than they have in the past to ensure a full reverse flow of technology, better access to Japanese markets, and a clearer commitment to reciprocity.


See Andrew Pollack, "U.S. Chip Makers Stem the Tide in Trade Battles with Japanese," New York Times, April 9, 1992.

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