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To those who believe that the Japanese electronics industry is mired in recession, a few facts are in order. The major Japanese electronics companies closed their worst year in recent memory on March 31, 1994. Even during this nadir of financial performance, NTT recorded over a billion dollars of profit, and Hitachi, Toshiba, and Matsushita over $500 million.2 When an American information technology company is in dire straits, it loses a billion dollars, yet somehow the media convinced Americans that Japanese companies were in deep financial trouble even as they continued to record profits. Since then, financial performance, and more importantly, morale, among Japanese information technology companies has improved. True, American stock analysts may be unimpressed, and there are many medium-and long-term business issues besetting Japanese information technology companies, but they will be around for a long time.

What about the notion that the United States enjoys a huge technological lead over Japan in all the right areas of information technology? Of course, even if the United States were ahead in, for example, signal processing, Japan can and does recruit that talent in America's open job market. Nevertheless, when advocates of American technical superiority focus on particular products, they often point to semiconductors. It is true that, in 1993, the U.S. share of the $77 billion world semiconductor market was larger than Japan's. But not by much: in 1993, the U.S. share by revenue was 43.4 percent, whereas the Japanese share by revenue was 40.1 percent, according to the World Semiconductor Trade Service, less than a 4 percent lead. So the United States is ahead by a nose. That is more encouraging than the 1990 ratio, in which the Japanese semiconductor industry had more than a 10 percent lead. But it is nowhere near the 53 percent of the world market that the U.S. semiconductor industry enjoyed in 1984.

If we consider the "food chain" leading up to the highest value-added information technology in which the United States excels, the situation is more disturbing. As a result of technological dependency on Japan, the United States was unable effectively to punish a company that sold missile parts to Iran and perhaps Iraq; the U.S. semiconductor industry was panicked by a sudden shortage of epoxy resin for semiconductor packaging resulting from an accident; and the U.S. computer industry has been unable at times to offer customers better or lessexpensive products.

Significant progress has been made in promoting U.S. sources of supply for certain critical technologies, but very little progress has been made in countering the growing ideological influence of Japan. Japan is an attractive model of economic success for the rest of Asia. The U.S. press often describes the Japanese consumer as downtrodden. Yet in 1960, Japan had a per capita gross national product (GNP) of only $477, barely 20 percent of that of the United States. By 1990, Japan's per capita GNP exceeded that of the United States, and had multi-


 Keijo rieki (operating profit) for FY 1993 (April 1, 1993-March 31, 1994) for NTT was 109.4 billion yen, for Hitachi 71.8 billion yen, for Matsushita 63.8 billion yen, and for Toshiba 53.7 billion yen.

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