U.S.-Japan Strategic Alliances in the Semiconductor Industry Technology Transfer, Competition, and Public Policy (1992) / Chapter Skim
Currently Skimming:
5 A Typology of Alliances
5 A Typology of Alliances
Pages 31-50
The Chapter Skim interface presents what we've algorithmically identified as the most significant single chunk of text within every page in the chapter.
Select key terms on the right to highlight them within pages of the chapter.
From page 31... ...
and Japanese semiconductor industries stand today. One would expect fabrication contracts, sales/marketing agreements, and joint development projects to be among the most actively sought and commonplace forms of bilateral alliances, given the current commercial situation.
|
From page 32... ...
The third cluster of alliance types, including joint ventures, product/technology-seeking investments, mergers, and acquisitions, encompasses the most enduring
|
From page 33... ...
Repeated Transaction/Quasi-Formal Bonds Standards coordination Regular exchange of technical personnel Joint development III. Costly Exit/Organizational Fusion Joint ventures Participation in research consortia Product/technology-seeking investment Mergers/acquisiiions Free Exit/Arms Distance Repeated Transactiord Stronger Bond Costly Exit/ Organizational Fusion 0 10 20 30 40 50 60 70 Number of Agreements FIGURE 10 Alliances by cluster grouping: 1990.
|
From page 34... ...
Although measuring the volume of one-way technology outflow through such public channels is impossible, the fragmentary and unsystematic evidence (such as the number of foreign nationals receiving graduate training in the United States) suggests that the volume of flow is heavy perhaps heavier than the one-way transfer through strategic alliances.
|
From page 35... ...
are common and relatively simple alliances to conclude; the costs and risks tend to be low but so too, by the same logic, are the advantages and benefits. Joint development projects and joint ventures represent far more challenging and complicated types of strategic alliances.
|
From page 36... ...
Thus, by their nature, joint development alliances Assembly and Test Agreement Second-Sourcing Technology Exchange Joint Venture Investment Joint Development Sales Agency Agreement Licensing Agreement Fabrication Agreement ~ ASICs [:~1 Memory 1~ CPU, MPU 0 2 4 6 8 10 12 14 FIGURE 11 Agreement type and product technology: 1990. SOURCE: Bruce Kogut and Dong-Jae Kim, "Strategic Alliances of Semiconductor Firms," unpublished report to Dataquest, January 1991.
|
From page 37... ...
Relatively few companies cross this threshold. Because joint development projects can be finely targeted and do not require permanent union but can be disbanded, the costs, risks, and difficulties tend to be significantly lower than they are for joint ventures.
|
From page 38... ...
The impact of certain forms of strategic alliances on the one- or twoway flow of technology is shown in Table 5. Whether, and to what extent, the various alliance mechanisms facilitate one-way or two-way technology transfer depends, of course, on the specific provisions of the agreements.
|
From page 39... ...
ASYMMETRICAL PAIRINGS: LARGE AND SMALL COMPANIES By disaggregating the 1990 data on strategic alliances according to size of companies, it becomes clear that the vast majority of U.S.-Japan alliances are between small- or medium-sized U.S. companies (many of them young start-ups)
|
From page 40... ...
Even if a small company happens to be cash rich or have access to lowcost capital—which is definitely not the typical pattern and even if it possesses a "hot" product or seminal new technology that attracts eager suitors, the need to come up with the best manufacturing arrangement and to find marketing, distribution, and servicing networks in Japan's challenging market often makes it imperative that small U.S. firms connect with one or more large Japanese corporate partners.
|
From page 41... ...
To kaisha, strategic alliances represent an indispensable tool for gaining immediate commercial advantage and moving down a longer-term learning curve. Alliances are not mandatory in the sense that their short-run survival depends on them, as is often the case for small U.S.
|
From page 42... ...
Almost as much as structural factors, however, the attitude and intent of Japanese companies go a long way toward explaining imbalances in the distribution of benefits. Japanese firms view strategic alliances from a longer-term time horizon and enter the relationship with the intention of
|
From page 43... ...
Whereas U.S. firms may gain access to low-cost fabrication facilities or realize short-term increases in sales from strategic alliances, their Japanese partners often have bigger objectives in mind, such as applying what they have learned to the development of whole families of new products.
|
From page 44... ...
Power Integrations has developed a way to integrate power supply and logic. The market for power supplies is very large because every electronic system from a complex mainframe computer to an electric toothbrush needs a power supply.
|
From page 45... ...
"Pure" equity with a longer time window would have been preferable, but the market will be large and the agreement maintains nCHIP' s rights to market directly in Japan. Capital is available in the United States to start new semiconductor firms if their contribution is considered focused on a specific issue in the ~~-qtq of o^~irmn~l,~rt~r t~.rhnolos~ies Since capital is not available to build fully integrated firms, alliances have become a way of life.
|
From page 46... ...
capital markets, the semiconductor industry's overreliance on the computer industry, and the absence of a substantial presence in consumer electronics—lead to difficulty in insuring that they make the most of alliances with Japanese companies. According to Robert Reich, U.S.Japan strategic alliances, even those bringing together partners of roughly equal bargaining power, have resulted in transfers of state-of-the-art technology to Japanese competitors.27 Not many alliances have been consummated between large Japanese companies outside the electronics industry and established U.S.
|
From page 47... ...
is a joint venture established in 1985 by LSI Logic and Kawasaki Steel, whose first manufacturing facility in Tsukuba began operations in 1987. Kawaski Steel made an initial investment of $175 million and owns 45% of NSI, while LSI Logic transferred its wafer process from its California plant and holds 55% equity.
|
From page 48... ...
, are large, nonelectronics Japanese firms willing to tie up with large Amencan semiconductor companies. When such large-large tie-ups do occur, they tend to take the form of joint ventures or joint development projects cluster II and III types of strategic alliances.
|
From page 49... ...
The combination of lifetime employment and intercorporate stockholding has the effect of closing off alternative routes of survival, such as mergers and acquisitions involving other Japanese companies. The underlying forces at work pushing Japanese firms to diversify should be kept analytically distinct from the factors that account for success or failure in implementation.
|
From page 50... ...
50 The need to diversify has been one of the driving forces behind a noteworthy trend in U.S.-Japan strategic alliances: namely, the proliferation of tie-ups between large Japanese corporations outside of electronics and both small and large American electronics companies. Whether these alliances will be sustained during a period of downturn and whether they will result in the building of substantial technical capabilities on the part of the large Japanese corporate partners are key questions for the future.
|
Key Terms
This material may be derived from roughly machine-read images, and so is provided only to facilitate research.
More
information on Chapter Skim is available.