How the United States stopped Japan’s Toshiba from becoming the world’s leading chipmaker.

In the 1980s, American policymakers saw Japanese chipmakers as their biggest threat.

Smiling US Congresswoman Helen Delich Bentley took turns with her colleagues to sledgehammer a stereo Toshiba inside the Capitol.

“Treason by any other name is still treason,” Bentley told the assembled reporters. “But if it had another name, it would be Toshiba. »

The incident happened in July 1987, when the Japanese electronics giant was facing a controversy centered on the national interests of the United States and their quest to maintain their technological hegemony on the world stage.

One of Toshiba’s divisions had sold key technology to the former Soviet Union, helping it develop advanced submarines. Such exchanges with the Soviet military at the height of the Cold War were considered a cardinal sin by US lawmakers.

As a result, the US hit Toshiba with sanctions and millions of dollars in revenue were wiped from its accounts, its products being subject to heavy import taxes and US companies cutting ties with the company.

Realizing the importance of the US market, executives of the Japanese company – which made a range of products from batteries, televisions and laptops to nuclear power plants – ran full-page ads in dozens of US-based newspapers. United States to apologize to the public. Heads rolled at Toshiba. Many members of the management team have been fired.

Toshiba – which, along with Sony, Mitsubishi Corporation and other Japanese companies, defined the East Asian country’s incredible rise – is now only a shadow of itself.

The company, which invented NAND flash memory chips and introduced Japan’s first color television, is on sale after years of losing money and selling off parts of its business.

Toshiba and other Japanese chipmakers adopted automation early on to reduce the cost of producing semiconductors.
(AP Archive)

While Toshiba’s decline is linked to internal mismanagement, its semiconductor division has never been able to regain its leading position in the global chip market.

Before the US sanctions, Toshiba was the world’s second-largest chipmaker, ahead of tech giants like Intel and IBM.

Toshiba, however, remains one of the largest semiconductor producers in Japan.

The first flea war

By the mid-1980s, when Toshiba faced retaliation for its business dealings with the Soviet Union, tensions were already high due to the growing influence of Japanese companies in the US market.

Toyota and other Japanese automakers had pushed out many big brands like General Motors and Ford.

By the 1980s, Japanese semiconductor companies NEC Corporation, Toshiba and Hitachi had overtaken American technology companies such as Intel and Fairchild Semiconductors to become the world’s leading chipmakers.

Japanese companies dominated the memory chip market thanks to falling costs; automating production processes and reducing waste increased the number of usable chips that could be cut from the silicon wafers.

The rise of Japanese semiconductor manufacturers was aided by government initiatives such as the VLSI (Very Large Scale Integrated) Semiconductor Project, which encouraged industry collaboration on modern technologies and a consumer market booming.

“When Japan became the leader in semiconductors, especially in the memory market, friction between Japanese and Americans erupted in the semiconductor field,” said Hiroo Kinoshita, a Japanese scientist who played a role crucial in the development of the tools used to manufacture modern chips.

“It was the beginning of the decline of the Japanese semiconductor industry,” he says. TRTWorld.

US policymakers have gone after Japanese semiconductor companies in the same way they recently did to hamper Chinese firm SMIC or market-blocked telecommunications giant Huawei. 5G in developed countries.

Washington has accused Japan of manipulating its currency, the yen, by deliberately keeping its value lower than that of the US dollar to help Japanese exporters – meaning more gains for exporters earning in dollars.

Japan was forced to appreciate the yen, triggering decades of economic stagnation. Toshiba, Hitachi and other chipmakers were hit with 100% import tariffs and Japan was forced to open its market to American companies.

Fujitsu, another Japanese giant, was publicly attacked by Malcolm Baldrige, then US Secretary of Commerce, when he attempted to acquire Fairchild Semiconductor, a Silicon Valley pioneer behind the development of the first practical integrated circuit.

“Since then, his [Japan’s] the semiconductor industry has entered an ice age under the dual impact of forced self-restraint on its semiconductor exports and the acceptance of a domestic market share of at least 20% for American products,” write Chen Fang and Dong Ruifeng in their book titled Deciphering China’s Microchip Industry.

The United States is currently engaged in a similar standoff with China. Last month, President Joe Biden introduced the toughest export restrictions ever, preventing Chinese semiconductor companies from acquiring the tools and equipment needed to produce advanced chips.

But the similarities in the cases of Japan and China stop at the point where Washginton wants to protect his industry.

“There is only a superficial similarity. In the case of the Japanese, the United States never sought to cut off the flow of technology to Japan. They only sought to end the dumping of the Japanese market at prices below the cost of production,” says Clyde Prestowitz, president of the Washington-based Institute for Economic Strategy.

“But Japan was never seen as a geopolitical threat to the United States.”

Source: TRT World

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