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"The Rise & Fall of the Japanese Semiconductor Industry, 1970 - 2000"

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"The Rise & Fall of the Japanese Semiconductor Industry, 1970 - 2000" Summary: The semiconductor was the created with the innovation of transistor by Bell Corporation. The industry was driven by the of great US electronic giants such as general Electronic, Texas Instruments and others. These US giants conquered most of the world market sharers. However in the ever-changing world economy the market always moves here to there. Nothing was different in the case of semiconductor industry. With the span of time US gradually lost control of the semiconductor market shares and Japan captured the industry. Nevertheless, it was only a matter of period to misplace the market share of semiconductor business by Japan. The time frame of semiconductor business started immediately after WWII and running even now. In a way the changes took place and how the shape of distribution of market has been changed was grounded by all time great market and economic mechanisms. Some argues those government policies and economic mechanisms in an optimistic viewpoint some obviously in sees in pessimistic view. However, this is known to all that the policies that have been part of the cause have made those countries the world's leader in electronic production as well as the economic super power of the planet. ...read more.


Initially, US firms found that licensing is a profitable way to place their business in Japan as they were receiving an amount of 10 percent of the net earnings from the licensees by the end of 1060s. This amount was paid as the royalty to the US firms by the Japanese local firms. Actually in other words MITI's policy was to insist that if a foreign firm was going to license technology in Japan meaning they are allowing the local firm to know how to make those things. Gradually the policy of the MITI got successful. Slowly but surely very soon the US companies faced the Japanese local firms as their tough competitor. The firms that raised to the top this tough environment, such as NEC, were more than capable of going head to head with US semiconductor firms by the mid-1970s. The most significant reason of this competition is as they have learnt the same technology; the features were more or less similar. All the competition was in between the pricing. Better the efficiency the firms had more the earned as profit. ...read more.


Secondly, the companies of Korea and Taiwan, particularly Samsung, gained DRAM market share in Japan. Even in 1988 Samsung never produced DRAM but in 1994 got more than 12 percent of market share lot ahead of Japanese giants like Mitsubishi or NEC. The investment on plants of digital chip making was lot higher by the Korean and Taiwanese company compared than Japanese or US. South Korean firms invested 55 percent of the revenue from the semiconductor revenue whereas Japanese did only 15 percent. The aggressive move from South Korea and Taiwan made them able to grasp the market share of Japan. Still now from 1991 Japan is losing its market share in semiconductor business. Also, The U.S. comeback in chips was due primarily to rapid growth in the market for microprocessors, the chips that act as the "brains" of personal computers. That market is dominated by Intel & Motorola. Intel's semiconductor sales increased from $1 billion in 1986 to about $4 billion in 1991, a gain that by itself is responsible for the U.S. share of the world market being about 5% higher than it otherwise would be. The Japanese attempt to develop its own microprocessor design standard - "TRON" failed in large part because there was no software to support it. ...read more.

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