Don't count out Japan
02/01/2000
A lot has been written lately about Japan's sluggish recovery. This is in stark contrast to a couple of decades ago, when Japan became the global leader in consumer electronics and DRAMs, and flooded the world with well-built, fuel-efficient automobiles. Japan's Ministry of International Trade and Industry pushed exports while strongly discouraging imports, a model that proved so successful it was soon being imitated all over Asia — often with loans from banks that were at the heart of the Japanese conglomerates known as kiretsu, such as Sumitomo (including NEC), Mitsubishi, and Hitachi. In the US semiconductor industry, concern peaked when Japanese companies moved into the lead in lithography, which is such a critical step in chipmaking. This led to the formation of Sematech, a government-backed consortium dedicated to maintaining US strength in chip-processing technology.
How things change! Today, Sematech is an international R&D and consulting enterprise — free of US government subsidies — with members in Europe, Taiwan, and Korea, although not yet in Japan. (It does, however, cooperate with Selete, Japan's own chipmaking consortium.) US policy is to help Japan revive its economy, partly because of a swollen negative balance of trade due to the thriving economy in the US.
With Japan in the doldrums, particularly during the downturn of the last couple of years, it gets little of the intense attention it once received. The hot areas for process tools and materials have been predominantly Taiwan — which kept going even through the Asian flu episode — and recently Korea and Singapore.
Those who choose to ignore Japan as a major force in the emerging Information Age economy now taking shape are likely to be surprised in the future, however. While at the government level Japan has been sluggish in implementing the policy changes needed to extract its financial system from excessive debt, the high-tech sector is well on its way to emerging from the abyss and re-establishing its pre-eminent position.
Even though the process of downsizing and restructuring did not sweep rapidly through Japan as it did in the US, there have been gradual moves to rationalize troubled companies, including sell-offs, layoffs, and even plant closings, in spite of the strong cultural taboos that made such moves almost unheard of in times past. Some bank mergers have been taking place and even a few closures. Once- fierce rivals have begun to forge partnerships and alliances that can reshape the business to capitalize on emerging market trends. DRAMs were hardest hit in the recent downturn, and some of this fab space has been turned over to flash memories, a fast-growing, more lucrative sector. Toshiba, probably the hardest hit, is shedding its LSI testing unit (to Advantest) and has sold its mask shop to DaiNippon Printing as part of a new joint venture. Hitachi is joining NEC in DRAMs. Sony is collaborating with Toshiba on a new 128-bit microprocessor, made in a specially built fab. This superchip will start out running game machines with dramatic 3-D graphics, but will then be supported as an embedded processor for what may be a wide range of advanced applications.
At the same time, there is a growing number of smaller entrepreneurial companies, once rare in Japan, building a sub-layer into the economy that could generate the Sonys and Hondas of the future. A new five-year national program is being organized to push forward semiconductor technology for the 100nm generation and beyond. The last time Japan had a similar program, chipmakers there not only caught up, but in some cases moved ahead of the rest of the world. Industry-wide collaboration is needed to shift into the system-on-a-chip or system LSI era, and Japan has proven to be much more adept than the US or Europe at this type of noncompetitive coordination.
A new day may soon be dawning in the land of the rising sun.
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Robert Haavind
Editor in Chief
[email protected]