Japan's government-supported high-tech industries are becoming so sophisticated that by 1990 there is a "reasonable probability" that America's defense establishment will become dependent on them for vital national security needs, a top Reagan administration trade official said yesterday.
Those needs include semiconductors, telecommunications equipment and computers.
"It is my belief that U.S. high-tech industries, as a class, are seriously threatened by Japan's targeted industry practice," in which the government picks areas for Japanese businesses to attempt to gain world predominance, said Commerce Undersecretary Lionel H. Olmer.
A former Motorola executive with wide business experience in Japan, Olmer said he sees "a competitive decline on our side" because many American companies "believe they are competing against the Japanese government" instead of against individual businesses.
Olmer, head of the Commerce Department's International Trade Administration, will fly to Japan Friday to see how the Japanese high-tech industries operate and to formulate possible administration positions for supporting domestic companies.
Olmer will be the first administration official to have the chance firsthand to try to impress upon Tokyo's new government leaders that America is serious about pressing Japan to open its markets to more U.S. imports.
Over the past two weeks, administration spokesmen have attacked the Japanese for failing to live up to past promises to reduce trade barriers and have insisted that America's patience is wearing thin.
The issue of the potential Japanese domination of the world's high-tech markets is coming under increasing discussion in government agencies and private think tanks.
A Cabinet Council on Commerce and Trade study on competitive aspects of American technology, which generally follows Olmer's views, is undergoing final revisions, and should be released within a month. A more technical National Academy of Sciences study is also expected to be released soon.
Japan has captured such a large portion of the world's market for semiconducters -- tiny chips first developed in the United States that are key to modern microelectronics -- that many scientists and trade officials fear it threatens to do the same in the computer field.
At present, Japan annually exports to the United States about $150 million more semiconductors than U.S. firms sell there.
The most conspicuous recent example of Japan's ability to take over the market for high-tech products is the 64K RAM (64,000 bits of random access memory) silicon chip that can hold more information than than a roomful of old computers. Although the inch-long chip was developed in northern California's Silicon Valley, Japan now holds more than half of the 64K RAM market, which is expected to reach $1 billion in sales soon.
Olmer said high-tech industries play a special role in America's future economic growth as well as its national security and, thus, deserve extra consideration from the government.
He said the high-tech field has a record of creating jobs at a rate greater than more traditional industries and of leading the economy's productivity growth, which contributes markedly to deflation. What's more, it is the new area of growth in what many see as an information age.
"If the U.S. cannot compete in developing components needed for it high technology ," said Olmer, "it will be left behind and jobs of the future will not be created."
To give America's high-tech industries a boost, Olmer said officials are looking into possible changes in patent, tax, antitrust and education policies as well as the speed with which federally funded research and development goes from labs to commercial application.
While American R&D funding essentially has remained static over the last decade, Japan and some Western European nations have greatly expanded their research investment.
Tax policy changes could reduce the depreciation time on equipment for high-tech industries, which, as a result of rapid technological advancement, sometimes become obsolete in as little as 18 months, whereas the minimum allowance for equipment depreciation is three years.