Japanese semiconductor manufacturers responded yesterday to an their U.S. counterparts' charges of unfair trade practices by insisting that Japan's markets are open and that American complaints are a "red herring" to mask basic U.S. industrial deficiencies.
"The Semiconductor Industry Association's allegation that U.S. semiconductor producers are denied fair access to the Japanese market is a red herring and has no basis in law or reality," said Tomihiro Matsumura, a senior vice president of Japan's NEC Corp., at a press briefing to elaborate on the response by the Electronics Industries Association of Japan (EIAJ) to the Section 301 complaint filed by U.S. manufacturers.
Matsumura said the U.S. semiconductor industry is "exploiting general trade tensions in an attempt to seize a guaranteed share of the Japanese market."
In unusually blunt criticism, Matsumura maintained that the Section 301 complaint failed to show that the Japanese government has established any unreasonable trade barriers to U.S. semiconductor exports. Similarly, he argued that Japanese semiconductor companies do not discriminate against U.S. companies.
"No evidence of actual market barriers has been presented, for the simple reason that the market is completely open," Matsumura said.
The U.S. Semiconductor Industry Association (SIA) has said that "U.S. companies hold an 11.9 percent share of the Japanese market, while Japanese companies have a 17 percent share in the U.S." However, the EIAJ said that it calculates market shares for integrated circuit chips at 19.1 percent for U.S. companies in Japan and at less than 10 percent for Japanese firms in the U.S. market.
According to the SIA, the U.S. semiconductor market was $11.6 billion last year; the Japanese, $8 billion.
The Japanese figures focus on the market in computer logic and memory chips, while the SIA figures address virtually all kinds of semiconductor components, according to H. William Tanaka, a counsel to the EIAJ. The figures come in part from Japan's Ministry of International Trade and Industry and Dataquest Inc., a San Jose-based market research firm.
However, Dataquest disagreed with the EIAJ's interpretation of the figures, saying that "the Japanese are overstating U.S. sales in Japan" and understating the size of the Japanese market, according to Patricia S. Cox of Dataquest.
On the other hand, the EIAJ maintains that the SIA's figures are biased because they exclude the so-called "captive" manufacturers of semiconductors, companies such as International Business Machines Corp. that produce the chips for their own use and don't sell them.
The Japanese trade group also asserts that the SIA's figures include not only sales of semiconductors by companies such as Hitachi Ltd., Toshiba Ltd. and NEC Corp., but each company's production for its own use.
When both captive markets are factored in, "According to a preliminary analysis conducted by the Ministry of International Trade and Industry (MITI), the U.S. share of the Japanese market for integrated circuits last year was 19.1 percent while the Japanese share of the U.S. market was only 9.6 percent," the Japanese manufacturers said.
However, because companies such as IBM do not disclose the size of their internal semiconductor operations, determining the true size of captive markets is difficult, according to analysts. "You have no way of getting at that data," said George Scalise, senior vice president of Advanced Micro Devices and chairman of the SIA public policy committee. He also said that the Japanese requested several years ago that the captive market not be included in market data.
"Based on SIA's preliminary review, it appears that the Japanese, in attempting to refute SIA's case, have employed data from a variety of nontraditional sources, and that such data may be inaccurate and/or misleading," the SIA said in a statement yesterday. The trade association added that all of the information in its 301 petition, which was filed on June 14, was drawn from two "universally accepted sources" -- the World Semiconductor Trade Statistics program and the data-collection system of the U.S.-Japan High Technology Working Group.
"The trend lines are obvious. Our penetration of their market has stagnated while their penetration of our market has increased," an SIA spokesman said. The Japanese agreed, but declined to be specific.
They also declined to outline the role of the Ministry of International Trade and Industry in drafting and approving the EIAJ filing. However, H. William Tanaka, attorney for the EIAJ, said yesterday that the facts presented in the EIAJ statement "had to come from MITI."