U.S. and Japanese negotiators will hold semiconductor trade talks here Thursday for the first time since five leading Japanese firms offered to increase their U.S. purchases to try to end a rash of unfair-trade complaints brought by U.S. competitors and the Reagan administration.
U.S. industry officials said a large gap remains between their position and the Japanese offer, which was made at a private meeting between American and Japanese companies in Los Angeles 10 days ago. The American businessmen said the offer would add just 3 percent to overall U.S. semiconductor sales in Japan, according to the first details provided by industry officials about the Los Angeles meeting.
The U.S. semiconductor makers pressed for greater access to Japan's chip market to break up what they call a government-nurtured cartel that has restricted U.S. sales to about 10 percent of consumption and enabled the Japanese to leap ahead in the highly competitive field of high technology, industry sources said.
"We made it clear that we are very far apart on access and they were expected to go back to Tokyo prior to this week's meeting and come up with better guidelines" that will take U.S. companies "to what our earned share should be," said George M. Scalise, head of the Semiconductor Industry Association.
The U.S. companies told Japan they want "milestones" that will increase U.S. share of the Japanese market to 15 percent this year, with 5-percentage-point additions for the next three years to raise sales to 30 percent by 1989.
"We think we can do better, but we want that as a marker on the way to a fully open market that will end the Japanese cartel," an industry official said.
Scalise said giving U.S. makers a large chunk of the Japanese market will effectively destroy the Japanese cartel in much the same way that the addition of North Sea oil in the last decade broke up the Organization of Petroleum Exporting Countries' grip on the world oil market.
U.S. Trade Representative Clayton Yeutter has called the semiconductor dispute the major trade issue between the United States and Japan, and the Japanese government appears to want a settlement soon to avoid any embarrassment during Prime Minister Yasuhiro Nakasone's visit with President Reagan April 12 and the economic summit in Tokyo in early May.
Scalise said a quick settlement is needed urgently by U.S. semiconductor makers, who are losing their high-technology lead to the Japanese. Japanese semiconductor purchases are about $10 billion a year, the same as the United States', out of total global sales of $26 billion.
Semiconductors are key elements in high-technology products ranging from computers to sophisticated communications systems. They are being used increasingly in all sorts of consumer products, including automobiles, washing machines and stoves.
It remains unclear how strongly the Reagan administration, with its ideological free-trade orientation, and the close friendship between the president and prime minister, will push Japan on semiconductors. Complaints have surfaced already that the industry approach would create a global semiconductor cartel.
Commerce Secretary Malcolm Baldrige, however, reportedly is determined to press on with investigations of three complaints -- including one brought by Reagan's trade strike force -- that Japan was dumping chips in the United States at prices below their fair market value. In addition, the industry filed a complaint last summer charging that Japan formed a cartel that limits U.S. sales.
Congress, moreover, is watching the semiconductor talks carefully and, according to one administration official, "is ready to pass bad legislation" if the government fails to pursue the complaints.
The West Coast industry meeting, supposed to be kept secret, was arranged by Robert Galvin, chairman of Motorola Inc., and Akio Morita, chairman of Sony Inc., and included the nine largest chip makers in both countries.
The Reagan administration declined to send a representative, citing concerns over possible antitrust problems. But the main spokesman for the Japanese was an official not of the industrialists but of the Ministry of International Trade and Industry, Yuji Tanahashi, who will take part in this week's negotiations. Administration sources said they received a written report on the meeting from Galvin.
Industry officials broke silence on the meeting after the Japanese leaked details that made it appear they had offered to double U.S. sales.