For years, tiny Alphasil Inc. hung on by a shoestring. The Silicon Valley company had top-notch technology for making screens -- flat-panel displays -- that it hoped could be used in laptop computers. It had a sparkling manufacturing line and occasional infusions of cash from venture capitalists and large corporations.
But Alphasil also had stiff Japanese competition. Nearly every time it tried to attract investors or customers, the potential partners went away saying they didn't want to risk doing business with a company that seemed destined to be outrun by large Japanese firms with deep pockets. In 1989, Alphasil closed its doors.
Alphasil's story, though undoubtedly a simplified version of the company's travails, has become an emblem for a U.S. industry whose hopes for revival were kept alive yesterday by a preliminary Commerce Department finding that imposed modest import penalties on Japanese manufacturers of flat-panel displays.
Acting in a case filed last summer by a clutch of struggling U.S. firms, the Commerce Department found that Japanese companies are "dumping" screens used in laptop computers -- selling them below fair-market value -- but it imposed preliminary penalties considerably below what the U.S. firms had hoped for and below penalties imposed in other recent dumping cases, according to trade experts.
The department imposed no penalties on two firms, Matsushita Electric Industrial Co. and Hosiden Electronics Co., while requiring other makers to post bonds that amount to 1.46 percent to 4.6 percent of the import prices of the screens. The highest levy was against Sharp Corp.
The dumping decision came the same day that U.S. and Japanese negotiators appeared to make little progress in talks in Washington that began a new round of sparring over another troublesome issue, semiconductor chips. The United States has asked for continuation, in new form, of an agreement on chip trade that will expire in July.
Signed in 1986, the agreement called on Japanese chip companies to stop "dumping" their products in the United States and other countries and to open the Japanese market further to U.S.-made chips. A supposedly confidential "side letter" to the pact set a target of 20 percent for the U.S. share of the Japanese market.
A Japanese official said yesterday that his government wants no percentage level set in the new agreement. But the U.S. chip industry still wants a market-share target, and U.S. officials take the view that some tangible way of measuring progress is needed.
In the flat-panel screen case, Paul Rosenthal, the Washington attorney for the 10 U.S. firms, said he was "pleased" with the finding and that he expected higher duties to be imposed after U.S. officials visit Japan to examine the Japanese firms' costs. A final determination is due by April 29.
At the same time, the Japanese makers' powerful allies -- U.S. computer companies that buy the screens -- declared victory. "The small margins validate our position that the problems are not caused by dumping," said Compaq Computer Corp. spokesman Rick Scott.
U.S. computer makers, whose heated objections to the dumping case threatened to divide the electronics industry, have argued that no U.S. firm produces the type of flat-panel displays they need.
Rosenthal, the U.S. display companies' attorney, argues that American computer companies were simply lured to Japan by unfairly low prices. "In our view, some of the prices offered were so low there's no way they could ever cover their cost ... but they want to get in there and get the relationship," he said.
The dumping case has been closely watched because of the increasing importance of flat-panel displays in the $250 billion U.S. electronics industry. Used in popular laptop computers, as well as in medical equipment and other instrumentation, flat displays could find their way into every home with the emergence of high-definition televisions later in the decade.
Like other technologies commercialized in Japan, flat panels were developed in the United States but were never made in mass quantities. Giant U.S. firms like American Telephone & Telegraph Co. and General Electric Co. dropped out of the market in the 1980s, while Japanese firms invested hundreds of millions of dollars to exploit the know-how. Meanwhile, several small U.S. firms survived by selling more specialized and higher priced flat-panel displays to the Pentagon.