'Chip race': US could retake the lead, says Japanese computer expert
Tokyo — Japan's current domination of the computer ''chip'' market at American expense surprises one of the founders of the Japanese industry. But he does not believe this edge will necessarily last.
Dr. Atsuyoshi Ouchi, now senior executive vice-president of NEC Corporation, was in at the birth of the first Japanese large-scale integrated circuit, the brain of a computer. In 1966, he supervised the creation of the country's first chip production division.
In the beginning, he recalled in an interview, there were 600 workers at NEC (formerly Nippon Electric), including assembly line personnel. Today, NEC has some 20,000 people worldwide, but most of them are engineering specialists refining the product. Steady advances in automation have reduced the need for assembly work.
Even though American companies were originally world leaders in computer technology, the Japanese proved to be good students. They now dominate the market for the latest chip miniaturization - 64,000 ''bits'' of information stored on one chip, known as 64k RAM (k for kilobit, RAM for random access memory).
By outspending and outthinking their American teachers, the Japanese were first on the market with the product in 1980. Last year they took 70 percent of the world market.
This year is likely to be even better - to the irritation of the American computer industry, which is alleging foul play (citing ''illegal'' practices such as heavy government subsidies and joint research among competing firms).
Dr. Ouchi refutes this. He believes Japan has had stronger domestic competition and higher consumer demand for better product quality than the United States.
This led Japanese companies to commit themselves from the start to automation to ensure consistent quality as well as cutting the product price to the bone, he says. When a world price war broke out, the Japanese had a decisive edge.
The industry here is turning out almost 5 million 64k RAMs a month to meet an insatiable demand for computers, factory and office machines, and communication equipment.
A growing proportion of this production is in the US and Europe. NEC has a chip plant in Mountain View, Calif., and is building a second near Sacramento. Another major producer, Mitsubishi Electric, has just announced plans to build a plant in North Carolina.
The main American concern is that there is going to be a repeat performance over the next generation of chips with four times the memory capacity - 256k RAMs - that will enable computers to be made even smaller, faster, cheaper, and more reliable.
Six companies - NEC, Hitachi, Mitsubishi Electric, Fujitsu, Toshiba, and Oki Electric Industry - are sending prototypes to prospective clients. Reportedly only one US company, Western Electric, is in a position to match that effort.
Some of the Japanese companies as well as government departments are cautious about the advent of the 256k era for fear of aggravating trade friction with the US. But experts say competitive pressures will ensure that full-scale production will not be too long delayed.
Dr. Ouchi said NEC was not yet ''100 percent committed'' to 256k production, but he stressed that ''while I don't want to see trade friction with the US, I don't see how we can simply sit back and wait for American companies to develop a competing product. I'd like to see the Americans catch up and compete with us, however, in both 64k and 256k.''
But Japan could not be entirely confident of keeping its present advantage, the NEC official cautioned.
''One of our biggest weaknesses is that we have concentrated all our engineering resources up to now on improving the quality of existing products rather than on developing entirely new technology. There are many areas where the United States is still ahead.''
A major concern is the quality and diversity of software, where the US is considered to have an advantage through the proliferation of small, specialized firms that have no counterpart in Japan. NEC acknowledges this by hiring Americans to develop its software for the US market.
In Japan, the company has a plan to increase its staff of software engineers drastically throughout the rest of this decade. It has set up a laboratory to examine ''software productivity improvements'' and is looking at ways to put software onto chips.
Even as the US worries about countering the Japanese 256k challenge, engineers here have begun making breakthroughs that will soon make present products outdated.
By 1990, there will be a megabit (1 million k chip), according to Dr. Ouchi: ''Technically, it is not difficult, but the problem is cost.''
Nippon Telegraph & Telephone Corporation has plans for megabit (million k) chips, etched with electrons focused by magnets. Meanwhile, NEC has its eye on a gigabit (1 billion k) chip. It has produced an experimental chip able to store the Bible on a half-inch square.