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Japanese Companies Pledge New Measures to Boost U.S. Chip Sales

June 4, 1992

TOKYO (AP) _ Japanese and U.S. industry officials announced an agreement Thursday aimed at quickly boosting sales of American computer chips in Japan.

The pact cools a simmering dispute over access to Japan’s market for semiconductors, the building blocks of computers and other sophisticated electronics equipment. It is one of the most contentious areas in the broader issue of trade between the world’s two biggest economic powers.

Japan’s 10 largest semiconductor users, which account for about half of all Japanese chip purchases, agreed to take what they termed emergency actions to sharply increase purchases of foreign semiconductors over the next six months.

A U.S.-Japan semiconductor trade accord sets a December deadline for achievement of a 20 percent market share for foreign chips.

But the foreign share has stalled at about 15 percent for the past two years, and sales of foreign chips actually have fallen in recent months because of Japan’s weak economy.

U.S. chip makers say they could have an additional $1 billion in sales per year if the foreign market share reaches 20 percent.

″I have confidence that the measures outlined in this agreement, if aggressively, energetically executed, are capable of achieving the goals in the trade agreement,″ said James Norling, vice chairman of the U.S. Semiconductor Industry Association.

Association officials had warned of a looming trade crisis if a satisfactory agreement weren’t reached in talks this week with the Electronic Industries Association of Japan.

Under the agreement, the 10 largest Japanese chip users are to give U.S. suppliers lists of additional semiconductors they are willing to buy during the second half of this year.

The semiconductor association also will begin a monthly tally of chip orders by Japanese customers to quickly report changes in purchasing trends. Current data measure chip deliveries and are compiled for each quarter, resulting in delays.

The Japanese association also pledged to seek commitments from each of its 62 member companies to observe the semiconductor trade pact, promote purchases of high-value custom-designed foreign chips, and increase foreign orders at a rate greater than the overall expansion of demand when Japan’s economy recovers.

Japan blames the slump in foreign market share on weak demand for electronic products that use semiconductors.

It also insists that the 20 percent market share figure in the semiconductor trade pact is a goal, not a commitment.

Particularly troublesome to many U.S. chip makers was the rapid decline of sales of their chips following the onset of Japan’s economic downturn, indicating that they still are seen as marginal suppliers.

U.S. chip shipments to Japan in April were 20 percent below shipments in April 1991, said Wilfred J. Corrigan, head of LSI Logic, a U.S. chip maker.

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