ABSTRACT
Japanese semiconductor investment spending levels have been substantially greater than those of the US industry as a percent of sales since the mid-1970s. Both the Japanese and US Governments have implemented numerous measures which have benefited their respective microelectronics and related information sectors. The Japanese semiconductor industry consists virtually entirely of an oligopoly of vertically integrated firms that both produce and consume semiconductors. In the semiconductor market, the Japanese industry has pursued a strategy based on expanding market share rather than maximizing profitability. Japanese firms’ ability to sustain intensive capital and research and development (R&D) investments is attributable to several factors. The Japanese joint R&D programs are designed to accelerate the diffusion of newly-developed technologies throughout national industries. The cost of capital is lower for Japanese producers than for US producers. The relationship forged between the Japanese government and industry has thus enabled Japan to mount a major challenge to the United States in the international semiconductor market.
