This chapter analyzes the external factors that led to the shifting of comparative advantages from the Silicon Valley to other regions outside the United States. The growth of globalized competition has allowed an ever-increasing number of companies, which have pursued a global-versus-multidomestic strategy over the past ten years, to gain dominant market positions in their respective industries. The biggest threat to Silicon Valley's domination in microelectronics came from nations and firms in those nations that combined their efforts and strategies to create comparative advantages that enabled them to compete and, in some cases, dominate some segments of this new industry. The shift in comparative advantage from Silicon Valley firms to Japanese firms, for example, has two patterns. The first rests squarely on the decisions, or lack of them, made by Silicon Valley firms, and the second, on the ability of Japan and its industries to create new advantages that specifically targeted the high-technology industry.