Hi guys,
The decline of Japan fascinates me, as it was once considered a major Asian competitor to the U.S. but slowly collapsed into a pitiful state. One reason is that Japan missed out on the personal computer revolution of the 1990's. Japan's semiconductor industry once shocked the world, rising from nothing (the first
) to over 50% world market by 1988 through its advanced DRAM (Dynamic Random Access Memory chips). Meanwhile US market share collapsed from dominance to just 35% and the leading US lithography supplier, ElmerPerkins, was forced to exit the market in 1989. This created major political headaches in Washington D.C. and in 1986, the
. (If you want some insight into American thinking on industrial policy as well as some entertaining look back on the paranoia of the 1980s,
)
However since then, Japan's market share for semiconductors has collapsed from 50% to just 7% and going to zero. Here is an interesting article:
" Japanese companies accounted for more than 50% of the IC market in the second half of the 1980s and 49% in 1990. But by 2017, the share of Japanese companies has fallen to 7%.
Why is the situation like this?
Yukio Noguch, a consultant at the Waseda University Business Finance Research Center in Japan, believes that there are deeper reasons. On June 8th, Japan's "Diamond Weekly" magazine published an article by Yukio Noguch entitled "What is the root cause of the decline of the Japanese semiconductor industry? ", the author explained his deep insights in the article. The article is now excerpted as follows:
"In fact, DRAM is not a product that requires too much technology, and emerging countries will one day produce low-cost DRAM products. As a result, Japan's semiconductor industry will also decline due to price competition with emerging countries. The same thing happened later in the LCD field. Not only LCD, but in many areas of manufacturing, as products are commercialized, price competition has intensified.
The real problem with the Japanese semiconductor industry is that it has not been able to transition to products such as CPUs that require high technology.
So why are Japanese semiconductor manufacturers failing to make a transition to CPU production?
That is because the basic research and development capabilities are weak.
For the CPU, the important thing is not only the semiconductor chip hardware itself, but more importantly, the software part of the integration. The same thing happens in other areas, such as the camera field.
At the stage of transitioning from a film camera to a digital camera, Japanese camera manufacturers were keeping up with the trend. However, when a smartphone appears, the most important thing becomes the artificial intelligence image recognition function provided by the smartphone. That is to say, the "brain" that processes image information becomes necessary compared to the "eye" of the camera lens. In this field, Japan’s basic development capabilities are clearly behind.
In the end, Japan's semiconductor industry was left behind in the world trend after the 1990s. The fundamental reason is the lack of ability to create new things, especially in the information-related areas.
The significance of basic education
New technologies can come from companies, but not exactly. Basic research in universities is also important.
When the US industry weakened in the 1980s, American universities were still very strong.
So what is the situation in Japan at the time? When Japan dominated the world in the semiconductor industry in the 1980s, it was also strong in the academic world associated with it. Japanese scholars play a leading role in the semiconductor-related international society.
However, this state has not been maintained. Since then, Japan’s research capacity has declined.
It can be seen that Japanese universities have not kept up with the development of the world in the most advanced fields because they cannot reconstruct the research and education system according to changes in society. If we stop growing, the reconstruction of the university will not be possible. Therefore, the research in the fields needed by society cannot be completed, and the economy cannot grow."
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While the author blames the weakness of Japan's basic research university system, I think that is only part of the picture. In retrospect, Japan never fully caught up with the US and its market share advantage was a mirage, because it was based on low tech DRAM. In fact in the 1980s the PC revolution was already beginning and although Japan dominated in consumer electronics (such as the Sony Walkman) it was never a serious competitor in the Personal Computer space, not even in the 1980s, neither hardware or software.
Japan never even tried to seriously compete in the PC space.
This would eventually doom its lead in semiconductors as well. Thus, in reality Japan was never more than a marginal player in the larger technological trends of the time.
The real lesson of Japan's decline is that you cannot get too excited over dominance in one area (such as DRAM). If you are not leading in basic research and competitive in all major areas, you will eventually lose out. For China, it must not cede any areas to the US and actively compete against Google in OS as well as with Intel and AMD, as well as in biotech and aerospace fields. Winning shallow victories in narrow technologies will not hold.
Even the crisis with PRC came after the harsh response of Mao to the Soviet pro-market Κossygin reforms at early 60's . He condemned USSR for turning to capitalism. Funny story. Japan has much money to spend for its own prosperity. But is somewhere stuck. Like USA. Sad to know that people leave in capsules or internet cafes though. I hope both Japanese/US people will find the way