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APPROVE~ FOR RELEASE= 2007/02/08= CIA-R~P82-00850R000300020032-1 ~ ~ ~ # ~ ~ ~ ~ APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000300020032-1 APPROVED FOR RELEASE: 2007/02148: CIA-RDP82-44850R000300024432-1 Fl)R OFFICIAI. I~SN~ ONLti' JPRS L/9260 19 August 1980 , Ja an Re ort ~ - p p CF~UO 19/80~ FBIS FOlREIGN BROADCAST INFORMATION SERVICE FOR OFFICIAL USE ONLY APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000300020032-1 APPROVED FOR RELEASE: 2007/02148: CIA-RDP82-44850R000300024432-1 NOTE JPRS public~tions contain information primarily from foreign newspapers, periodicals and books, but also from news agency . transmissions and broadcasts. Materials from foreign-language sources are translated; those from English-language saurces are rranscribed or reprinted, with the original phrasing and othe~ characteristics retained. Headlines, editorial reports, and material enclosed in brackets are supolied by JPRS. Processing indicators such as [Text] or [ExcerptJ in the first line of each item, or following the last line of a briet, indicate how the original information was processed. Where no processing indicator is given, the infor- mation was summarized or extracted. 'Jnfamiliar names rendered phonetically or transliterated are enclosed in parentheses. Words or names preceded by a ques- tion mar:t and enclosed in parentheses were not clear in the original but have been supplied as appropriate in context. Other. iinattributed parenthetical notes within the body of an item originate with the source. Times within items are as given by source. The co~cents of this publication in no way represent the poli- _ cies, views or attitudes of the U.S. Government. For f~irther information on report content c~_ill (703) 351-3067 (Japan, Korea, M~ngolia); 351-2760 (Vietnam, South and I?ast Asia) . w COPYRIGHT Lr1WS AND REGUI~TIONS GOVERNING OWNERSHIP OF MATERIr~LS RGPROD[;CED IIERF.IN REQtiIRE THt1T DISSEi~1INATION OF THIS PUBLICATION BE RESTRICTED FOR OFFICIAL USE 0~~1LY. APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000300020032-1 APPROVED FOR RELEASE: 2007/02148: CIA-RDP82-44850R000300024432-1 FOR O~'FICIRL USE ONLY ~ JPR5 JG/9260 19 August 1980 JAPAN REPORT (FOUO 19/80) CQNTENTS POLITICAL AND SOCIOLOGICAL 'M~iINICHI' Criticizes Fcreign Ministry (Editorial; MAINICHI DAIZY NEWS, 30 Jul 80) 1 Election System Analy~ed (Takehi:_o Takahashi; MAINICHI DAILY NEWS, 30 Jul 80) 3 ECONOMIC Japan's 7-Year Plan Up for Review (Kentaro Koshiba; THE JAPAN TIMES, 5~ug 80) 5 Signs of Shift in Government's Economic Policy (Editoria?.; MAINICHI DAILX NEWS, 26 Jul 80) 8 'MAINICHI' Cites Prerequisite for Tax (Editorial; MAINICHI DAILY NEWS, 27 Jul 80) 11 Blindspot of MITI~s Trade, Industrial Policy Cited (Takashi Iga; EKONOMISUTO, 15 Apr 80) 14 SCIENCE AND TECHNOLOGY - Semiconductor Firms: Bullish Plant, Equipment Invest (NIKKEI SANGYO SHTMBUN, various dates) 23 ULSI Pushed Semiconductor Activities Toshiba Approach Mitsubishi Semiconductor Strategy Sharp Production Sanyo Electric F`ujitsu Hitachi Limited ~ - a - [III - ASIA - 111 FOUO] FOFc OFFICIAL USE ONLY APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000300020032-1 APPROVED FOR RELEASE: 2007/02148: CIA-RDP82-44850R000300024432-1 I FOR OFFICIAL USE ONLY Oki Electric Matsushita Electronics Sony's Plans IC Indu stry Plans Described Government I7rafts Plan to Mine Deep-Sea Manganese Ore (THE DAILY YOMIURI, 29 Jul 80) 57 - b - - FOR OFFICIAL USE ONLY APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000300020032-1 APPROVED FOR RELEASE: 2007/02148: CIA-RDP82-44850R000300024432-1 FOR OFFICIAL USE ONL`I POLITICAL AND SOCIOLOGICAL 'MAINICHI' CRITICIZES FOF.EIGN MINISTRY Tokyo MAINICHI DAILY NEWS in English 30 Jul 80 p 2 [Editorial: "'Gaimusho' Without Policy"] [Text] ~ The Foreign Ministry recentIy published a~~porE by the . Com~nittee on Peace and Ser~rity in an at- tempt to pinpoint Japan's security prnblems from the global standpoint. The report, however, has not only ' disappointe~ us bvt caused us to entertain grave anxiety as to the future course of this country. ~ In the. firsE place; the report emphasized the importance of military might in ~ the conduct of diplomacy while prnposing an amendment to the keynote of Japan's postwa~' foreign policy; namely, "`peace diplomacy without resorting to arms." ~ There is little doubt that mil~tary might has been playing a ma jor role in international politics, and that the incre~ased Soviet military strength is partly responsible for the escalation oi tension. Ttie Soviet ilnion has expanded its military capability to an alarming degree, thus threatening to upset the power balance with the United States. As a countermeasure, the U.S. has called on Japan and its allies to step up their defen'se posture: ' , ~ Nutwithstanding ~~our analysis~; .Qf the, present .~ituation, w~ doubt` whether the imbalance betwe~n the m}litary and nonmiiitary aspects uf" Japan's ~ security, a~ the report implied, poses a serious problem, It ts desirable that the nation should engage in intensive.discnssions ~n the security issue, but it must be remembered that Japan's diplomacy started off with the convicticn not to haue milikary might. ~'he Foreign- Ministry appears to have set ~as}de . "the very'basic~~s~irih~of Japan's diplomacy~judging 1 FOR OFFICIAL USE ONLY APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000300020032-1 APPROVED FOR RELEASE: 2007/02148: CIA-RDP82-44850R000300024432-1 FOR OFFICIAL USE ONL`I � froin the repo~tr, which contended that--it will be dit= ficult to maintain security in the 1980s witMout a military backup. . . The report was quite enthusiastic a~x:!it strengthening Japan's defense capability, expanding its solidarity with the U.~. and' western Europe, and ~ restraining Soviet military power. On the other hand, it failed to iron out any concrete measures designed to promote dialogue with the Soviet Union anG ease the terision. _ , . . . ~ We learned a bitter lesson in the days of the cold war. that increased military might only glves rise to endless-military expansion and escalation of tension. We should not repeat the follies of the cold war caused by the arms race, and we remind the Foreign Ministry ef the principle of Japan's "peace diplomacy - without military migh~." COPYRIGHT: Mainichi Daily News 1980 - CSO: 4120 ' ~ 2 t ~ FOR OFFICIAL USE ONLY APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000300020032-1 APPROVED FOR RELEASE: 2007/02148: CIA-RDP82-44850R000300024432-1 FOR OFFICIAL USE ONL'I POLITICAL AND SOCIOLOGICAL ELECTION SYSTEri ANALYZED ~ Tokyo MAINIC~iI DAILY NEWS in English 30 Jul 80 p 4 ["NAGATACHO DOINGS" column by Takehiko Takahashi, adviser to the MAINICHI newspaper and former chief editorial writer: "Small Constituency System"] [Text] When he attended a meeting revisioa of the Election system size constitueneiES continues; ~ of directors Of 't~e `~douse of Was platuied as one of the im-~ there is no passibilixy ot. a JSP Representatives' D?iet p~rtant problems~ fa~ing _adminisiratioabeingformed." _ Operation Committee on July domestic adminisiratio~.~ and~ �~M~pg~ F8Ct0~'S 2, Chiet . Cabinet Secretary that the Eighth Elertie n System . . Kiichi :~iyazawa ~empfiasized Study Council ~would be con- Nevertheless, while merllum- t,5at the government has no ~o1~edShortlY� ~ siu'co~t~tuencies at~y_be that, intentionat t6e present tim~ ot The present election system advantageous tor thg LDP,. introducing a small con� of the House of RepresPntatiVes there ate also certain "minus"' stituency system in the House of -consists of inedium-s�e , con- tactors. This is because of the~ Representatives elecEion. stituencies. The number of intense rivalry that.. occurs . Ea:lier. - Hame Aftair5 seats in one. ~constituenty ~~'~a LDF candidates ia the Minister Jiro Ishiba: who is in averages from th~ee to five. same constituency. ~ This _ ~ char~ of electlon.q~tatters; had 'fhere is a view that this elec� ''~~~~tates a large amount of staEed~ on an NH~ TV program tion system is advantageous for money and alsa ~ abets tbe tor= that "it is de.sirable for the the Liberal-Democratic Party. 'matioa of factions. House of Repre.genta~ives Eo This is because the LI7P is able There has been an dpinion~~ adopt a small cpnstiEu~ncy . to field several candidates In within the LDP Cor som~e time system and tor elections one constituency. In this ~that ihe only way toConduct an: party-managed." ~p~t, the system is oNy election that wau}d not require The opposition p~rties seized ~slightly advantageq~ts,,;for.;,k~; a huge outlay o'f-money and. to upon thts statement and JapanSocialistP~t~y.;,,:, ~dissolve factions~is'to'adopt a_ - demanded a full explanation of ~ It (s therefore cotlsfder~fl ttf~t small constituenc'y system ia ~ even if the LDP were to lose its which LDP candidat~s would the government s view 6y ~ ,calling tor Chief ~abinet majoriry, its position as the not compete. AiY.attempt. w~; Secretary bliyazawa's at- P~Y W~~ ~e ~IAparativety ~raade during the 'Panaka ad=' tendance at the Diet commitCee largest number ot Diet seats ministratbn to_.britlg �yp ,this., meeting. woWd remain unchanged under problem of small co0.stitauncIes. - ~ The siat~ment that Home the existing system ot medium- but this was - not realized. Atfairs Minister Lshiba made or~ size constituencies. The late because of resistance by the _ the NH~{ TV program had a Saburo Eda, who was at one oppositfionpatti~s. ~ . - certain backg~oimd. This p~as time secretary general of the Among the op~ositionparties, that P~e Min~ster' Zef~ko JSP,. remarked that "as long as the smaller the , partq; ttie Suzuki made~ ciear that a the.pi~esenf system of inedtum- stronger the resistanCe. There 3 FOR OFFICIAL USE ONLY APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000300020032-1 APPROVED FOR RELEASE: 2007102/08: CIA-RDP82-00850R000300020032-1 FOR OFI'Tf;fAL liSE ~NLY is a deep-rated view th~,t e~�e.2 ' Despife tf~is, the ceason why if a small constituency ~yste*~a there~r~ voices within the LpP__ were to be acco~panjed :,y a cadiing strongly_ for a small s y s t e m o f~ ra p o r t i o n a l, constituenc~ ~ystem is beca~se. representation, this would be of the p~oblems attending disadvantageous for the op- ;"money" and "factions." - positioa parties. , . The DSP says Xbat should the - Fierce OppOSition tiMe come wfien the -JSP also - ' beco~nes a democratic socialist At the time when the Tanaka party and the two parties . can . administration attempted to com6ine into oAe: iC will agree bring up the problem of a small to a~ sma11 consiituency constituency system, the system-but. absolutely. not fiercest oppositfon was raised betore .t,hat. The JCP ha~. op- by Ikko K'asuga ot" the posed a smaJl ; constituency Democratic SocialisE Pa~ty. - sy5tem since long in L5e past. Late one nigh~~ ~�asuga, in_ Th~ same-holds-true foc the order to avoid tiein discovei`ed Komeito. by ne:vspaper'~repoiters,: ~ Accot~gly;~even~if the LDP clintbed over ~a fenee-ot the is � holdin~g a comfartable Tanaka residence irr ~dejim, majority~, if ~the Suzuki ~ad- - Tokyo, and expressed his op- ministrat~on takes up the "position in the strongest terms pro6lem of a small con- ~ to then Prime Minister Tanaka. stituency. great tlrmoil is It is said that even the resolute likely to occur ducing Diet Tanaka was overwhelmed by deliberations. - Besides, there Kasuga's ~orceful denunciation ~are some members of the ~,DP � and abandoned t6e small too;.such as Muneno~i ~rkagi, constituency system. ~who oppose a small con- Upon observing t6e last stituency~ysiem.. general election, if a propor- : Uclder the~e circumstarnes, tiohal representation system . even if . the Suzuki ad- had beeA adopted, the LDP's Diet seats wQU!a be redtx~dto min~stration~ convokes the 255. The JSP:w~oald ~?vehed99. - E~Shth Election System StUCty Council and a recommendation 'TIx~.Diet::sealgof the Komeito. is made fot a small con- ~~and Ja~an- Com~nnnist Party stituency systetn plus a woal~ haye increased. In tHis proportional representat:on ~ way an etectIon system has. ~ system. !t will be most difficWt "close~ relationship with the to put this ~ into actual number oi victors. L'nder t6e realnation. (The w,~iler is an existiag system. the relation- adviser of The Afalnichi ship between the number~ ot votes obtained and the numbee Ne"'~~~�.~ chief of Diet seats is favorable for the~ ~r~'~" ' � , . . _ 1.LDP: ~ ~ : ' ' ~ _ COPYRIGHT: Mainichi Daily News 198Q CSO: 4120 1~ FOR OFFICIAL USE ONLY APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000300020032-1 APPROVED FOR RELEASE: 2007/02148: CIA-RDP82-44850R000300024432-1 FOR OFFICIAL USE ONLY ECONOMIC JAPAI~'S 7-YEAR PLAN UP FOR REVIEW OW06052Z Tokyo THE JAPAN TIMES in English 5 Aug 80 p 5 [Article by Kentaro Koshiba] [Text] The 7-Year Socio-Economic Development Plan (1979-85), which was launched with great fanfare just a year ago, is coming up for review. The plan as it now stands calls for, among other things, non-inflationary economic growth at the average rate of 5.5 percent in the 7-year period, with domestic demand providing the main thrust�of that growth. . The government is to play a large role in this through massive public investment projects designed to double the stock of the nation's "social capital," to about 240 trillion yen, a sum about equal to the present GNP. For example: --Public facilities related to day-to-day living, such as sewerages, waste diaposal plants, parks, hospitals, schools and gyms, will be constructed in great numbers. - --The network of railways and roads also will be expanded, and so will the communications system. Envisioned, too, are big projects to build offshore airports in Tokyo and Osaka. This public investment program, however, is expected to be scaled down, = largely for fiscal reasons. The finance ministry argues that the government, now deep in deftcit, simply cannot afford to achieve the 240 trillion yen target. Officials say that public works spen~'ing will have to be increased more than 'LO percent annually .'..n the reet of the 7-year period if the target is - to be attained by fiscal 1~�5. Such spending was ~xpanded 22.5 percent in fiacal 1979, the first year of the program. In the second year, however, the rate of increase dropped to zero because of the enormous budget deficit. 5 FOR OFFICIAL USE ONLY APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000300020032-1 APPROVED FOR RELEASE: 2007/02148: CIA-RDP82-44850R000300024432-1 T'he 7-year plan, whe~i it was approved by the cabinet in August 1979, was - based on the assumption that the so-called "general ~~nsumption tax," a sort uf �~alue added tax (VAT), would be introduced in Fiscal 1980. That assumption collapsed, however, as the late prime minister Masayoshi Ohira's pl~a for tax increases was rejected in the general election held in October of the same year. In January this year, the government offi-- cially withdrew the VAT proposal. The possibility remains that,the administration might revive the proposal in the future, though in a different form. And given the solid majority that the Liberal-Democratic Party (LDP) holds in the diet, that possibility could become a reality. But even then it would be practically impossible to carry out the public investment program as now envisaged--for the simple reason that the tax raise would come too late. There is another reason--one that has been cited by government economists-�- why the program is coming up for scrutiny that is that the role of public works spending in stimulating growth ~as diminished since the Japanese econoary entered a period of slower expansion following the oil c risis of 1973-74. In a time of economic slump, such spending arouses domestic demand as more building materials, such as steel and concrete, are produced to carry out public works projects. Thus it creates more jobs and thereby stimulates personal spending. Economists at the Economic Planning Agency (EPA) think, however, that the contribution of public investment to the growth of GNP has declined in _ recent years--for reasons such as the following: --An incrE-~sing proportion of investment funds is going into land acquisi- tion, beca~_~ of the skyrocketing price of land. But land purchases do not lead to creat~~~n of jobs. --Less funds are being funneled into large-scale industrial proj ects, such as those to build roads and bridges, and more into sma?_1-scale p rojects to construce sewerages, parks and the iike. Some private economists believe that the hig}: growth of public works spending has ended, as has the high growth of the Japanese economy itself, and that - some of the projects now under goveriiment control can be taken over by private enterprises. The finance ministry reportedly wants to see the 240 trillion ypn target slashed to about 200 trillion yen, although the final figure is sub~ect to negotiation both within the government and the LDP. 6 FOR OFFICIAL USE ONLY APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000300020032-1 APPROVED FOR RELEASE: 2007/02148: CIA-RDP82-44850R000300024432-1 FOR OFFICIAL USE ONLY ? A cut in the investment program is likely to resslt in a slower GNP growth rate unless the slack is compensated for by an increase in private-sector demand. holds the key here, it is believed, is the trend of private capital spending. In other words as long as investment in the private sector remains active, the impact of reduced public investment on growth is expected to be negligible. Also in the balance are some of the r.elated targets to improve the "quality of life." For instance, the 7-year plan calls for increasing the availa- bility of sewerage systems, expressed as a percentage of the population, to 55 percent in 1985 from about 30 percent now. - The plan is likely to undergo further change in 1981 and beyond not only in the areas of investment and growth but also in other key areas such as the rate of inflation (currently targeted at less than 5 percent on the - = average). But that seems to be the fate of any long-term plan in this age of uzcertainty. COPYRIGHT: The Japan Times 1980 CSO: 4120 7 FOR OFFICIAL USE ONLY APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000300020032-1 APPROVED FOR RELEASE: 2007/02108: CIA-RDP82-00850R000300020032-1 FOR OFFICIAI. USE ONLY - ~CO"; C~IIC SIGNS OF SHIFT IN GOVERNMENT'S ECONOMIC POLICY Tokyo MAINICHI DAILY NEWS in English 26 Jul 80 p 2 ~Editorial: "Economic Policy"~ _ [Textl Signs of a delicate shift in the government's econom~� management policy from that of con- strai;~ing price intlation have become apparent. Shintaro Abe, chairman of the LDP's Policy - Affairs Research Council, has told business leaders ihat a reductiorl ot the official discount _rate has now hecome merely a matter of timing. , " Bank of Japan Governor Haruo l~7aekawa has ~relased his stand somewhat on fiscal-monetary ti�htness by implying that the policy ,to be taken must be cnnducive to cushioning a b~~siness slowd~w�n expected to begin in the autumn, although price stabilization should rerr~ain the top policy priority. �'e firmly believe the major emphasis in economy management should be placed, as in the - past, on combating inflation. ~'his fundamental stand should not be altered under any circumstances. _ The recent business ~erformance, however, - appears to call for a minor, if not significant, policy adj~ls[ment to~~ard relaxing the government's tight grip on the economy to e~pand it to a certain ex~ent, although efforts to fight inflation should not be - re~axed. , The current official disr.ount rate of 9 percent per annum, the highest level in the post~var period, is abnormally high in all considerations. - The go~�ernh~ent, in this context, is urged to begin relaxing its tight m~neta:y policy, and as quickly as possible, provided th2.t the economic developments, both at home and abroad, warrant the move, and - ~ro~�idea ~nilation can be kept in check. The easing, t~o~~ever, must be carried out in a gradual manner. - g . FOR OF'FICIAL USE ONLY APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000300020032-1 APPROVED FOR RELEASE: 2007/02108: CIA-RDP82-00850R000300020032-1 FOR OFFICIAL USE ONLY Ui~cussions on e economy management policy shouid deal ~~ith three major are~s. The first is the price movement. ~vnolesale price i~~flation, which had accelerated :n the double-digit range in the past, a~pears to t~ave peaked in April and is ~now abating. This leaves th~ question of consumer - price inflation, the peak of which is yet to come. Consumer price increases, although slowed down ~onsiderably of ]ate, are still of the utmost rnncern, - - especially ~~hen the effects of both the rapid rises of - ~ti~holesale prices in earlier months and the yen's depreciatzng tre;~d are considered. , V~'e hope the government confains the .consumer price growth rate during the current fiscal year u�ithin its targeted 6.4 percent compared to the previous year, lest the people's livelihood be - jeopardized and all the planned economy man- agement policies be upset. ~ . The second concern is business performance. ~No one can deny the fact that a trend toward a business _ slowdow~n is emerging: production and product shipments have become sluggish, exports have siowed do~~n, and the growth rate uf consumer spending has declined. Business investments, - however, have remained steady and are expected to - be so in the foreseeable future. In other words, the nation's business performance is not so discouraging as to warrant an immediate relaxation of the fiscal- munet2ry tigfit poiicy~. On the contrary, an un- justifiably hasty relaxation in this respect could lead to still higher prices and io a temporary economic expansion. What we must guard against is a recession that could follow such a temporary expansion. The thirtl concern is the yen's exchange value in relation to the international interest rate level. Japan's economic fundamentals which determine the ~~en's value on foreign exchanges, such as economic growth, prices and international balance of payments position, still remain healthy. Despite the fact that the yen's value is eapected to remain at a high level in the long run, it has continued to depreciate of late. This is due to speculative selling of the Japanese currency on the markets, caused by the downturn in Japanese exports to the U.S. because of the recession in that _ country, and anticipation of a lowering of the official discount rate in Japan. - 9 , FOR OFFICIAL USE ONLY APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000300020032-1 APPROVED FOR RELEASE: 2007/02148: CIA-RDP82-44850R000300024432-1 FOR OFFICIAL USE ONLY The ~~en's depreciation can nullify all efforts to - restrain price rises, and if a government attempt to - constrain domestic price rises fails because of an untimel}~ relaxation of its control on the economy, it H~ill invite an acceleration of the yen's depreciatior~. - 1~b'e hope the government ~~ill make policy ad- - justments after watching closely the official discount rate movement in West Germany and further ]o~�ering of the official rate in the United States. COPYRIGHT: Mainichi Daily News 1980 CSO: 4120 10 FOR OFFICIAL USE ONLY APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000300020032-1 APPROVED FOR RELEASE: 2007/02148: CIA-RDP82-44850R000300024432-1 FOR OFFICIAL USE ONLY ECONOMIC 'MAINICHI' CITES PREREQUISITE FOR TAX Tokyo MAINICHI LIAILY NEWS in English 27 Jul 80 p 2 ~Editorial: "Prerequisite for Tax Hike�1~ ~Text~ Arguments for and against increased taxation have livened up again in various quarters as in- fluential figures of the Liberal-Democratic Party, iricluding the chairman of the policy affairs com- mittee, made a series of remarks suggestive of the increase, while a private advisory group to the late Prime Minister Oti~ra wound up a report that a tax increase is essential for flscal reconstructlon. The . move did not emerge as a result of the sweeping victory of the LDP in the last elections. It is �only a matter of course that we have to take up the revenue issue in compil:ng the fiscal 1981 budget. Even if a coalition government had been formed, the situation would be just the same. ~ For four consecutive years since 1977, . the state has continued issuing national bonds totaling more than 10 trillion yen. This is~ certainly abnormal. ~ During the current fiscal year alone, the state has to pay a whopping 5,300 billion yen interest for the bonds ~ it issued in the past. .Whoever heard of anything so absurd? With'thaY mvch interest to pay; the govern- ~ment has to consider floating more bonds just to keep it going. A fiscal policy dependent on borrowings from the people is bound to collapse. ~ lt is not surprising that people in the know are - ver}~ worried about the ~pation's fiscal state'of affairs, and they have called on the .government. to take the ~bull by thQ ~p,~s,}~,remedyin;~ this seemingly endless vicious cycle: ` ~ ' ' - 11 - FOR OFFICIAL USE ONLY APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000300020032-1 APPROVED FOR RELEASE: 2007/02148: CIA-RDP82-44850R000300024432-1 FOR OFFICIAL USE ONLY . increase will robablx ~ain further momentum. No or,e~'riof even ~e rich, wants ~ t~o pay higher taxes. This hurts yet we cannot brush it aside. Since we live in a democratic, sovereign state and are indebted to a great many bene~its, both tangible and intangible, we as taxpayers must face up to the cold reality and see eye to eye with, the ine~~itable. It should be_pointed out, however, that. there. are certain conditions that mast be observed. As a prerequisite to a tax increase, a thorough revamping of the existing structure of the nation's annual ex- ~ . penditures as well as administrative reform must be carried out. Bureaucrats, particularly. Finance Ministry cifiicials, will not be happy about our insisting on the observance of that prerequisite and will likely say ~ `~Oh, not again!" ~ut, this is the core.of t~e whole problem. Should they continue to compile the national budget out of sheer habit based on conventional concepts as well, the tax increase will not help to normalize our finances. It would be like scooping up water with a bamboo basket, as the Japanese saying goes, since the desired. effects of the tax increase would disappear. The F'inance 1Vlinistry in its "Handbook of Fiscal ~xpenditures" published recently quoted the scale of �personnel , expenses of public servants in stressing that the proposed administrative reform could hardly fie considered an effective weapon for realizing fiscal reconstructiun. VVhat made the bureaucrats em- phasize this trivial point? Thus we doubt the sincerity _ nf the government to deal with administrative reform. Take, for instance, the government policy con- cerning agriculture, forestry and fish~ries. They have spent so much for subsidies and bounties in this field that most city workers are disgusted. Diet members ,had been frantic about getting more funds for. road construction just to make a show of ach~evement before their constituents. Our new prime minister is renowned for his "brilliant achievements" on this score. Voices are already being heard in man,y circles asking whether the. new government is qualifie~ for the job of compiling a reasonable budget. ~ 12 FOR OFFICIAL USE ONLY APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000300020032-1 APPROVED FOR RELEASE: 2007/02148: CIA-RDP82-44850R000300024432-1 I FOR OFFICIAL USE ONLY Concerning the fax debate, we hope that the financial authorities concerned w�ill provide the nation with all information concerning state finances as a whole. It is still fresh in our m~mory that an increase in corporate tax was given up in the final phase of budget compilation last year. . If the government wants the support of the people, it should make all unbiased information available before the public: The government has more often than not compiled the budget in camera, ~ and the people have become suspicious of the true intent of the government. Lack o~ information would be just another obstacle in the way of conducting the tax debate. COPYRIGHT: Mainichi Daily News 1980 CSO: 4120 13 - FOR OFFICIAL USE ONLY APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000300020032-1 APPROVED FOR RELEASE: 2007/02148: CIA-RDP82-44850R000300024432-1 1'VL\ \/1 l 1.\ill11~ VJLi \ll\Ll ECON~~I I C BLINDSPOT OF MITI'S TRA1)E, INDUSTRIAL POLICY CITED Tokyo EKONOMISUTO in Japanese 15 Apr 80 pp 20-26 [Article by Takashi Iga, Kobe University Professor] [Text] MITI has publishea an International Trade and Industrial Policy Report which gives the 1980's the status of an "era of practical knowl- edge." The author takes a calm look at this massive composition by talented officials. - Special P.ole of the Council The Industrial Structure Council has drawn up a report entitled "1980's Internationa.l Trade and Industry Pfllicy." The report, which comes to about 80,000 words and 223 pages, was drawn up as a guide for "passing through the trials of the 1980's and beginning a new future." It is a comprehensive approach to all problems from the energy crisis and eco- nomic friction to policy for promotion of local economies and fostering of talent for technological development. However, the actual author of this report is the Ministry of Interna- tional Trade and Industry; the Industrial Policy Council simply delibe- rated the original MITI draft. While there was a certain degree of revision as the result of the deliberation, the basic framework was accepted more or less as in the original draft. The talented officials of MITI deliberately inserted words and phrases which deserved revision, and the focus of delibera~ions was diverted to that work. In that sense the council had the function of authorizing the text drafted by the officials--it served as a rubber stamp. Thus the report should be regarded as "Made in MITI." Next it should be said that the draft report was deliberated by the "Special Subcommittee for 1980's Policy" which was set up within the - Industrial Policy Council. The subcommittee had 38 members. The ~ver- whelming majority of these were those with scholastic experience (in- cluding journalists) and representatives of big business (including financial circles), with 13 and 17 members respectively. In addition there were two representatives each from smaller businesses, labor l~. FOR OFFICIAL USE ONLY APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000300020032-1 APPROVED FOR RELEASE: 2007/02148: CIA-RDP82-44850R000300024432-1 FOR OFFICIAL USE ONLY unions and women's groups, and one representative each from local govern- ment and the general citizenry; these can be called the minority faction. This sort of inembership structure is not limited to the Industrial Policy Council, but is found in most government councils. I said the function of the council was the rubber-stamping of the text draf ted by the govern-- ment, but this is primarily the role expected of the majority faction. It is possible to say that the role expected of the minority faction, on the surface, is to monitor the work of the majority faction. However, ~uring deliberation of issues which require a fairly high degrPe of spe- cia~tzed knowledge, the manbers ultimately either represent the special intere~~ts of their parent organization or they are simply accessories. But though I say the minority faction representatives are just accesso- ries, I think there is still a social function even in that. If t:ie minority faction members were excluded because they lack eacpertfse, the resulting report would certainly be severely criticized as self-serving. This may well be related to the Japanese peculiarity of liking mixtures _ which include a little of everything. Japanese box lunches and sukiyaki are classic examples, and this peculiarity is probably the reason that one can buy study desks decorated all over with everything from book- shel.ves to clocks and light fixtures. Thus councils are exposed to social criticism unless they are provided with representatives of every- thing from women's groups to the general public, and are prepared to give a little consideration to all sorts of issues. And for that reason, reports issued by councils of this sort inevitably take an all-inclusive approach. Soft Awareness of the President Situation As for the content of the report, it consists of 11 chapters plus an - introduction; the relationship among the chapters is shown in Figure 1. As the figure s~ows, the concerns of 1~tITI--from the international economy to local economies and from technological innovations to improvement of the quality of life--extend to every corner of the Japanese economy. But, Chapter 7 on improvement of the quality of life, Chapter 8 on local economic society, and Chapter 10 on vigorous small and medium enter- prises were written to deal with the previously mentioned minority fac- tion. They make up the accessory portion. Aside from these three chapters, the outline of the report is quite simple. Chapters 1 and 2 describe the prospects for the domestic and international situations, and they stress that what lies ahead in the 1980's ~s very bleak. Externally, the difficulties of oil, the international monetary system and trade friction will follow each other in close succession. ' Domestically, the technological progress and the young labor force which have propelled the Japanese economy will disappear. Metaphorically 15 FOR OFFICIAL USE ONLY APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000300020032-1 APPROVED FOR RELEASE: 2007102/08: CIA-RDP82-00850R000300020032-1 if;Y~�iift ~r.iFRli i'y t~l'7't'!ufl'1r~%4tt~ � 1. z::.~~#-~~~ t~.~nkC?lv~i~(G ~�iF;~.r+Ubi:~$t411L' fiaA~',irtts~v~,N}k . 3. ~t~trh�l~J,+ti~;i 1 n, 4 _ ' t~~hkU;~ x,~;!~I~Ct.~o~ i~~i y vD t ~ ]'r;~ ii'; i i~d 3~1 #'J s"t q~ ~ f~:~L 7, 8. 9. 10. t~:;~rr~>,~,;;;~~~ ~;~a~;s~~t~~~ ~tc!iinttyt ~t~o~T'i~',rar ( 3 fi. i c& tA.-t 3 r~F .~c i:'~~is v~ i'~~l #~Ti.'t~ffd',fC~ (2ix) (8~) (7~) ~ . tt41~~f':.'+i ( 4 ~:1 1.1. 12. 5.:~� 1L~-'-r,'cf 1~ !~#i~L[~~'~m77! F~ t ~t~;~tt~~. ( 6 o~~t~ ( 5~) 9tl iu.t't rD t~ ~i� r~ , ~~:l~'u`iv)~~ (9#) . . . 5. ~ ~~!~`i~o)tlk~t nfifi3~b~'~1~~5~ =s-7 R iT 1 ~.~r,~ c~o~a~ ~~~ra~~ui~a~ , Figure 1. Key: 1. International situation: energy problem; diversification of inter- national relations. 2. Domestic situation: end of imitative modernization; responsibility of economic power; emergence of aging society. 3. Search for national goals (Chapter 1). 4. International contributions of an economic power. 5. Overcoming liu~itations of resource scarcity. 6. Vigor and relaxation. 7. Fiow of wcrld situation (Chapter 3); Foreign policy in an era of interdependence (Chapter 4). 8. Growth emphasizing economic security (Chapter 2). 9. Role of industry and local economic society (ChaFter 8). [key continued] 16 FOR OFFICIAL USE ONLY APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000300020032-1 APPROVED FOR RELEASE: 2047102108: CIA-RDP82-00850R000300020032-1 FOR OFFICIAL USE ONLY [Figure 1 Key--continuation] - 10. Raising the quality of life (Chapter 7). ' 11. Energy security and preparations for an oil-free society (Chapter 5). 12. Path to a technology-based state (Chapter 6). 13. Development of a highly creative industrial structure (Chapter 9). 14. Prospects of ma~or industries and possibillty of a new frontier (Chapter 11) . 15. Developnent of vigorous small and medium enterprises (Chapter 10). speaking, we are a ship whose engines have failed at the very height of the storm. ?n this state, we can drift aimlessly, driven by the wind and the waves. Therefore, the report says, we must try to escape - these difficulties by setting national goals and making greater eftorts. This is rather prejudiced logic. In any collective entity, whether nation, enterprise or household, loyalty toward the group is linked to enmity toward outsiders. Phrased differently, enmity toward outsiders produces solidarity within the group. G.W. Allport found the roots of prejudice in this universal human attitude. But MITI is an economic agency, of c~urse. Perhaps if it were a defense agency it would clamor about red flags over t'usan or the defense of the Malacca Strait, but instead it has taken a soft tone and tried to build up a sense of crisis. As a method to overcome the crisis, the report proposes international co- operation and a technological foundation for the country. Chapters 3 and ~ 4 are a prescription for international cooperation, and chapters 5 and 6 indicate specific policies for basing the country on technology. The _ International Trade and Industrial Policy which establishes these two as national goals and then develops them is set out in chapters 9 and 11. Let's look at these in order. Will It Aid Policy Decisions? As the report points out, Japan is economically strong but poor in re- sources. In physiological terms, we have an extremely corpulant physique, and are so unstable we would timmble over immediately if not propped up by international cooperation. Thus, we must maintain a relationship of coexistence and coprosperity with the advanced countries by means of horizontal division of labor, with the newly industr3alized countries by means of transfer of technology, and with the developing countries - by means of economic aid. This is called "getting along well with every country," and it is co�~rect as a concept. But "getting along well with every country" is a pollyanna policy. At times we are driven into a position where we cannot get along well with any country. We are faced with situations in which we must choose between two opposing countries, and the agony cannot be avoided. Japan was soundly scolded by America for trying to buy the crude oil Iran could not sell because of the U.S. - import embargo. We must be aware that this sort of thing is going to happen more and more often. 17 FOR OFFICIAL USE ONLY APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000300020032-1 APPROVED FOR RELEASE: 2007/02108: CIA-RDP82-00850R000300020032-1 1 VI\ \/I L 1V LI1L \IJL+ VL~IlI Today's world situation can be viewed as a"2.5-polar game." U.S.-USSR confrontation, a bipo lar game, is at the center, and third forces in- cluding Japan and Europe are also drawn in. The situation is not that of a tripolar game because these third forces are not united. I have called it a 2.5-polar game because it is somewhere between a bipolar and tripolar game. One characteristic of that game is that it is hard to form a core. Simply put, there are too many shifting alliailces. It thus becomes difficult to calculate the payoff from forming an alliance, and as a result it is impossible to establish one's intentions. Looking just at Japan's position, we can see a variety of possible com- binations; here are a few of the main ones: (1) to ~oin with either the U.S. or the USSR to build a new world order by hegemony, (2) to join with the resource-rich, economically poor countries of the south to be- come a countervailing power against hegemony, or (3) to ignore criticisms that Japan is an economic ani.mal or an opportunist, and pursue an inde- pendent line. On this point, the report's position is greedy indeed. It says we should pursue all three possibilities simultaneously: --With the U.S. at the center, the EC, Japan and others will increase their interdependence and bring about cooperative management of the world economy. (p 44) --We will make an organic link between the three modes of economic co- operation--official development aid, trade and direct investment--and pramote comprehensive economic aid. (p 57) --We will raise our scientific and technological level and make use of our intellectual resources to strengthen our bargaining power. (p 24) This is fine as a literary composition, but it probably won't be of much use as a guide for the formulation of actual policy. Within certain limits, continuation of th~ confrontation between the U.S. and the Soviet Union is to the advantage of the countries of the south. It is the power of America and Europe that has obstructed the national liberation movements of the countries of the south, and the Soviet Union has functioned as an effective means to suppress that power. I think this is a common view in the countries of the south. While they - don't really trust communism, they are attracted by the practical utility of the Soviets. This is the reason they have not criticized such zhings as the Afghanistan problem with the same strong tone as the Western coun- tries. These countries of the south seem to view Japan as a bridge between the U.S. and the PRC, and as an agent in the containment of the Soviet Union. Simply calling for international cooperation will not be enough to develop an omnidirectional foreign policy; we will need a little more forceful concept, such as world federalism. 18 FOR OFFICIAL USE ONLY APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000300020032-1 APPROVED FOR RELEASE: 2007102/08: CIA-RDP82-00850R000300020032-1 FOR OFFICIAL USE ONLY There is a similar problem in becoming a country founded on technology. In calling for techn~logical development, the report lists all possible issues from coal liquefaction technology to nuclear fusion technology and from fostering of researchers to problems of the patent system. This looks just like the confusion at the scene of a f ire, and does not make it possible to work out an effective technology policy. Unless the scope of the problem is trjmmed a littl e and the key points are ideriti- fied, we will end up doing nothing more than encouraging swindlers seek- ing subsidies. Technological Development and Its Risks The question of technological development must be divided into at least three stages for examination. These are the stage of development of engineering technology, and the stage of construction of capital equip- ment. If we diagram the relationship between the different stages, we see that scientific knawledge A is used in development of engineering technology a, which is used together with technology b to build capital equipment 1. And the operation of new capital equipment 2 results in accumulation of new scientific knowledge E. A period of roughly 50 years is required from the accumulation of scientific knowledge to its embodiment iz capital equipment, and if new technology is to be put to pracrical use in the 1980's the principles underlying it will have to have been discovered in the 1930's. Watt discovered the principle of the steam engine in 17fa5, but it was 1804 when Stephenson applied this principle in building a steam loco- motive, and 1825 when the world's first railroad was constructed between Stockton and Darlington. And while Faraday discovered the principle of electromagnetic induction in 1831, it was 1861 when Pacinotti built a generator and 1882 when Edison constructed the first central power sta- tion. Thus, technological progress requires a long gestation per~,od. But the real question to be considered is what incentives to use to encourage technological progress can be promoted by fostering large numbers of the technicians who carry out research and development, by elimina ting the risks involved in research and development, and by in- vesting copiously. But this sor t of f lat, unimaginative view will nat be adequate. The nature of risks, for example, is different in each stage of development. The risk in the stage of constructing capital equipment is primarily one which comes up in relation to the market; there is great risk of in~ury from inadequate demand or a drop in prices. Tl:is was the cause of RCA's losses in development of computers and Kohjin's development of the flame- resistant fiber Kohderan. But risks in that stage of development can be avoided, to a certain extent, through marke t research and demand forecasting. In that sense the 1980's 19 FOR OFFICIAL USE ONLY APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000300020032-1 APPROVED FOR RELEASE: 2007102/08: CIA-RDP82-00850R000300020032-1 a va\ vl ? 1V1[w v~JL vl~La are certainly not opaque. It is as good as certain that energy prices will rise and the young labor force will peak out, so t1:ere won't be - much risk ~n investments in energy-saving device5, labor-saving devices _ or alternative sources of energy. If investment does not increase despite this certainty, the reason will be ttlat there are more favorable investment opportunities in other sectors in which business choose to invest. Regulation of investme~its in such areas as land, foreign currency or stocks would b e a real coun- termeasu?-e, and there would be no need to cover risks. Risks in the stage of development of engineering technology, by con- trast, will require relief ineasures to some extent. An example is the losses suffered in new engine development by Rolls Royce. The probability of loss in this stage is even higher than in the capital investment stage. According to a survey by Joseph Heller, the protzability of loss in the capital investment stage is 66 percent, but in the research and development stage it reaches 80 percent. I think the probability of loss is ev en higher in the stage of accumu- lation of scientific knowledge. The discovery of X-rays and penicillin were matters of good fortune; these can enly be called bl essings from heaven. In that sense, even the introduction of economic incentives in this stage will not guarantee results. Preparing the conditions for research and providing assistance is the most that can be done; after that it is a matter of waiting patien tly for the scientists to strike paydirt. The Scientific and Technical Council has carried out any number of surveys on researchers, and I wonder if a more realistic policy couldn't be worked out by making use of those surveys. 'Era of Practical Knowedge,' But... This report, then, seems to be a sort of unfinished symphony. The first move~nent is international cooperation and the second movement is basing - Che country on technology, but there should be a third m~ovement which has - not been written. My own feeling is that the motif of the third movement should have been - the structure of big business. Considering that about half the members of the subcommittee were representatives from large enterprises, I would think they would like to develop that motif. As Galbraith asserted, the present economic structure ha s come to have - a dual structure, with planning among the large enterprises and compe- tition centered among the small and medium enterprises. Trying to explain this dual structure by forcing it into the comp etitive model can only end in failure. 20 FOR OFFICIAL USE OI1LY I APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000300020032-1 APPROVED FOR RELEASE: 2007102/08: CIA-RDP82-00850R000300020032-1 FUR OFFICIAL USE ONLY Chapter 9 of this report is a really ciesperate e.xplanati~n; it is hard to understan~ why such roundabout argiiments have to be The title of Chapter 9 is "D evelopment of a Hig h?y Creative Industrial Structure," - but I think they must really have meant "Devel~pmPnt of a Highly Imagi- native Industrial S*_ructure Council." r The following ideas are written in section ~ of tha~; chapter. A. Free and fair competition insures the efficiency of industrial ` activity. B. Industrial activity up till now is judged to have been efticient on ~ the whole. " C. It can thus be assumed that on the whole there has bee.n free and fair competition in industrial activity so far. - - D. But since restrictions on competition are expeuted in tr~~ future, strict . application of antitrust laws will become necessary. A and C should be left out of this series of arguments; B and D conv ey the sense adequately by themselves. To start with, the fall~cy of the idea that efficiency an be maintained if there is just free c~mpetitiorl ~ was danonstrated by Keynes some SO years ago. It is thus best to del ete Argument A. If it must be kept, i~ shculd be revised to so~uething like this:--A'. Reliance on free competition is better than arbitrary ~dmin- istrative interference for maintaining efficiency. This is the proper way to state the classic liberalism of Smirh and Ricardo. Expansion of the scale of ~n industry ard expansion of organization of an - enterprise each contribute to the other. This is behind the emergence of oligopolistic structures in industries like steel and auto.~n~~biles, and it is impossible to reverse the trend now. In practice it would be impossible to strengthen anti trust laws and demand ehe breakup of large enterprises. MITI is correct in asserting that much. But the large enterprises have great power, both economically and politically, and the abuse di that power would do away with social justice. Therefore it is necessary to watch that the giant enterprises do not abuse their influence. To state this more positively, it is necessary to create a mechanism which will directly relate the prosperity of big business to the well-being of the majority of the people. And so, there is no need at all for stopgap arguments like, "We will block the evil of restraints on competition." If anyone wants to restrain competition, he should be allowed to do so. The resulting increase in profits to large enterpr3ses can be siphoned off and distributed to the public or reserved f4r public works. 21 FOR OFFICIAL USE ONLY APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000300020032-1 APPROVED FOR RELEASE: 2007/02108: CIA-RDP82-00850R000300020032-1 ~k~i ~'i~lt:~ . _ ` p ~ � 7~`r ~~Ji~14r ~~~u'.~CU10 b n - U 1 C b _ 2 D ~ E ~ ~ Figure 2. = Key: 1. Scientific knowledge 2. Engineering technology 3. Capital equipment Galbraith proposed establi~hment of a corporation with its stock held by the public; this corporatiun would then buy up all the stock of the large enterprises. Of course, the pr inciple of separation between ownership and u~anagement should be preserved, and there should be no interference in man~gement except in cases where the interests of the stockholders are being han.~ed. This sort of linkage between a publicly-owned corporation and fir.ancial assets would also solve, to a certain extent, the problem of pensicxts in an aging society. I read through the repc,rt repeatedly, trying to f ind such a proposal, ~ and I was q~.~ite disappo~nted that I could not find even a fragment of the ' idea. The Introduction of this report cal?s the 1980's the "era of prac- tical knowled~e." This means it is an pra in which knowledge will not just be accumulated and stored--it will also be put to practical use. I ~ think tha[ in that case there stlould have at least been the proposal for a publicly-owr.ed corparation. ' An American I have known for the last 20 years cannot distinguish between the sounds "Esu" and "zu," no mat~er how often he is corrected. As a resul.t he still pronounces "tsusansho" (MITI) as "zusansho" (slipshod ministry). I am afraid that if MITI gets this excited about an "era of practical knowledge," it will become a"zusansho" indeed. COPYRIGHT: Mainichi Shimbunsha 1980 9601 CSO: 4105 22 FOR OFFICIAL USE ONLY - APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000300020032-1 APPROVED FOR RELEASE: 2007/02108: CIA-RDP82-00850R000300020032-1 FOR OFFICIAL USE ONLY SCIENCE AND TECHNOLOGY SEMICONDUCTOR FIRMS: BULLISH PLANT, EQUIPMENT INVESTMENT VLSI Pushed Tokyo NIKKEI SANGYO SHIMBUN in Japanese 15 Apr 80 p 5 - [Text] The VI,SI (very large-scale integrated circuit) age is ~ust about to unfold. Japan's large semiconductor makers are pointing toward all out efforts in mass production of VLSI in the 1980's, and it is expected that this y ear's production will top last year's record-breaking sum by 30 percent in facilities investment totaling roughly 140 billion yen. They will be setting up production lines for the 64 kilobit RAM (random access memory) which is considered the "gateway" to VLSI. Medium and - lesser sem ~conductor makers including Fu~itsu, Mitsubishi Electric, and Oki Electric Industry, are also enterir~g into this business with the intent of closing the gap between them and the "peak 3" co nsisting of Nippon Elec tric, Hitachi Limited, and Toshiba who already sell more than 100 billion yen worth each year, and there is heated competition in facil- ities investment. (A series o n"Electronic-Electric" front will start on the 16th) Start Off with Mass Production of 64 Kilo RAM Apri1 ist was the day ne~,~ workers who will sustain the company in the - 1980's were welcom~d. Mitsubishi Electric's ceremony for welcoming new entrees this year was held at its Itami Plant (Itami City in Hyogo Pre- fecture). The Itami Plant is Mitsubishi's research and development stronghold for semiconductors. President Sadakazu Shindo emphasized that the business strategy for the 1980`s will be "Mitsubishi in elec- _ tronics," that will be the theme around which electronics will be taken up hy the entire company." It is said the reason this ceremony was held - at the Itami Plant was to make the new entrees become aware of the impor- _ tance of the semiconductor area as represented by IC and LSI. There was r easo n for this strczR statement by president Shindo. Mitsu- bishi is known as the first company in Japan to produce IC, but its 23 FOR OFFICIAL USE ONLY APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000300020032-1 APPROVED FOR RELEASE: 2007/02148: CIA-RDP82-44850R000300024432-1 , ~~res~~nt sales in the semiconductor area amounts to but 1/3 that of Nippon El.ectric whicl? is the present leader. There is a feeling within - the company that "this is amortifying situation." "Stren~;th anci weakness in the semiconductor area wi11 determine the fate uC electronic related makers from now on." This is the concensus of the l.arge semiconductor makers such as Nippon Electric. As is evident from the data in the accompanying table, the 10 large companies which are representatives of Japanese industry in the areas of computers, communi- cation equipment integrated electric business, and household electrical _ a~pli.ances a:Ll have within the past few years taken the step of invest- ing in the semiconductor area. According to one source (director Teru- yuki Nish.ijima of Toshiba "if one neglects to invest in Facilities for semiconductors which are the nuclei of electronics, he will be lacking in business strategy." - ~ Ttiis competition in plant investment is about to become even more active with the dawn of the VLSI age which seems to be just around the corner. Nippon Electric which is investing the record-making sum of 30 billion yen in the history of the electronic makers of Japan has this to say, "the favorable aspects of the IC business will continue, and sales will depend upon the supply capability" (Director Jungi Ouchi) thereby stress- _ ing the importance of this investment. Hitachi Limited and T~shiba are maintaining their high level of investments, and their top people say, "this is something we have to do." Each company is concentrating on VLSI production lines with the thought "the VLSI production plants and investment scal.e of the future will be one order of magnitude greater, and this is a factor responsible for raising the level of plant investment in a'no ceiling' manner." What each company is aiming at is the mass production of the 64 kilobit VLSI which incorporates the capabilities of more than 100,000 transistors and which has already appeared on the ?narket. These products which are con- sidered to be "gateways" to VLSI are expected to find wide use in com- , puters during the first half of the 1980's, but the feeling in the semi- conductor industry in such fierce technological innovatian orientation is that "the one who puts his mass production unit in orbit tefore rival makers will be the eventual ~~inner." ~11 the companies seem to agree on this point, and this view is reflected in the form of plant invastments. Nippon Electric is pushing reinforcement of its VLSI test production and development line at its Sagamihara Plant in Kanagawa Prefecture which is its main bastion in the communication equipment area and is also hasten- ing compl.etion at its Kyushu Nippon Eleetric Plant (Kumamoto City) wl-~ich is reputed to be one of the world's top VLSI production plants started last year for the production of 64 kilobit VLSI and the succeedin~ 256 kilobit VLSI through its No 6 diffusion lir.e. Hitachi, Limited which is breathing hot on the heels of Nippon Electric ~s pushi:ig comple�ion of 2L~ FOR OFFICIAL USE ONLY APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000300020032-1 APPROVED FOR RELEASE: 2007/02148: CIA-RDP82-44850R000300024432-1 FOR OFFICIAL USE ONLY its Musashino Plant (Kodaira City in Tokyo Urban Prefecture) for the pro- duction of 64 kilobit LSI class and better units while Toshiba is doing - the same at its Oita Plant (Oita City). Mitsubishi Electric is directing half of its plant investments to its new Kumamoto No 2 Plant (Gasshi-Town, Kumamoto Prefecture) saying, "we will win out in this VLSI era competition ~nd rise to the top group level" (semi-conductor group leader Tamio Sato). The other companies which are pursuing this top group are putting all eEforts into reinforcing their main plants. P4atsushita Electronics at its Kyoto Nagaoka Plant, Sharp at its Nara Tenri Plant, and Tokyo Sanyo Electric at its Oizumi Town Plant in Gunma Prefecture are directing their maximum efforts in semiconductor development at their own plants. In addi- tion, Fujitsu at its Kanegasaki Plant in Iwate Prefecture and Oki Electric at its Kiyotaki Town Plant in Miyazaki Prefecture are starting construc- tion this year on the latest in semiconductor plants. It seems likely that the plant investment plans of the Japanese semicon- ductor industry which is now greeting the arrival of the VLSI era are con- tinuing on a plan to maintain this more than 10 billion per year invest- ment every year on the part of the larger makers for some time to come. Trends in Semiconductor Plant Investment and Sales of Large Companies (Unit: 100 million yen) Plant Invest~ent Sales JFY 1978 JFY 1979 JFY 1980 JFY 1978 JFY 1979 JFY 1980 Nippon Electric 155 270 300 1,195 1,575 2,045 Hitachi Limited 100 150 200 1,000 1,300 1,650 Toshiba 60 100 100 850 1,000 1,300 Fu~itsu 116 160 220 286 565 900 Sharp 20 88 33 384 560 670 Matsushita Electronic Industry 50 100 170 400 500 650 ~ Mitsubishi Electric 60 80 100 385 440 540 - Tokyo Sanyo Electric 15 43 80 250 310 400 Oki Electric Industry 34 53 120 107 175 260 ~ Suny 45 50 80 (Note) include~ IC and other semiconductor products. Sony does not sell semiconductors separately. Estimated values included. Matsushita Elec- tronic Industry concludes business in December, Tokyo Sanyo Electric in November, Sony in October, and all others in March, 25 FOR OFFICIAL USE ONLY APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000300020032-1 APPROVED FOR RELEASE: 2007/02148: CIA-RDP82-44850R000300024432-1 ~ 'I'he United States semiconductor industry is presently beset with high interest rates as a result of which Fairchild along with the world lead- ing oil exploration equipment makers Schlumberger and Mostec have come under the wings of the conglomerate United Technologies whose main forte is in the air and space area. In contrast, the large Japanese companies are putting forth vast sums for research and deveiopment and plant in- vestment over long periods on their own strength. This is indicative of the great "strength" of the Japanese industries to which the American industries are struggling to keep up and is causing increasing resent- - ment displayed through anti-Japanese attack. Semiconductor Activities _ Tokyo NIKKEI SANGYO SHIMBUN in Japanese 16 Apr 80 p 5 [Text] Over the past 10 or so years, the semiconduct~r makers of Japan have been pouring money and manpower into putting as many transistor - units into silicon chips a few millimeters square as transition is being made from IC to LSI. In this manner the LSI age has been ushered forth, and the developmental race has become even more fierce. All th~ compa- nies are increasing their investment plans tremendously in order to come out ahead in this competition. Aiming for the expanded semiconductor ~ market which already is expected to close in on the "i trillion yen," total, the strategies of these maker companies have assumed diverse and very active forms. We spoke to managing director Jungi Ouchi who is the "overall mentor" of the semiconductor activities of Nippon Electric which is the largest of these makers, and he served as the lead-off batter of the representatives of the 10 companies interviewed. (Reporter Nonaka) Nippon Elec tric [QuestionJ There is expected the positive commitment of 60 percent of the total investments to ttie semiconductor area again this year in the investment strategy not only by the Japanese but the American semi- conductor indus*_ries. What is the background for such concerted efforts? Time for Plant Investment and Success _ [Answer] There is constant pursuit of need to plan plant investment if - one is to stay on top in the semiconductor business. The semiconductor business is one in which there is strong influence of the equipment business, and as indicated by the term "money eating bug" which is often applied to this industry, investment in equipment greatly controls what- ever share which is allotted this business. The manner in which the needs of the market are read greatly determines the rise or fall of a business. 26 FOR OFFICIAL USE ONLY APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000300020032-1 APPROVED FOR RELEASE: 2007/02148: CIA-RDP82-44850R000300024432-1 FOR OFFICIAL USE ONLY ~ Speaking in terms of IC, the annual rate in increase over the past few years has been of the order of 20 percent. Of this total, memory and micr~computers have shown more than 30 percent increase. Since it is anticipated that the semiconductor market from here on will increase at an even greater pace, plant investments must be increased. To be sure, Nippon Electric is hoping for an increase much greater than the other companies, and this year's investment total was determined based on a long-term plan. We even anticipate there may be an upward revision sometimes during this year, and we are forever trying to increase our share. It has been said that this situation is one in which "one is beset with red ink and conducts business to get out of the red," but we are now at a time when we hope to reap some profit out of the money we spent in the past, and we are anxiously awaiting the outcome. [Question] Where is the point of all these investments? [Answer] As you are well aware, increasing the production capability of the domestic plants to comply with the rising LSI demand is a life or death situation. We plan to be producing 20 million LSI units per month by the end of this year. This involves hastening the completion of the No 6 diffusion line at the Kyushu Nippon Electric Plant (Kumamoto city) which is our main plant and increasing the diffusion capability of the Sagamihara Plant in Kanagawa Prefecture which has been involved in test production and developMent of the 64 kilobit RAM (random access memory), We will commit 6 billion yen to Kyushu Nippon Electric and 4 billion yen to the Sagamihara Plant. The diffusion line is referred to as the "heart" of semiconductor production, and the precision of diffu- - sion will determine the LSI product quality. As a result, the newest lines with maximum automation and conservation of energy processes will be installed and thereby open the gaps between us and our rivals with respect to plant stoppages and product quality. These are important strategic moves aimed at winning the competition in the VLSI era. [Question] Domestic and foreign rivals have already come out with sam- ples of their 64 kilobit RAM which is termed the "gateway" to VLSI, but has not Nippon Electric come out with its product? [Answer] The memory market is presently inundated with 16 kilobit RAM, and worldwide shortage has resulted in a stampede of inquiries. When seen from the standpoint of supply and demand balance, the life of the 16 kilobit RAM is likely to be unexpectedly long, and it will probably be about 1982 when its successor the 64 kilobit RAM becomes the main- stream. Our development is already completed, and we are planning to - ~ introduce our product with an eye on the market movements. We have suc- ceeded in research and development on the 256 kilobit RAM using a 1.5 micron design rule by optical technology through a reduced transc:ription 27 FOR OFFICIAL USE ONLY APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000300020032-1 APPROVED FOR RELEASE: 2007/02148: CIA-RDP82-44850R000300024432-1 method, and we feel we have the lead in VLSI strength. Just how to imple- ment the development plan and the product design into the marketing stra- tegy is a theme which will assume increasingly greater importance from here on. (Question] According to plan, semiconductor sales totaled 264 billion yen of which IC accounted for 142 billion yen. Doesn't TI (Texas Instrument) which is the world's largest keep second-ranked Motorola at a respectful firing range? Meaningless Rankings - [Answer] The worldwide rankings of semiconductor makers are not too ' reliable. It has been estimated that TI has twice the produc*_ion of Nippon Electric, but any comparison with Motorola and lesser companies changes with the yen market making the comparisons without substance. Should the yen become 20 percent less in value in a year, our ranking will fall not to third or fourth but possibly to fifth. This is why these rankings are rather meaningless. To be sure, it is not too far from the truth to say that we are the maker next in line to TI. [Question] What about your overseas strategy? - _ Integrated Production Between Japan, United States, and Europe [Answer] American production of cemiconductors has been through strengthening of the 16 kilobit RAM production syste~ of Electronic Arrays (EA) which we purchased 2 years ago in December. Because of the sudden increase in demand for the products of this system in the American market, production was increased to 100,000 units per month this past February. We expect to raise this capacity to a 500,000 unit production systesn during the course of this year. This will restore the EA operations back to black. Since American nerves are being tightened as the result of sharp increase in imports from Japan, we are hoping to ease Japanese- � " American friction in the semiconductor area through this approach. In addition, we are planning to increase production capability in Malaysia. - Since there is some concern that the sparks of this semiconductor friction will leap from the United States to Europe, we are planning to follow the assembly plant in Ireland with an integrated production plant also in Ireland or in Scotland or the United Kingdom for which surveys are pres- ently under way. We will pursue a course of ir_tegrated production for the three ma~or markets of the world: Japan, United States, and Europe. 28 FOR OFFICIAL USE ONLY APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000300020032-1 APPROVED FOR RELEASE: 2007/02148: CIA-RDP82-44850R000300024432-1 FOR OFFICIAL USE ONLY No Relaxing in Alert on Semiconductor Friction Director Ouchi was in charge of inedical equipment after which he became ~ the central figure of Nippon Electric's semiconductor strategy since 1966. "Ouchi of semiconductors" is a well-known figure around the ` world, "It has been said that putting more than one-half of one's capi- tal into semiccnductors is a risky business," but he has the background of a resolve that placed this company as one of the three strongest com- � panies in the world in this area and he prides himself on change. He voiced optimistic sentiments throughout the interview, but he chose his words carefully and became very serious when the subject turned to JapanesE-American semiconductor friction. He had been playing a spokes- man role to make all out effort to avoid this friction, but he said as the result of lack of unity within the industry that "it is difficult to _ achieve harmony as the case with colas. The automobile is presently the target of (Japanese-American) friction, but the semiconductor problem will eventually arise," he statea in a warning tone. Director Ouchi was acting for an audience. Toshiba Approach Tokyo NIKKEI SANGYO SHII~iBUN in Japanese 17 Apr 80 p 5 [Text] Toshiba is hotly contesting Hitachi Limited for second spot in the semiconduc tor industry. It has to date yielded a slight lead to Hitachi, and it has adopted the slogan "close chase of Nippon Electric, beat Hitachi." As attested by the separation of its elect~onics parts sector which takes in semiconductors and other areas of the electronics sector on 1 April, it is going all out to "attain second rank." We went to Director Teruyuki Nishiza.wa of Toshiba to hear of this company's approach. Toshiba [QuestionJ Your 1980 plant investments in the semiconductor will total 10 billion yen which is the same as last year. This is somewhat conser- vative when compared to the other large makers. Mass Production of LSI at Oita [Answer] One should not be led astray by the figures one sees, and what is more important is how effective and appropriate the invest- ments are. This is why I do not feel that we are at all conservative. The basic strategy is to increase our semiconductor sales by 30 percent this year. The investment to this end was determined several years ago, and this year's investm~ent is intended to lay the stepping stones for the LSI era which is expected to take over the stage in the 1980's. To be sure, pressure of the semiconductor business centered on the 16 kilobit 29 FOR OFFICIAL USE ONLY APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000300020032-1 APPROVED FOR RELEASE: 2007102/08: CIA-RDP82-00850R000300020032-1 fZ~'1~t may cause us tc~ speed up increase in production, and there is ample pos~ibility of some upward revisions to the investment total during the course of the year. [(luestion] At the present time you are using your Kawasaki transitor plant z~s the development plant for VLSI, but do you plan to convert Toshiba's main IC and LSI plant in Oita (Oita City) to a VLSI production line? [Answer] The Oita grounds still have room for expansion, and the con- struction to date has left room for new construction at any time. The preparations are okay. The real production of the 64 kilobit RAM which already has undergone sample shipments is planned to have its production line be sited within the Oita plant. [Question] You have overwhelmed the other companies in the line of desk- top CMOS and LSI and have exceeded the otl;ers in abundance of products although many are to fulfill in-company needs. What is the essence of your future strategy? - We Will Go to Changes in the Business [Answer] We will not follow an overall policy but follow the priority principle. Microcomputers and memory will be the principal pillars. Starting with the electronic engine control device to be produced for _ the Ford Company of the United States, car electronics related elements will be an area in which our "strength" will be exploited in the future. _ We will co ncentrate our strength in the newly established electronics parts sector and go into changes in business. [Question] You were the last batter among the large makers when it came to enteri-ig the American market, however, you purchased a plant with superior production facilities and were able to initiate operations in January of this year. In this manner, you were able to make up for your lost time in one swoop. How do you propose to develop your future over- _ seas strategy? \ We Will Eventually Have Plants in Europe [Answer] Toshiba Semiconductor which is located at Sunnyvale in the state of California and which presently is the on-site production plant for the American market was the object of an investment of 10 million dollars, and this is where we will concentrate production of the 16 kilobit RAM which is seeing sharply increasing demand. To this end we will conduct training of well-experienced workers. We feel that we must also build on-site plants in Europe as well, but plans are inde- - finite at the present time. 30 - FOR OFFICIAL USE ONLY ~ APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000300020032-1 APPROVED FOR RELEASE: 2007/02108: CIA-RDP82-00850R000300020032-1 FOR OFFICIAL USE ONLY [Question] It seems that the increased productionsystem of the Malaysia semiconductor plant is about to go into orbit. [Answer] The on-site plant in Malaysia in the form of Toshiba Electronics Malaysia (Kuala Lumpur) started assembly of linear IC in JFY 197~, and the work has proceeded extremely well so that this plant is now producing 2 million units per month. The production of small signal transistors has been increased from the 15 million monthly of the previous year to 20 million units per month. There has been acti~-e entry of television, - audio, and watch set makers into Southeast Asia, and we are serving as supply bases to these plants. About 80 percent of the production of Toshiba Electronics Malaysia is directed to the Southeast Asia market. The system in which one supplies to the areas he advances is one which probably will be adopted by the Americans and Europeans. Active Efforts To Take Second Place Toshiba surprised the industry when it received a large volume order for a control unit (EEC) for an engine incorporating microcomputers from the Ford CQmpany of the United States in June 1977. The number of EEC units supplied to the Ford Company has already exceeded 100,000 units, but Director Kawanishi said, "the car electronics market has not developed ' as much as we had expected. There is considerable decrease from what - we had initially estimated." He registered his unhappineGS in this manner. It is claimed that the basic attitude is "aqueeze out the essential points and introduce changes," but ~udging from the deft movements displayed on their entry into the American market as d zscribed above, this company seems about to develop active movements wh~ch are aimed at "sole second place." Mitsubishi Semiconductor Strategy Tokyo NIKKEI SANGYO SHIMBUN in Japanese 18 Apr 80 p 5 [Text] Semiconductor strategy af Mitsubishi Electric to date has been a rather modest affair. It together with Hitachi, Limited and Tashiba has been ranked as the top three integrated electrical companies, yet, in the area of the semiconductor sector as represented by IC and LSI _ type basic electronic components, this company not only trails top maker Nippon Electric by a wide margin but also has considerable ground to catch up on the second-ranked Hitachi, Limited and Toshiba Electric. In other words, it is a"minor" company in this respect. President Sadakazu Shindo made this most recent remark, "we will like to be called ~ Mitsubishi Electric the electronic giant," and this undoubtedly indicates reinforcement of the semiconductor sector. This company which made several hits in household electrical appliances starting with blanket dryers is in a stage of inetamorphosis in the area of semiconductor strategy. We interviewed Tamio Sato chief of the semiconductor sector who is the pilot of this company in the semiconductor area. 31 FOR OFFICIAL USE ONLY APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000300020032-1 APPROVED FOR RELEASE: 2007102/08: CIA-RDP82-00850R000300020032-1 1Vl? ~/L'l l\.~(~l� VJL \II~L~ Mitsubishi Electric [Question] What is the reason for Mitsubishi Electric ranking second and belonging to the lower group of the 10 large makers in the semicon- ductor business? I,aying the Foundation for VLSI Mass Production [Answer] Put into a single statement, this was the result of placing emphasis on a balance between profit and products when we made invest- ments in the semiconductor sector. We are frankly aware that there is considerable difference between this company and the top companies in the matter of sales. This is why we have set our sights on obtaining 10 to 15 percent of the share in the semiconductor market by 2 years from now in 1982, but here again we will adopt the concept of "pursue profir rate" as the primary policy as we make out plant investments. [Question] We hear that plant investments will total 10 billion yen in 1.980 which is the largest in your history of which exactly half or 5 billion yen wiZl be directed to the Kumamoto No 2 Plant (Nishi Gasshi Town, Kumamoto Prefecture) which is your semiconductor production plant. [Answer] This company's semiconductor production lineup is for the North Itami Plant (Itami City in Hyogo Prefecture) to be the research and devel- opment brain. Kumamoto No 1 Plant (Takita-cho, Kumamoto City) to be a production plant, and the Kumamoto No 2 Plant to be the mass production plant. This Kumamoto No 2 Plant is the special plant for the diffusion process which is the "heart" of semiconductor production, but construc- tion on a diffusion plant for the production of 4-inch wafers for the mass prod~iction of 64 kilobit RAM use was started in May with the intent of initiating operations next spring. The foundations for mass production of VLSI are being laid. In addition, the Kumamoto No 1 Plant where considerable assembly work takes place is presently operating at full capacity, and it has assigned a part of its assembly functions to the Fukuoka Seisakusho (Fukuoka City) which is a plant producing electrical machinery such as electric = hoists. Despite this situation, the plans are to reinforce this plant and increase its production capability. [Question] Do you feel your preparations for the VLSI age which will blossom out in the 1980's adequate? _ 'We Will Not Follow the Tracks of Later Starters` [Answer] Because this company was late in product development of the _ 16 kilobit RAM which is the principal ite~ in today's memory market, user's evaluation lagged behind while we were late in getting on the bus 32 FOR OFFICIAL USE ONI.Y - APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000300020032-1 APPROVED FOR RELEASE: 2007102/08: CIA-RDP82-00850R000300020032-1 FOR OFFICIAL USE ONLY to the market conf rontation. Fortunately there was an extreme shortage of 16 kilobit RAM, and our production rose 20 percent over the previous year in 1979 when monthly production was in the 300,000 to 400,000 range, _ and we expect a further increase of 20 percent this year. We do not intend to fall into this same rut of delayed entry where VLSI is con- cerned and we have been making sample production of 64 kilobit RAM by the superfine MOS (metal oxide mecnbrane semiconductor) process since September of last year. We will time the stage of production initia- tion once the new diffusion plant for VLSI production goes into opera- tion at the Kumamoto No 2 Plant. [QuestionJ The weight of discrete units such as thyrister makes up 40 ~percent of the sales in the sem iconductor sector, and the recent devel- opment of products aimed at energy conservation is eyecatching. Also Reinforce Discrete Semiconductors [Answer] The expansion rate of the discrete market is smaller compared to the LSI and IC markets, but it is nevertheless a large market which comprises about 40 percent of the semiconductor market. The large makers have increased their weight in the IC and LSI areas, and we are not necessarily committed to closing this gap. On the other hand, it is a fact that we are putting strength into the discrete area. We would like to foster the name "Mitsubishi in discrete" even further. Our successes in power transistors and photo trigger thyristers which were the first developments of their kind in the world will be the lever by which we will pursue development of discrete products for electricity conservation applications. This will al~o aid in fulfilling intraplant needs of the electronics sector of electric appliances which are the backbone of Mitsubishi Electric. [Question] The first step in on-site production of semiconductors in the United States is said to be granting American makers the rights to conduct test business. Do you have any plans for enteri~g the American market in the future? [Answer] We are presently granting the rights to a test business which is the core of the semiconductor assembly process to a specialty company r in California's "Silicon Valley," and this is an indication of our entry (into the American market). There are no specific plans as yet, but I am somewhat skeptical of any merit in siting a plant in the United States when the quality of present American labor and its training are considered. Rollback with a Powerful Organization "Fertile but not conspicuous." Mitsubishi is considered in such a light in the semiconductor area which is the most active sector of the Japanese _ 33 FOR OFFICIAL USE ONLY APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000300020032-1 APPROVED FOR RELEASE: 2007102/08: CIA-RDP82-00850R000300020032-1 ~l~cr_rical makers. ~titsubishi is now in the process of rolling back this conctpt. Last "1ay on the occasion of the 20th year of its entry into the seniiconductor industry, the company's top echelon headed by President Shindo assembled at the production plant in Kumamoto to plan its strategy. 'I'he net result was the establishment of a"LSI Laboratory" for reinforc- in~; large plant invastments into the Kumamoto No 2 Plant and strengthen tlle research and development system, and this company's plans are gradu- ally assuming specific shape. Mitsubishi's "char~ge in spirit" associated with th is reinforcing of its semiconductor area is buttressed by its back- ground of a powerful industrial organization, and activities are converg- ing in this area in a manner similar to the eye of a typhoon. Sharp Production _ Tokyo ?VIKKEI SANGYO SHIMBUN in Japanese 19 Apr 80 p 5 [Text] Production of Japan's first electronic translation machine followed by the introduction of a voice synthesis machine. "Sharp's products have distinction." This is the evaluation of the electrical industry which is a good indication of this company's unique semiconduc- tor strategy. Only 10 years ago this Sharp Company was but a set maker which relied on other companies to supply its semiconductor needs. It introduced techno logy from the American Rockwell Company in the develop- ment of LSI for its desk calculatoz (electronic desktop calculator) and followed a thorny path as it struggled for domestic production. It has presently grown into an influential maker specializing in microcomputers and CMOS (metal oxide mesnbrane semiconductor). While it is a young com- pany, it has been referred to as a new powez-ful faction," and it looks toward VLSI as its next focal point'. Kosaku Okano who heads the elec- tronic parts industry headquarters at the comprehensive development center of this company located at Tenri City in Nara Prefecture is commanding the forces in this company's efforts to increase its capacity. Sha rp Estimate 23 Percent Increase in Sales _ [Question] You have just completed your No 3 semiconductor plant within your comprehensive development center with an investment of 10 billion yen. [Answer] We expect to initiate operations in July. Only about half the production equipment has been installed as yet, and we are delayed by the delivery of the electron beam exposure unit from the American Itec Com- pany which is an indispensible adjunct to our "fine finishing center" at our no 3 plant for VLSI test production and development which will not take place until June. Since a considerahle fraction of our production equipment is shipped in from the United States, we do experience a number of unexpected cost increases and headaches. There is demand from within the company to "start production as quickly as possible," and we are con- tinLally under stress. 34 FOR OFFICIAL USE ONLY APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000300020032-1 APPROVED FOR RELEASE: 2007102/08: CIA-RDP82-00850R000300020032-1 FOR OFFICIAL USE ONLY [Question] What are your production plans once the new plant goes into o~eration? [Answer] Half of Plant No 3 will go into operation from July, and it will be next year before full operation wiil be in force. At that time the monthly production capability of LSI will be 1.0-1.5 million units. Th is, together with the production of the No 1 plant, will give us a capacity twic e the present level to 3 million units per month, and a production system in line with the demand structure will go into orbit. The main force will be directed at memory products for microcomputers, ROM and RAM. Where memory is concerned, we expect to go into 16 and 32 kilobit dyna- mic RAM for which samples will be coming out this year and the mass pro- duction of th e 96 kilobit ROM which will have the greatest memory capa- city in the world and which will be the heart of the electrical translation unit. We will also concentrate on our "fine finishing center" with the purpose of establishing technology for VLSI production. = With the operation of Plant No 3 total sales of the electronic parts industry for this year is ~xpected to increase 23 percent over last year to 67 billion yen. Of this total foreign sales will account for a 33 per- cent increase to 45 billion yen. Start Coopera tive Efforts with American Companies _ [Question] What about your strategy in the microcomputer area which is expected to play a ma~or role in business machines and household elec- trical appliances? ~ [Answer] In addition to the self-developed 4 bit-1 chip microcomputer "SM series," the other mainliners are the "A 180" and the 16 kilobit - "Z-8000" whic h was acquired by technological a~reement with the American Rockwell Company. The production capacity is 1.5-1.6 million units per month overall. What we particularly have held important is the contract we signed with the Zylog Company along the lines of a second source. We are the only Japanese make r involved in such an agreement, and we intend to exploit the superiority of this systesn design. Monthly production of "Z 180" is but 30,000 units, but it can be enclosed within the light programmable "pocket computer" which will be placed on the market in March. This unit is said to find many uses in intracompany applications. Once Plant No 3 go es into operation, we expect to be in good shape because production of the 16 bit "Z-8000" can be expanded. Ac tivate Join tly Financing Company [Ques[ion] There is considerable assembly work going on at the Tenri Plant of LC a nd LSI which have been produced at that plant, and this is 35 FOR OFFICIAI., USE ONLY APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000300020032-1 APPROVED FOR RELEASE: 2007102/08: CIA-RDP82-00850R000300020032-1 in r~5~ unse tu sharp increase in demand and an effort to further reinforce th~~ ~~roduction system. We have established a new company with Takaya (~T~in company at Ibara City in Okayama Pref.ecture, President Nagaroku Otsuka, cupitalization 40 million yen) by ~oint subscription, and opera- tions have been initiated ~aith a monthly production of 1 million units. '1'he expansions of the joint financial outlay mode system involving co- operatin~; companies is an effective strategy, and we hope to go all out in ~rc~moting this system. - [Q~iestion] Isn't the production of LCD (liquid crystal indicating ele- me~it) at your Nara Plant in very favorable position because of the in- creased demand for desktop electrical calculators and watches? [AnswerJ Compared to LED (light elnitting diode) or fluorescent indicating tube, LCD has the advantage oi consuming less electric power and its appli- cation in display units is undergoing great expansion in the market. The LCD production cap ability is between 3.4 million to 3.5 million per month which places this company with the top members of this group in Japan. The indicating dev ice which transmits information treated by the ~lec- tronics along with LED and has the role of "f ace of electronics" will be produced at the Na ra plant by completely automated process, and the mass production systezn will be reiz~forced further. Squeeze the Develo pment Target To Achieve Results What must not be f orgotten about Sharp's semiconductor strategy is that - by establishing photo semiconductor technology, this company has drawn ahead of the other s in the mass production of solar batteries. This is the result of havi ng squeezed the developmer.tal target in the form of "developing a semiconductor with unique characteristics." The integrated dev elopment center which stands on a rise in Tenri City _ of Nara Prefecture has a group of tombs in it~ ground which depict a strange contrast with this most leading of semiconductor production sites. Plant No 3 which has just been completed is a newest type con- struction which has been rendered dust free to the extent that it belongs to the "super" dus t free category of "class 100" with less than 100 pieces of dust greater than 0.5 microns per square foot. There is a new row of 100 million unit p roduction facilities, and test operations are being repeated. While guiding us around this new facility, Chief Okano said, "even when we attain full operation, when I consider the present demand for semiconductors, the day will come when production will not keep up with demand." In this manner he was alrAady planning some other new site. 36 FOR OFFICIAL USE ONLY APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000300020032-1 APPROVED FOR RELEASE: 2007102/08: CIA-RDP82-00850R000300020032-1 FOR OFFICIAL USE ONLY Sanyo Electric Tokyo NIKKF,I SANGYO SHII~BUN in Japanese 22 Apr 80 p 6 [Text] Tokyo Sanyo Electric is in charge of semiconductor production for the Sanyo Group. The nain plant at Oizumi-machi, Oura-gun, Gunma Pref ec ture is the site of the f ormer Naka,j ima Airplane Plant . It is now � 21 years since this company located here, and there have been new addi- tions following new additions, and the wide expanse of 1.3 million square meters is nearly completely covered at the present time. The c.onstruction - of a new semiconductor plant is presently under way in this tnaze of struc- tures. IC can be grossly classified by construction and performance into - bipular and MOS. Where this company is concerned, the bipolar type linear IC used in stereo and television accounts for 90 percent of the production. In order to rid itself of this "one lung flight" image, a - line solely for MOS production is being installed in this new plant with the aim of establishing a new flight pattern. Director Shingo Iwase is in charge of this strategy. This head of the semiconductor industry ' sector is well known as one of the pioneers in the Japanese semiconductor indus try . (Reporter Nonaka) Tokyo Sanyo Electric - Memory and Related Items Are the Main Forte ~ [Question] When will the special MOS production plant aimed at "all weather type" operations strategy development go on stream? [Answer] We are aiming for August as starting date, but full-scale pro- duction will be some time during the latter half of 1981. Construction was started in February. In order not to distiirb the neighboring linear IC plant which is in full operation by vibrations, excavations were _ made down to 16 meters below ground level for the concrete founctation in the cocr.~lex construction which is being irstalled. As a result, the con- struction has been somewhat delayed from che original estimate. This new plant is a two-story affair (floor area of 3,300 square meters) of 12 meters height providin~ considerable leeway. The total investment is _ expected to rise from 6 billion to 8 billion yet~. [Question] Wt?at about your production plans? ' ' [A~swer] We hope to produce 4 million MOS units per month at this new plant. This is a figure which includes IC and LSI. The production items will be mainly nonvolatile memory, memory for computers such as the 4 bit microcomputer, and watch use ite s. The total sales in the semiconductor area for 1979 by Tokyo Sanyo was 30 billion yen of which the bipolar IC to MOS r4tio was 9 to 1. Looking at the monthly production figures, 37 rOR OFFICIAL USE ONLY - APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000300020032-1 APPROVED FOR RELEASE: 2007/02148: CIA-RDP82-44850R000300024432-1 bip~~Lrir accounted for 1G.8 million units and MUS 1.2 million units. The new production expected to come oa stream during the latter half of 1981 - will be biased t~ward MOS production. Since there is posaibility of expandin~; the present bi_polar production lines, there will be total pro- duction c~f 18 million units per month. _ Thick M~~nbrane-C, Increase Production Strength [Question~ What is unique of Tokyo Sanyo's semiconductor capabilities is the competitive strength of its hybrid IC. In this area, this company is said to be the to2~ maker of high power thick film IC for audio use. [Answer] Demand for this thick film IC increased greatly during the past few years, and the supply is unable to keep up with demand. We can pre- sently produce a million units per month, and we believe we supply 70 Percent of the world matket in the audio area. Thick film IC does not r.equire heat dissipation considerations, and we have had inquiries f rom IBM as a result of which some samples were sent in January of this year. This may he thought to be a strategic export item, and we are planning to expand this increased production system. [Question] What about your VLSI test production and development? , [Answer] We call this the VLSI development plan. The VLSI technology development center at the Gifu Plant located in Yasuhachi Town in Gifu Prefecture is where this development is going on. Plant investment for a 3-year plan was allotted in 1979, and a project team was recruited from the entire Sanyo Group. VLSI development is being actively promoted here. There is all the necessary equipment. The question of whether to produce 64 kilo~it RAM and higher class products at the semiconductor mass production plant of Tokyo Sanyo is awaiting studies on the market situation, cost factors, and fulfillment of in*_racompany needs. Co n- sidering the present situation in which we have our hand full, this production will probably b e deferred to a later date. Self-Development of Microcomputers [QuestionJ You have a technological agreement with the Fairchild Company of t:he United"States in the matter of microcomputers. [Answer] In Tanuary, 2 years ago, we entPred into an agreement with Fair- child to supply them with the technology related to a nonvolatile memory which does not erase when po~,~er is cut off and can be rewritten in ex- - change for which we received information on the production process for the 8 bit microcomputer "F 8" series and its peripheral information. Two years have gone by since this technology exchange, and we have adapted the production technology for "F 8" to a 4 bit microcomputer which we plan to mass produce. This is an area in which we hope to do considerably mare self-development. 3~ FOR GFFICIAL USE ONLY APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000300020032-1 APPROVED FOR RELEASE: 2007/02148: CIA-RDP82-44850R000300024432-1 FOR OFFICIAL USE ONLY One Step Forward Toward "All Weather Type" Director Iwase frequently says "the line of thought to date that linear IC is the basic mode for IC conversion of consum er goods such as tele- _ vision or audio equipment which has been the rule based on experience ia gradually crumbling away." The expectation that microcomputers will - begin to find wide use in household electrical appliances and thereby increase the weight of MOS was one that had to be ,judged together with the need to fulfill intracompany needs, and this led to a speedup in the construction of a new MOS plant by Tokyo Sanyo. This company's semiconductor strategy was along the line of "we are a semiconductor maker, so we need to po~nt toward linear," but it was decided to throw weight toward MOS this year. This is the story behind the step toward "all weather type." Mr Iwase with 25 years of semi- conductor business experience said, "even when the other companies were struggling in the red, we managed to show profit." In this manner he presents an awesome figure when he argues the investment versus effect problem singularly directed at the unique semiconductor situation. Although there are large gaps between this company and Nippon Electric, _ Hitachi, and Toshiba, he states emphatically, "we have been producing only linear to date, wait till we also add on MOS" as he looks forward 00 "tha t day." Fu j itsu Tokyo NIKKEI SANGYO SHIMBUN in Japanese 23 Apr 80 p 5 _ [Text] Fujitsu is a"giant" in the computer area which is waging an effecrive campaign versus IBM. This company's semiconductoz sector which supports its computer sector was separated as an independent - business 2 years ago, and it has since actively entered the outside sales market. As is clearly stated by the saying "go to a bakery if you want bread," semicondiictor strat~gy which is involved mainly with the memory products used in the "heart" of the computers and which is beginning to assert itselt more and more is sometimes referred to as the "eye of a typhoon." Certainly, this is no unappreciated effort, and semiconductors line up with computers and communication equipment as one of the three pillars. "We are a clearly established semiconductor - company." These were the words of Chief Shiiunir~ Yasufuku of the semi- conductor industry as he used the carrier so abundantly used to trans- ~ port this company's semiconductors as a weapon to attack the situation in the manner given below. Fu~itsu 'Shadow' On the American Market [Question] Japanese exports of 16 kilobit KAM (ramdon access memory) ' to the United States increased sharply last year. Fujitsu see7ns to have benefitted to the extreme degree in this situation. 39 FOR OFFICIAL USE ONLY APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000300020032-1 APPROVED FOR RELEASE: 2007/02148: CIA-RDP82-44850R000300024432-1 ~AnswerJ I feel that the market environment is closing in on a state ~,1 ct~an~e. 'I'he demand from the computer makers of the American market remains strong. At the same time, the increased production systems of the semiconductor makers have gone into orbit at an even higher level. For example, there was a shortage of 16 kilohit EPROM last year, but there is a rairly good supply situation presently. There still seems to be considerable shortage of 16 kilobit RAM, but this picture may change by the latter part of this year. It is clear that the memory market, par- ticularly the movement in the American market, is considerably different from last year. [Question] The domestic companies headed by Nippon Electric seem to have read in active memory markets this year as well. You are the only one who sees a "shadow." [Answer] This adverse climate appears in the price of 16 kilobit RAM on the American market. The vast purchases by IBM maintained the demand last year, and there was no drop in price. On the other hand, the aver- age price of 16 kilobit RAM on the American market is presently about $6.00, and this represents a slight decrease. The American makers who had been suffering from lack of productioti now seem to have increased their supply, and this fulfillment of the supply side setup is beginning to be reflected in the price picture. Illustrating this situation along the lines of the semiconductor business feelings, the users said last _ year, "we have no seed to plant the next crop, and we ask your help." This is no long er the case today. - Expand the Kagoshima Plant [Question] Your plant investments this year will total 42 billion yen of which more than half or 22 billion yen will be directed to the elec- tronics sector inc~uding semiconductors. In this respect, you are second only to Nippon Electric. [Answer] Although this does not mean that all of this money is for the semiconductor headquarters, a considerable amount is for the semiconduc- tor plant at Kanegasaki in Iwate Prefecture for which groundbreaking ceremonies were held on the 23rd of this month. This large project wiil account for a major share of this sum. We expect this new plar?t to be the second IC and LSI plant which will follow the Kaitsu Plant (Kaitsu in Wakamatsu City). We hope to start operations in September, and some of the first work will be the as$embly process of IC and LSI _ produced at the Kaitsu Plant. Despite one addition after another, the - Kaitsu Plant is running out of space. The Iwate Plant in due course of time will be an integrated p~ant with a diffusion line. 1~0 FOR OFFICIAL USE ONLY APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000300020032-1 APPROVED FOR RELEASE: 2007/02148: CIA-RDP82-44850R000300024432-1 FOR OFFICrni, IJSF. ONLY The one other domestic plant site is the Kagoshima Plant (Kagoshima Fu?itsu) whose assembly line operations 2 years ago suffered from lack of manpower problems. This problem has finally been resolved in orderly manner, and we intend to expand this plant this year. Start Next Month on Plant in the United States [Question] You announced last fall your intent to construct a plant in the city of San Diego in ttie State of California as an American plant. In addition, you seem to be seeking a suitable site in Europe for which Ireland seems to be the prime candidate. Let us hear of your overseas plans. [Answer] It seems that construction of the San Diego plant will begin along about May, and this represents some delay. I cannot give the pro- duction plans although I can say that we are thinking c~f between 1 to 2 million LSI units per month. Of this production, we hope to direct a 3 co 16 kilobit RAM. We have picked a likely site in Ireland, but we have as yet not purchased the land. We are thinking of placing an assembly line at the Ireland plant just as Nippon Electric is doing. I believe we will be able to start operations in 1981. [QuestionJ Where the 64 kilobit RAM frequently referred to as the "gate- way" to VLSI is concerned, Fu~itsu has led the rest of the pack in production, and you are also leading in placing samples in circulation. Does this mean you have confidence in the VLSI era? [Answer] When one refers to VLSI, he is speaking of 1 megabit class products. The 64 kilobit RAM which we have formed on a 6.44 x 3.36 millimeter silicon chip by exposure to light does not represent that great a memory capacity extension. At any rate, we have laid the foundations for reacting to what is expected to be a 64 kilobit RAM market 2 years hence, and we have already set up a mass production line in our Kaitsu Plant. A produc+:ion line is also _ ~ being installed at the new Iwate Plant. While we may be in the lead at the present time, we will soon be challenged by Nippon Electric and Hitachi with their tremendous volume capacities. We plan to continue to provide our customers with high level products such as 64 kilobit RAM. Main Effort in TTL Sales [Question] The bipolar area includes TTI. (transistor-transistor logic ~ circuit) whose role in MOS memory is in great intracompany demand, Is this an item which is being exploited2 [Answer] We are in the top group together with Hitachi. On the other hand, the share of TI (Texas Instruments) of the domestic market is high as before. While it was not because it has been said that "TTL will I~]- FOR OFFICIAL USE ONLY I APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000300020032-1 APPROVED FOR RELEASE: 2007/02148: CIA-RDP82-44850R000300024432-1 ? V~? V l l L V 1~ W V J L V~~ L� n~~t be profitable" but the sales have not been too good to date because we }iave had problems in our assembly capabilities. We made all out ef- Fort since ].ast year to fulfill our customer's demands, and we have derived a measure of results. Prime Candidate to Enter the Top Group "I will not mention production figures or values." Mr Yasufuku nailed down the lid in this manner firmly even before the interview. Being one of the main framework on Fujitsu and with responsibility for the _ semiconductor area, he chose his words carefully and deliberately. "Com- bine subtleness and boldness" describes the in and out of company evalua- tion of Yasufuku. His ~haracter seems to be reflected by the semiconduc- tor strategy of this company. He surprised the top echelon of the other companies with his statement "since last year the very lucrative 16 kilobit RAM market seems on the verge of turning the corner," and this "reading" of the situation was contrary to what all others thought. It was 2 years ago wnen outside sales were entered in earnest while still paying great attention to intracompany ne~ds. "Our outside sales now total 70 percent of total sales. We can now operate as an independent semiconductor company" was his statement which reflected his great con- f.idence. This may well portray why this company may be the prime candi- date to join the top group headed by Nippon Electric. Hitachi Limited Tokyo NIKKEI SANGYO SHIMBUN in Japanese 25 Mar 80 p 5 [Text] Hitachi, Limited lost its top status in the semiconductor indus- try to Nippon Electric in 1975. The gap between these two companies has been widening since then, but the heads of the other companies in the _ same business say in unison, "we are fearful of Hitachi's latent strength." This company produces semiconductor production equipment starting with the electron beam exposure device which is indispensible to VLSI produc- tion within its own group, and it certainly does not suffer in its tech- nology development strength compared to its rival Nippon Electric. The factors which determine the strength of a semiconductor maker are the technology development strength and the plant investment strength along with marketing strength. Hitachi which is well known as a steady busi- ness has during the pa~: few years turned to some determined plant invest- ments and changes in business tactics to mount a counterattack. We interviewed Director Hiromu Asano who has the responsibility of restoring - Hitachi's niche in the semiconductor area. Hitachi Limited Ir.creasP and Expand American Plants [Questiori] You shifted your bipolar production from the dome;;tic produc- tion system centered at the Musashino Plant to the Takasaki Plant and the ~2 FOR OFFICIAI, USE ONLY APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000300020032-1 APPROVED FOR RELEASE: 2007/02148: CIA-RDP82-44850R000300024432-1 FOR OFFICIAL USE ONLY MOS to the Kofu Plant (Kofu Branch of the Musashino Plant), but have you established the mass production system of the Musashino Plant? [Answer] We started out in JFY 1978 to engage in this conversion tactic at this production site, and we expect to complete operations this year. This change was necessitated because of space limitations az the Musa- shino Plant greatly limiting the work. Mass production of leading pro- ducts centered on 16 kilobit and 32 kilbot EPROM type memory products and microcomputers has been put on stream at the Musa~hino Plant. Our pro- duction of the 16 kilobit dynamic RAM for which demand has sharply in- creased is about 1 million units per month, and half of this production is ticketed for export. We have also been using the Musashino Plant as development site for VLSI of the 64 kilobit and higher class RAM. [Question] Your start on operations of the plant you have in Dallas, Texas, has been greatly delayed. It seems you ave having considerable difficulties in your American operations compared to Nippon Electric. [AnswerJ Because of our rush in setting up plants all over the world - for the semiconductor industry, we had difficulty in obtaining certain necessary equipment as a result of which the start in operat.ions was greatly delayed; however, we did commence operations near the end of ` last year. We still have not come to a three-shift working stage, but a comprehensive assembly line has been put into force. Put in terms of _ an automobile gear shift system, we are presently operating at "low," and we will gradually shift to "second" then to "high." Full production will be attained in August. At that time the monthly production of dyna- mic RAM will rise to between 3 to 4 million units. This is small com- pared to other companies, but we will follow the basic Hitachi policy of "nurture the small to become large" as we develop this business. While we are still in the blueprint stage, we plan to expand our American plant during the course of this year. Sharp Zncrease in Export Constructive Type - [Question] You have advanced all the ca~ital for a semiconductor pro- duction site in Europe located in West Germany. [Answer] We are planning to initiate operations in January 1981. This move is in response to the increased demand for semiconductors in Europe. This will be a 3 million per month 16 kilobit assembly plant just as the one in the United States. We want to activate the local labor to obtain the same diligence as Japanese workers and raise production efficiency. [Question] Now it seems that you have crossed the mountain pass in the memory market particularly where the American market is concerned. [Answer] I have a feeling that there has been a slight easing in the . demand and supply situation in the memory market particularly in the 43 FOR OFFICIAL USE ONLY APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000300020032-1 APPROVED FOR RELEASE: 2007/02148: CIA-RDP82-44850R000300024432-1 principal item ttie 16 kilobit dynamic RAM. Of course, last year's shurtage was exceptionally great, and this situation has simply eased a litcle. There is also the factor that the supply capability has improved sumewhat. If we listen to the American side, this situation is the result of the ttiree Japanese cempanies which led the field into the market and the other two Japanese companies which followed later setting up such fier~e onslaught and which has caused much irritation. The clemand for memory in the Japanese market has not grown as much as we had }iuped, but the United States offers the capacity of a"bottomless marsh." 'I're sharp increase in exports to the United States is the result of ~tructural factors which are associated with this capacity of the American market. Check Low Value Exports [(2uestion] There are rumors that the Americans are up in arms because this sharp increase in imports is the result of the 16 kilobit RAM being exported at low price. [Answer] I believe that such is not the case; however, I do also hear ttiat there is something of the kind around. This is a ticklish situation when Japanese-American friction is considered. Semiconduc~or products are small in size, and it is difficult to trace their movements once they leave the plant. I also hear that electronics specialty companies are buying up the donestic market, and these may be exporting the domestically trained material at lower price overseas. It would be desirable that there be order in the exports, and we are now conducting checks on the destinations of our products, and we have initiated strict control. [Question] It is said that the Japanese attitude toward the 64 kilobit RAM which is the leading batter of the VLSI age is much superior to the American attitude. [Answer] We are in a quandry whether or not to produce this item as quickly as possible. The requests from our American users have already begLn to heat up. At the same time, what is in a Hamlet frame of mind is the Japanese influence which caused so many problems with the 16 kilobit RAM is causing even more problems with the 64 kilobit RAM capturing an ever greater share of the American market, and the impact on the triction is becoming of greater concern. In addition, it is not known what the "giant" IBM which went outside to � procure its 16 kilobit RAM will do when it comes to 64 kilobit RAM. Since last year IBM even shaved its research and developmen~ investments and has been sending out extraordinarily large orders to the American semi- conductor manufacturing equipment makers. It should have greatly increas ed its semiconductor producing capabilities. On the other hand, it is said that IBM has a mountain full of back orders similar to the "E series FOR OFFICIAL USE ONLY APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000300020032-1 APPROVED FOR RELEASE: 2007102/08: CIA-RDP82-00850R000300020032-1 ~ N'OR Oi~FICIAI. USE ONLY computers" and its semiconductor production strength has not yet caught up. The world's largest semiconductor maker TI (Texas Instruments) which led the way in the matter of the 64 kilobit semiconductors is said ~o be redesi~ning its product. Such being the case, Japanese makers may be producing a considerable amount of this product. Cost Absorption Is Problem [Question] Finally, we come to the question of the Japanese makers headed by Nippon Electric starting to raise the prices of semiconductors citing the high cost of the noble metals such as gold and silver. What is Hitachi's position? [AnswerJ The gold and silver prices rose to astronomical levels but have since subisided, and the situation seems to have stabilized. We have raised the prices on some of our export items, but the semiconduc- tor business is a fierce one in which the user readily says, "we quit buying" when prices are raised. The problem here is ~ust how to absorb the increased cost of raw materials. Squeeze Main Points From 'Al1 Directional Strategy' In a personnel memo dated 21 February, Director Asano handed the posi- tion of head of both electronic industry headquarters and semiconductor industry to Director Sutezo Hata. He says, "I have recently not gone _ too frequently to the Musashino Plant because I f eel that I should take a broader look at the electronics related sector." He was directed by President Yoshiyama to reorganize Hitachi's semiconductor sPCtor, and he is devoting his time wholeheartedly to this heavy responsibility. While he smiles constantly and speaks with a somewhat disinterested tone, he _ scans the semiconductor market with piercing eyes. "If one thinks he can apply what goes well in Japan to overseas situations, he can do it. Conversely, if one attempts something which did not go too well over- seas in Japan, there is need for some sort of technology or supervision." In this manner, he described the difficulties of conducting semiconduc- tor business in the United States. In regard to Japanese strength in the American memory market he said, "enter while treading lightly." "Hitachi's semiconductor role is not that of an all around player who does everything but one who squeezes out the main points." He plans to reinforce Hitachi's semiconductor area from this lofty position. Oki Electric Tokyo NIKKEI SANGYO SHIMBUN in Japanese 26 Apr 80 p 5 [Text] Oki Electric Industry made the transition from "reduced volume _ business" to "reorganization." In this situation the hustle in the semi- conductor sector is eyecatching. This attitude is well displayed by the new plant construction plans for mass producing VLSI at its plant in Kiyotake Town in Miyazaki Prefecture. "We have placed this company on ~5 FOR OFFICIpL USE ONLY APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000300020032-1 APPROVED FOR RELEASE: 2007/02108: CIA-RDP82-00850R000300020032-1 thE~ line" (President Masao Miyake). This new plant will reinforce its elec:troiiic device (overall term for integrated circuits and other semi- cr,nductors) sector and be the "central nervous system" from which b~isiness development aimed at advances in the communic.ation and com- ~ putE~r areas will be made. This effort on the part of Oki Electric which had been languishing among the lower class of the Japanese semiconductor industry was set off with the start on its Miyazaki Plant in May. On t}~e other hand, ther~ are some who say that this decisive and bold action is "too soon." We asked Director Noboru Ota head of the electronic clevices industry for. his views. Oki Electric Industry Aim To Start Operations During Latter Half of Next Y~ar [Question) The Miyazaki Oki Electric Establishment Group which will promote construction of the new plant was organized last month, and it seems that the VLSI project is finally under way. ` [Answer~ We hope to have the groundbreaking ceremonies on 27 May. The plant investment will most likely incYease 20 percent over the initial estimates to 12 million yen. Since we are importing the greater part of our equipment from American makers, we are seeing the effects of decrease in yen value in the money exchange market and increased construction costs. This new integrated production plant which will produce 64 kilo- bit memory class and higher class products are expected to go into opera- tion during the latter half of 1981. Since the advent of semiconductors particularly leading VLSI plants will be the important points in future strategic developments, the next year will be a most important period. First To Go Into Production of 16 Kilobit RAM [Question] When one looks at the memory market movenients, now is ~he peak period of the 16 kilobit RA*1, and the RAM, and the 64 ~Cilobit RAM will come on the scene in another 2 years considering thE lif e cycle of the 16 kilobit RAM according to informed sources. In such a light, i~ow do you place this mass production of VLSI at your Miyazaki Plant'? [Answer] This new plant is equipped with facilities to produce VLSI memory, and we will start off with production of 16 kilobit static RAM with the same level of integration as the 64 kilobtt item and which nas a circuit pattern width of 3 micrans. When compared with dynamic RAM, this unit has simple periphFral circuit makeup, and there is sharp increase in demand for its use a~ the memory of the terminal devices in microcomputer applicaG.iors, Gur 64 kilobit dyn3mic RAM was test produced and developed under the technological guidance of the Telegraph and Tele- phone Public Corporation. It will be incorporated into the digital elec- tronic exchange unit of the Public Corporation. The installation into the 46 FOR OFFICIAL USE ONLY _ APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000300020032-1 APPROVED FOR RELEASE: 2047/02/08: CIA-RDP82-00850R000304020032-1 F(1R OFF1CiAi, [?SF. nNT,Y No 1 electronic exchange unit which is expected in 1981 will be at the Hachioji Plant (Hachioji City in Tokyo-to) for electronic devices, but the succeeding operations will be by mass production at the Miyazaki Plant. To be sure, product plans will be modified in line with the practicalization of VLSI and the application era as well as market movements, and the conversion to electronics of this company's main line products in electronic communication equipment and information processing equipment will be promoted. Special Order Ztmes Which Have Expanded Ureatly [Question] Oki Electric's strategy to date has been to concentrate on CMOS�LSI for watch use where the company has led all other companies. In this manner, it was directed mainly at custom ordered products. Will you be increasing the weight of your industrial products? [Answer) Just as you said, our market to date has mainly been involved with custom orders (special order items) centered on CMOS for watches, cameras, and audio. This is different from a very large maker who makes products for all kinds of applications in the role of a"department store." Tempered by outside customers' demands to "produce devices of high of integrations," other companies have catered to the cus- tomers to increase their businesses by 20-25 percent over the past 2 - years while we enjoyed increases ef 60-70 percent. Now, plant invest- ment including that for the new plant has become huge, and we have to go to other types of sales. To this end we intend to go into industrial type products such as memory items in addition to the custom order pro- ducts. Also Reinforce Chichibu Plant [Question] Do you not have to reinforce the production system at the Hitachi Plant until the Miyasaki Plant comes on stream? [Answer] We have made provisions for that. When we newly installed ~ "control center" at the Hachioji Plant about the end of last year, the No 3 Building which housed the development team for circuit design and - business management section became open, so a start was made to put in a production line. This increased IC production at the Hachio~i Plant from the 6 million per month at the end of 1979 to 7 million per month this fiscal year. Even then the supply has not kept up with demand, and we are considering increasig production at the Chichibu Plant which is a branch plant of Hachioji and which has an assembly line. [Question] What about reinforcing the business end? [Answer] We reorganized this year the IC business section which had been under the electronic device industry business headquarters into the f irst and second sections. The custom order products which have been the mainstay in the past along the lines of external IC sales were placed I FOR OFFICIAL USE ONLY APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000300020032-1 APPROVED FOR RELEASE: 2007102/08: CIA-RDP82-00850R000300020032-1 run vr r l~lc~, u~G UIVLI undt_r section 1 while section 2 is designed to take over the sales of ~ new products such as m~nory microprocessors which will be actively pro- mc>ted f rom here on. Development of American Market Is Subject From Now On President Miyake assumed his post in Oki Electric just 2 years ago in April 1978. He said, "When I came here from the Telegraph and Telephone ~ Public Corporation, what concerned me the most was just how to interface with semiconductors. There were the rock bottom days of February 1977 when this company could not become a member of the VLSI research group. _ Yet, the same company was the first in this country to introduce the - electron beam exposure device and instinctively refrained from using the term 'super LSI' but instead started its VLSI project." "We gritted our teeth and did our research" (D irector Ota), and the net result was then "we also picked up strength" (President Miyake). While this company was able to capture the order for custom products for CMOS�LSI from a certain camera company, President Miyake says, "the real test of this company is from here on." The main subject from here on is export ef- fort to the American market which heretofore has been essentially nil. Matsushita Electronics Tokyo NIKKEI SANGYO SHIMBUN in Japanese 2 May 80 p 5 [Text] The Matsushita Electronic Industry is the semiconductor strategy company of the Matsushita Group. I t sustains all the electronics conver- sions of household electrical appliances produced by the Matsushita Group including microcomFuters and television. This Matsushita Electronics has now indicated a desire to enter into the industrial production area from the consumer group IC and LSI semiconductor front, and this is caus- _ ing considerable concern to the other makers. Its Nagaoka Plant (Nagaoka City in Kyoto-fu)is its LSI development center in which there are two electron beam exposure units where it promotes mass production of masks for use in memory of microcomputers. It is presently getting set to enter the LSI development contest. Although there is considerable margin between its production and sales totals compared with the top three companies including Nippon Electric and Hitac hi Limited, Vice President Kazuo Fujimoto of this company said, "We do not know what our goal is or who our rivals are. We constantly look at our profit margin while we look for new semiconductor markets." :~Iatsushita Electronics is an IC maker with the potential of making some spectacular developments. Matsushita Electronic Industry Shini Plant Will Be New Site [Question] Your plant investments in the semiconductor field showed a ma~or jump compared to the previous year of 70 percent to 17 billion yen. 1~8 FOR OFFICIAL USE ONLY APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000300020032-1 APPROVED FOR RELEASE: 2007/02148: CIA-RDP82-44850R000300024432-1 FOR OFFICIAL L'SE ONL'! ~ What can you say about the new VLSI p.lant cozstruction wi~~~h is the major target of this investment? [Answer] We started construction of this tzilit in March at the Na~aoka_ _ Plant grounds. We have allotted 10 billion yen Coward this censtructiou, - and we expect to see it completed in Nove.~ber, We ha~~r-: ~_nass~d a total of 5 billion yen to date in test production an~ de~-~lc~ment of VLSI, and our development force has increased considersbly. 'Che resuits of ~his _ effort are exemplified by the development of t~he 64 kilobit static RA~: with circuit pattern width of 2 microns whic h is a ~'LSI of the maximum - degree of int~gration reported in the world which was described at the solid state circuit conference held in San Francisco l.ast Fe~~r.uary. We have finally come to the mass production stage, For tYie present, it ~~ill be put into the microcomputer which is our mosc profitable item, and we will enter mass production of inemory items. W~ ~re anticipating a ~ business of about 1 billion yen per munth. [QuestionJ What are you doing to inc._ease y.~ur. prod!~ction capacity? [Answer] We have ti~e semicondlictur industry headquarters at 23anaoka - _ which is the site oi our main domestic prod:ection along wit~~-~ an IC plant at Shini (Shini City, Niigata Prefecture), a varica~ plan*_ ~r_ TJtsunomiya, a diode plant at Takatsuki City in Kyoto P:Ef.:=cture-_, ~..~na11 signal - transistor-thyrister plant at Okayama, and an LEn (li~.'~t ecnitting d~'sQdE) - plant ~t Kagoshima. Every effort is r~ade to rationaTize and aur.~;~~ate ~ these plants to reinforce the mass prodti~tion strur ture. We hope to exp~.nd ~ - our IC production from 18 million units per month to ni1.13.en un~ts per _ month by next year. The Nagaoka Plant is the sixth factory plar~t fo-r the nrodu::ticn o is desigiz4d decades. ~ beginning of this month to to realiu self-su$fciency in The seven-}tiear proiecb, locate undersea manganese the ~uppliea of such key schduled to begin in nscal ore deposits. metals as nickel, cobalt, 1981, will be particioated in Hoaever, the mining of copper and manganese, by Japan's leadlug steel- undersea manganese ore ts which are all contained in ~a~e~, ~achlne manulac- scheduled to be governed aeabed nodules, in the later turers, shipbuilders, electric by an international conv~n- hali oi the 1990s. eq~pment makers and min- tion to be si Japan solely depends on !ng industriea to develop a Bned next spr- ing. imoorts in securing these system to collect mangan�se Under the convention, the industrially-essential metals, ore from deepsea floors right to exploit undersea buying them mostly from where almost unlirnited manganese deposits will be Zaire, Zambia and 9outh amount of manganese ore granted to onlq countries Airica. depoaits are believed to be which have devsloped sys- Political unrest arising available. tems to tap the deposits, the irom growing nationalism A remot~-controlled sys- o81cia1 sourcea said. and pollcies to make stiat~- ~m presently considered as Japan 1s lagging behind - gical uae of manganese ore Lhe most leasible will bring in this fleld, they noted. in these countries have up ore from the seabed to The U3, the Soviet Union caused Japanese govern- the suriace, o~cials said, and West (3ermany have - ment and buainess leaders adding that the system will been carrying on similar to map out plans to ensur~ however, encounter high Proi~cts since the later ha11 a steady aupply o! the ore, waves, strong currents and o! the 1980s. France this iniormed ~ources said. In- other severe conditions. Year decided to pour ~30 ternational monopolies are ~e agency has already blllion to develop a system also eaercising oligopolitic built an explorer ship, No 2 to obtain manganese ore contrnl on manganese ore in g~le~ whfch is irom the seabed. theee countries. S~flcgllY designed to CSO: 4120 END 57 b'0~ OFFICIAL USE ONLY APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000300020032-1