3:56 pm in Uncategorized by Clyde Prestowitz
Reprinted from Clyde V. Prestowitz on Trade
In 1979, Harvard professor Ezra Vogel’s book Japan As Number One became a runaway best seller in both Japan and the United States. After a swing through Asia the past two weeks, it’s clear to me that Ezra needs to do a rewrite with a new title: Korea as Number One.
The South Koreans have long been confident that anything the Japanese can do, they can do better, but now they’re proving it. In the 1970s-80s, the likes of Sony, Panasonic, Sharp, Toshiba, Hitache, NEC, and Fujitsu killed off RCA, Motorola, and the rest of the American consumer electronics industry and came close to killing off Intel and closing down the U.S. semiconductor industry from which Silicon Valley takes its name. Yet, today, it’s the Japanese who are on the ropes as the likes of Samsung, LG, and Hynix have seized the high ground. Whereas Sony used to be the king of TV, now it’s Samsung. Developed initially in the United States in response to military needs, the market for flat panel electronic displays was quickly taken over by the Japanese who out-invested the American producers and whose dominance of television and then of VCR production gave them an in-house source of demand for mass production and its related economies of scale.
Indeed, the VCR is a classic example. America’s Ampex developed the initial professional video tape recording technology, but never got a consumer product off the ground as the Japanese preempted the market through quick, massive investment. Because VCRs were massive users of semiconductor memory chips, the dominance of the VCR business coupled with use of the same tactics in the semiconductor industry gave the Japanese producers a strong position from which to attack the Silicon Valley chip makers. In 1984-85, many U.S. companies left the business and the Japanese became the dominant players in DRAMS (dynamic random access memories).