Word: semiconductor
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Dates: during 2000-2009
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While the semiconductor slump is centered in Silicon Valley, the industry's hub, it extends well beyond that California region. United Technologies said last month that it was permanently closing its Mostek subsidiary in suburban Dallas and laying off 2,500 workers in Texas and 3,200 worldwide. The decision followed more than a year of intense and often agonizing cost cutting. Said Marie Gentilo, 45, a Mostek quality-control worker: "There is nothing for us. Some of us are too old to get new jobs...
Indeed, the slow growth of the computer market has been a chief source of the chipmakers' woes. They hastily built new plants and hired workers after personal computers, which are major users of semiconductors, became best sellers in 1983. But the popularity of desktop machines has so far failed to grow at the euphoric rate that experts predicted. Instead of doubling, personal-computer sales will do well to rise by 30% in 1985. That slower than anticipated growth, combined with weak demand for other types of computers, has contributed to a sharp drop in semiconductor prices. Result: worldwide chip revenues...
...Japanese strategy has been paying dividends. Since 1983 Japanese companies have raised their share of the American semiconductor market from 13% to an estimated 15%. Their biggest gains, though, have been overseas. While the U.S. portion of worldwide chip sales fell from 61% to 51% between 1980 and 1984, the Japanese share climbed from 26% to 40%. When it comes to memory components, which store computer programs and data, the Japanese have taken a commanding lead. They now provide six out of ten 64K memory chips, the basic devices that hold more than 65,000 pieces of information...
...companies have been mounting legal efforts to strike back. Three Silicon Valley firms, Intel, National Semiconductor and Advanced Micro Devices, complained to the Government in September that their Japanese rivals are selling certain types of chips in the U.S. at artificially low prices. Last week the U.S. International Trade Commission ruled that the Commerce Department should open a probe of the matter. The U.S. manufacturers want a fair shake in the Japanese market as well. The Semiconductor Industry Association formally complained to the U.S. Trade Representative last June that Japan was blocking access to its markets. Japanese companies deny both...
Despite their woes, U.S. semiconductor makers remain world leaders in many products. American firms hold a 64% share of the vital market for logic chips, or microprocessors, which carry out stored instructions. The Japanese, by contrast, have a 27% share. "For the time being, the logic-chip business is safe from foreign competition," says Stuart Johnson, who watches the semiconductor industry for the Manhattan firm of Wertheim & Co. "Logic chips are far more difficult than memories to copy and redesign." But U.S. manufacturers may soon face tougher Japanese competition in that market as well. --By John Greenwald. Reported by Cristina...