Why did Japanese semiconductor companies slump?

In the 1980s, Japan had first ranked market share over 50%, exceeding the United States. The market share of semiconductors is now lower compared with other countries. Why have Japanese semiconductor companies declined these days?

There are several reasons why the semiconductor companies in Japan were sluggish as well as the other developed countries. Here are two major reasons to explain.
Japanese engineer sold an advanced technology

  • Japanese engineers can make high advanced technology
  • US-Japan Semiconductor Agreement

Japanese engineer sold an advanced technology

During the years of 1980s , when Japanese semiconductor companies were at their peak of the industry, semiconductor engineers start to go to other companies, migrating around Korea and get paid with really high salaries for their talent.

This is not just within semiconductors industry, but also other makers. As a result, while Japan’s semiconductor companies are stagnating in the “Japan-US Semiconductor Agreement” treaty, Korea steadily gained strength and became one of the world’s leading semiconductor countries now.

US-Japan Semiconductor Agreement

In 1986 A agreement was made to actively push the collaboration of  foreign-made semiconductors. The United States was happy to collaborate with Japanese government by concluding a “Japan-US semiconductor agreement” between the United States and Japan.

However, the following year, the US government condemned the Japanese government that their semiconductor market is still almost based on Japanese products and the US president Reagan at that time firmly announced that 100% tariffs should be implemented on Japanese electric appliances to break this traditional market.  

Today the share of semiconductors has been reduced in Japan

In 1980s, Japan’s global semiconductor market share was more than 50%, but now has been sluggish to only 7%. On contrary, Korea and China have expanded their market share even on a global scale.

In 1991, some people believed that the second agreement was made between Japan- U.S and this literally made the Japanese semiconductor industry sinked further as Japan was again forced to obliged to unfavorable conditions. As a result, the market share of Japan uncontrollably declined in 15 years, and the United States turned away without doubt then abolished the agreement later on.

It is well-known that Chinese smartphone has become so popular recently for it’s affordable price and good function that it gradually hinder the sales of android smartphone in the U.S. This is reality that US market is facing and will clearly continue seeing it in the future.

Quotation; 出典: フリー百科事典『ウィキペディア(Wikipedia)』

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