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Technological Development, Corporate Strategies and Market Competition

  • Yoshitaka Okada

Abstract

Efficiency in each company’s internal operations is the primary source for explaining the Japanese semiconductor industry development. But competitive-cum-cooperative (CCC) interfirm relations add incomparable advantages to the efficiency and flexibility of semiconductor companies’ operations. One important factor influencing a semiconductor company’s choice of CCC interfirm relations is the condition of the product market. There are three aspects of the market to consider. First, severe competition in the semiconductor market has significantly contributed to the dynamic development of the industry. Secondly, milder competition in parts, materials, and semiconductor equipment markets provided a favorable environment for developing interfirm cooperation and CCC interfirm relations. And finally, cooperative networks and relations led to some radical innovations, even if they did not prompt major breakthroughs. Innovation occurs when companies have chosen corporate strategies suitable to each stage of their development and when they accumulate high-level technological capability. The historical relationships among these factors—product market conditions, technological capability, and corporate strategies—have been vital in the development of the Japanese semiconductor industry. As a background to understanding the dynamics of the industry, I shall trace the historical relationships among the three factors.

Keywords

Japanese Company Integrate Circuit Market Competition Corporate Strategy Dynamic Random Access Memory 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.

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Notes

  1. 1.
    The managers I contacted played crucial roles in the development of semiconductor technology and divisions. The number of interviewees was three in Company A and six in Company B.Google Scholar
  2. 2.
    I have revised Crawford’s (1983:98-105) categorization to be more suitable to the Japanese semiconductor industry. In order to indicate the degree of innovativeness, Crawford used the three stages of “imitative/emulative,” “adaptive,” and “pioneering uniqueness,” rather than “imitation,” “innovative imitation,” and “creative imitation.” Also, his classification of “quick second,” “segment franchise,” and “economic low price” in the “imitative/emulative” stage was not considered important for this research.Google Scholar
  3. 3.
    Hitachi, Toshiba, and Kobekogyo (later acquired by Fujitsu) contracted with RCA in 1952 and Western Electric in 1954; Fuji Electric with Siemens in 1952, SONY with Western Electric in 1953, and NEC with RCA and General Electric in 1958 (see Appendix Table 2.3).Google Scholar
  4. 4.
    Since NEC was the sole licensee of Fairchild’s planar technology in Japan, Hitachi had to obtain the license for one of the most essential technologies of semiconductor production from its major competitor in Japan. Hitachi’s success in developing its own low temperature passivation technology released the company from its dangerous dependence on its major competitor (Aida, 1992:48).6 Without personal relations between Mr. Osafune of NEC and Mr. Noyce of Fairchild, the time lag of I? production could have been more than one year. In fact, the development of an earlier version of an I?, the molectronics, lagged about two years behind (Appendix Table 2.2).Google Scholar
  5. 7.
    Kokusai Electric and Toyo Electric Seizo also contracted technical agreements for producing semiconductor manufacturing equipment.Google Scholar
  6. 8.
    Daini Seikosha also contracted a technical agreement on germanium manufacturing equipment in 1972.Google Scholar

Copyright information

© Springer Japan 2000

Authors and Affiliations

  • Yoshitaka Okada
    • 1
  1. 1.Sophia UniversityChiyoda-ku, TokyoJapan

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