This year marks the 30th anniversary of the conclusion of the US-Japan Semiconductor Agreement. The pact, which expired after 10 years, triggered declines in Japan's electronics industry.
No Japanese company will likely rank among the world's top 10 chipmakers this year. Until last year, Toshiba was Japan's only chipmaker in that exclusive club. This year, the merger of NXP Semiconductors of the Netherlands and Freescale Semiconductor of the US as well as the integration of US chipmakers Avago Technologies and Broadcom will create two new club members. Toshiba, meanwhile, is trying to get out of the nonmemory semiconductor business.
Behind the conclusion of the 1986 agreement was a fierce clash between Japanese companies -- many of which had entered the US market earlier that decade -- and US companies and society. During the late 1980s bubble, Japanese companies were snapping up US trophies, including Rockefeller Center in New York and the Pebble Beach golf course in California.
There was also a fear that Japanese companies, by opening factories and transferring a portion of assembly work to the US, would bankrupt US industry, resulting in a backlash.
The semiconductor agreement was an attempt to ease the backlash. Japanese chipmakers first likened the agreement to the thread the Lilliputians used to bind Gulliver's arms and legs. But the thread turned out to be a thick rope.
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