Morris Chang: Japan in the Semiconductor Industry

Transcript

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Summary

In this video, the speaker discusses the historical evolution of the semiconductor industry and the reasons behind the shift in power from Japan to other countries such as Taiwan, mainland China, and Korea. The lack of a fabless industry and the failure to enter the pure-play foundry business are highlighted as key factors contributing to Japan's decline in market share.

Questions & Answers

Q: Why did Japan's semiconductor industry fail to take over the entire industry as predicted in the late seventies and early eighties?

The Japanese industry lacked a fabless industry which was responsible for most of the innovations in the last 20 years. Furthermore, their failure to enter the pure-play foundry business, despite having the necessary technology and manufacturing capabilities, played a significant role in their decline.

Q: Can you provide an example of the difference between Japanese and American market share in the semiconductor industry?

Between 1985 and 2005, the Japanese market share dropped by 20% while the American market share increased by the same percentage. Additionally, during this time, the fabless industry in America grew from zero to 20%, further highlighting the diverging paths of the two countries.

Q: What was the speaker's experience at a Japanese semiconductor industry conference?

The speaker was invited to attend a Japanese semiconductor industry conference around five or six years ago. Although not invited to participate in a panel discussion, the speaker observed that the panelists, who were Japanese industrialists, were discussing the need for government funding for a common fabless company similar to TSMC.

Q: What comment did the speaker make during the panel discussion at the Japanese semiconductor industry conference?

During the panel discussion, the speaker raised their hand and expressed their opinion that the Japanese industry's problem was not the lack of a common fabless company, but rather the absence of a fabless industry altogether. They believed that it was the fabless companies in the United States that drove innovation and success in the semiconductor industry.

Q: What was the difference in market share between Japan and America from 1985 to 2005?

During the 20-year period from 1985 to 2005, the Japanese market share dropped by 20 points, while the American market share increased by the same percentage. This shift in market dominance had a significant impact on the global semiconductor industry.

Q: Did the Japanese industry venture into the pure-play foundry business?

No, the Japanese industry did not enter the pure-play foundry business, despite having the necessary technology and manufacturing expertise. This decision ultimately contributed to their decline and missed opportunities in the market.

Takeaways

Japan's failure to establish a fabless industry and reluctance to enter the pure-play foundry business were pivotal factors in their decline in the semiconductor industry. Contrastingly, the United States saw a rise in market share attributed to their fabless companies and entry into the pure-play foundry business. This historical evolution emphasizes the importance of adaptability and innovation in maintaining competitiveness within the industry.