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From: strong@tc.fluke.COM (Norm Strong)
Newsgroups: comp.sys.amiga,comp.sys.atari.st,comp.sys.ibm.pc,comp.sys.mac,sci.electronics,comp.arch
Subject: Re: GATT declares U.S. - Japan chip pact illegal
Message-ID: <3280@fluke.COM>
Date: 1 Apr 88 18:11:16 GMT
References: <2441@unicus.UUCP> <1259@hubcap.UUCP>
Sender: news@tc.fluke.COM
Organization: John Fluke Mfg. Co., Inc., Everett, WA
Lines: 30

>they should get out.  In my opinion, I think that the fact that the asian
>countries have a much cheaper labor force is a significant factor.  US
>producers obviously can't just cut their employees salaries in half, so some
>would say that they should get out.  Ok, so we lose the IC industry, big deal.

Labor costs are a negligible factor in the cost of semiconductors; they are
produced by automatic machinery.  A much better gauge is the yield:  US
manufacturers have notoriously poor yields compared with the Japanese, and our
cost of manufacture reflects this fact.  Besides, the Japanese get closer to
three-fourths of American salaries, not one-half.

>     Also I seem to remember reading in NewsWeek that last spring, Japanese
>companies were accused of dumping chips on the US market at prices lower
>than it cost the companies to produce them.  

The operative word here is "accused".  The Japanese have never admitted
selling for less than cost.  Perhaps less than we think it should have cost
them.:-)  

Besides, all manufacturers sell for less than cost from time to time.  They
call it promotion or "building market share".  It is a perfectly honorable way
of doing business when entering a new market, or when new competitors enter
your established market.

The first production run of any product, be it a car or a semiconductor,
invariably cost several times its selling price.  If the price actually
covered the cost of production, production would never start.
-- 

Norm   (strong@tc.fluke.com)