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From: esf00@amdahl.uts.amdahl.com (Elliott S. Frank)
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: <25965@amdahl.uts.amdahl.com>
Date: 31 Mar 88 00:07:20 GMT
References: <2441@unicus.UUCP> <1259@hubcap.UUCP>
Reply-To: esf00@amdahl.uts.amdahl.com (Elliott S. Frank)
Organization: The Beige Building Full of Bright Engineers, Inc.
Lines: 42
Followup-To:comp.misc,soc.politics,talk.bizarre


In article <1259@hubcap.UUCP> rchampe@hubcap.UUCP (Richard Champeaux) writes:
>In article <2441@unicus.UUCP>, craig@unicus.UUCP (Craig D. Hubley) writes:
>> 
>> The price-fixing deal that the U.S. forced on Japan to keep its own chip
>> manufacturers (TI and Micron) in business, that has forced chip prices to
>> four times their level (here, at least!) of ten months ago, has been 
>> declared illegal by GATT, the General Agreement on Trade and Tariffs,
>> the international body governing world trade.  The gist of it is that
>> the pact has forced chip prices up, and supplies down, in Europe and Canada.

>     Japanese and other asian chip producers can currently produce chips at
>prices significantly less than US producers, and US producers are having a
>hard time competing. ... 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.
>
>     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.

You seem to have slept through Economics 101, unlike the Japanese chip
manufacturers.  One, the labor content in manufacturing a chip is very
close to zero.  Two, the development costs to produce a chip are
astronomical (ask Intel how many buildings full of engineers it takes to
produce something as successful as the '386!). Three, the cost of a new
chip line is now > $100 million, reducing the ease of entry.

Classical oligopoly theory says that you should price at your *variable*
cost of production. (Silicon, chemicals, and electricity!) This will give
you maximum market share.  THEN you can recover your sunk costs.

The Japanese just did what we told them to do in school.  If you don't
like the results, do something about the economics.

>>>Followups have been directed to a more appropriate forum.
-- 
Elliott Frank      ...!{hplabs,ames,sun}!amdahl!esf00     (408) 746-6384
               or ....!{bnrmtv,drivax,hoptoad}!amdahl!esf00

[the above opinions are strictly mine, if anyone's.]
[the above signature may or may not be repeated, depending upon some
inscrutable property of the mailer-of-the-week.]