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Trade fight with Tokyo is defused Japan meets target for chip imports


WASHINGTON -- A trade confrontation that had been looming for years was unexpectedly defused yesterday when American officials announced that Japan had met a target for imports of computer chips.

Imports accounted for 20.2 percent of the Japanese semiconductor market in the fourth quarter of last year, exceeding the 20 percent target set in a 1991 trade agreement, said Donald H. Phillips, the assistant U.S. trade representative for industry.

The U.S. semiconductor industry, which accounts for 85 percent of Japan's computer chip imports, has fought for seven years for the 20 percent overall foreign share, enlisting the aid of the Reagan, Bush and Clinton administrations. The issue had become the most sensitive point in the tense trade relations between the world's two largest economies.

The foreign share of the nearly $20 billion Japanese market had reached only 15.9 percent by the third quarter of last year. Until Thursday night, when the final calculations were done, government and industry officials assumed that the fourth-quarter figures would also fall short, leading to speculation that the Clinton administration might impose sanctions against Japanese exports to the United States.

U.S. Trade Representative Mickey Kantor said yesterday that the abrupt increase in the fourth quarter reflected a significant contraction of the overall Japanese semiconductor market while sales by U.S. companies continued a long, slow climb.

The American semiconductor industry welcomed the improvement.

"It marks a level of openness in the Japanese market that numerous people in the American and Japanese governments and industries have been working very hard to reach since the mid-'80s," said James Norling, the chairman of the Semiconductor Industry Association, which represents American producers and is based in San Jose, Calif.

Non-Japanese companies held only 14.3 percent of the market in 1991, when the current agreement was negotiated, and less than 9 percent in 1986, when a pact was reached calling for a 20 percent share by 1991. Both agreements were aimed at reducing trade barriers and used market shares as anindicator of whether this was being accomplished.

The 20 percent figure became the American target in 1986 as a compromise between the American industry's estimate that it would hold 25 percent to 35 percent of the Japanese market without trade barriers, while Japanese officials did not want a target at all.

In addition to the United States, the European Community and South Korea have small shares of the Japanese semiconductor market.

Mr. Phillips said that total sales of semiconductors in Japan for all of last year were $19.4 billion, but he declined to provide figures for the fourth quarter for either the entire market or the American share.

Mr. Kantor said that the fourth-quarter import increase appeared to be sustainable, and that he had seen no indications that it might have been the result of stockpiling by Japanese semiconductor users seeking to reach the 20 percent target.

But semiconductor industry officials have also noted that chip prices have been higher in the United States, where personal computer production is booming, than in Japan, where the economy is stagnant.

As a result, there has been an incentive for Japanese companies to send as much of their production as possible to the United States, leaving room for foreign companies to sell more chips in Japan.

Stanton Anderson, a longtime Washington lawyer for the Electronic Industries Association of Japan, which represents semiconductor users and producers there, said that future market share figures were hard to predict.

"Obviously we're pleased by this, but it doesn't mean that this number is going to stay there as the Japanese economy comes back," he said. "I'm sure it's sustainable in the long term -- whether it's sustainable on a quarter-by-quarter basis, I just can't tell."

Mr. Anderson repeated the contention of Japanese officials that their semiconductor market was open and not subject to government controls, so that market shares might fluctuate unpredictably.

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