THE U.S. ELECTRONICS INDUSTRY

The United States is losing technological and market leadership in the world as its electronics companies drop out of consumer product markets. Today's global competitive environment requires that companies be first to introduce attractive products of the highest quality at the lowest price. Although the United States has long been both a technology innovator and a market leader, in the last decade it has been losing strength in the marketplace. According to the National Advisory Committee on Semiconductors (1992, 2),

At the beginning of a decade that promises unprecedented growth in global high-technology markets, the U.S. firms competing in these markets are experiencing disturbing weaknesses. Many high-volume electronics products, from low-cost goods to highly complex merchandise, are already manufactured overseas. In addition, concern is growing about the ability of U.S. firms to remain competitive in markets where they traditionally have been strong, such as low-cost segments of the computer and office equipment markets. Across the entire world electronics markets, the share produced by U.S.-owned firms has fallen by 14 percentage points since 1985. The market share loss translates to more than $100 billion in lost revenues, given the size of the current world electronics markets.

U.S. electronics manufacturers have lost market share to foreign-owned or foreign-based manufacturers in practically every electronics sector. This occurred while U.S. industry's R&D investment exceeded that of foreign competitors, and while U.S. government R&D dwarfed that of foreign governments. The Commerce Department was concerned that Japan could surpass the United States in production of electronic goods by 1994 and emphasized that since 1984 (except for software and medical equipment) the United States lost market share in 35 of 37 electronics categories. There are many who believe that the problem is the U.S. R&D structure's relative inattention to commercial applications, and that Americans must improve their focus on the basic problems of technology application and prototyping of new products. Bert Haskell of Kodak has stated the following:

North America must develop a...low cost, high technology manufacturing infrastructure. This can only be accomplished through a commitment to manufacturing consumer products, and in particular consumer electronics. North American companies must identify emerging high volume consumer electronics products, and must be determined to participate broadly in the manufacture of these systems (MCC/Sandia 1993).

The United States also lags behind Japan in flexible automated manufacturing. Japan operates over 68% of all installed industrial robots in the world, compared to only 12.5% operated by the United States. Japan also has over 40% of the world's installed flexible manufacturing systems. Driven by the shortening of product life cycles and the growing segmentation of markets, Japanese companies are committed to improving manufacturing system flexibility. While this is costly, it has the associated advantages of making possible rapid response to new product introductions. Continuous improvements in manufacturing as well as component technologies resulted in Sharp successfully introducing three new models of its 8 mm ViewCam within one year of introducing the original product. In sophisticated, flexible electronic assembly equipment, Japanese companies are dominant.

Proficiency in manufacturing high-technology consumer products is critical to maintenance of U.S. prosperity and leadership in a global marketplace; this is in turn dependent on electronic packaging proficiency. It is therefore likely that electronic packaging capabilities will play an increasingly important role in the future economic competitiveness of the United States. The MCC/Sandia report on electronic packaging (1993, 3-4) concluded the following:

The latest generation of consumer products is being integrated to provide new products for home and office: camcorders, electronic still cameras, mini-compact disc players, digital compact cassettes, hand-held televisions, and computers. Other consumer products include portable facsimile machines, copiers and printers, electronic data books, laptop computers, optical disk mass storage systems, smart cards, and portable telephones. Such products grew from 5% to more than 45% of Japanese electronics production between 1978 and 1988, an average growth rate of over 20% per year, as compared to 10% for the electronics industry overall (Dataquest 1988, 4-7). Focusing on high-volume consumer electronics markets has been central to Japan's economic strategy. High-volume products have been estimated to account for at least one-third of global integrated chip consumption. U.S. companies have depended for 40-50% of the value added in their electronic products on foreign competitors, from whom they purchased large numbers of "upstream" electronic packages and components (IEEE 1989, 7). The majority of these imported products and technologies have come from Japan's electronics industry.


Published: February 1995; WTEC Hyper-Librarian