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Abstract
Moving from labour to some capital and knowledge intensive sectors, East Asian countries have actively pursued strategic industrial policies and successfully promoted targeted sectors. However, their growth in high tech sectors challenged the US leadership and the World Trade Organization (WTO)-supported neo-liberal development “wisdom”. Tensions over trade and technology issues eventually exploded into fierce policy conflicts. This study explores the role of the state in a single information and communication technology (ICT) sector, the semiconductor industry, over the course of its evolution in Japan, Korea, Taiwan and China. It is hoped to tackle the issues surrounding the conflicts between the Western economic orthodoxy and East Asian development policies through explaining the ICT development pathway of these countries. The finding shows that the international frictions in both ICT trade and technology were inevitable and reflect the divergence of development visions held by latecomers and developed countries.
Acknowledgements
The author would like to thank Professor Mike Hobday, Sussex University, Dr Gregory Linden, University of California Berkley and Dr Wei Zhang of Cambridge University, for their helpful comments and suggestions. The views expressed here are those of the author alone.
Notes
1. The best known successful projects include large-scale integration and very large scale integrated circuits (1976–1979) which played crucial roles in assisting Japanese firms in upgrading technologies.
2. Fairchild the world's third largest US firm in the 1960s.
3. By 1974, there were nine US-owned and seven Japan-owned firms located in Korea engaging in labour-intensive semiconductor assembly and testing operations
4. After the Chinese civil war, the Kuomintang government established an independent state/firm relationship in order to prevent corruption by separating politicians from business communities. Accordingly, policies were designed to broaden its support base to include the general public and small businesses, as opposed to just a few large corporations.
5. E.g. Winbond with HP and Toshiba, MXIC/powerchips with Matsushita and Sun, New PC consortium with IBM and Motorola.
6. It refers to what Chinese officials called “strategic adjustment of the industrial structure”.
7. A US producers’ petition was filed with the assistance of the DOC against Japanese manufacturers in the field of erasable programmable read only memory (EPROM) and dynamic random access memory (DRAM) under Title VII of the Tariff Act of 1930. An investigation was soon launched by the US ITC. Japanese imports were determined to be dumping memory devices in the US market and to have materially injured the US semiconductor industry.
8. Although the EC complained to the GATT that this unilateral action was illegal, particularly the price floor set by the US, Japan had to accept unconditionally the US’ terms as it was threatened by further protectionist measures and political actions. As the GATT panel was unable to respond to its complaint, the EC used all means possible to conclude an agreement with Japan for 5% market access in 1988.
9. Anti-dumping duty order and amended final determination: DRAM semiconductors of one megabit and above from the Republic of Korea, 58 Fed. Reg. 27,520 (1993). Since 1994, LG and Hyundai had begun to request the DOC to review the anti-dumping order, but no decision was given. After 3 years Korea brought this case to the WTO Dispute Settlement Body, the DOC finally revoked the order in 2000.
10. In both cases, very minor import duties were placed on Samsung products. The charges have been amended and are currently activated.
11. Notice of final determination of sales at less than fair value: SRAM semiconductors from Taiwan, Federal Register, 23 February 1998 (volume 63, number 35); SRAM semiconductors from Taiwan: notice of revocation of antidumping duty order and termination of antidumping duty administrative reviews and new shipper review, Federal Register, 14 January 2002 (volume 67, number 9); notice of final determination of sales at less than fair value: DRAM semiconductors of one megabit and above from Taiwan, 64 FR 56308, 19 October 1999.
12. China's world market shares as reported by the Chinese Ministry of the Information Industry arguably showed 3.64% in 2001, 3.64% in 2001, 4.81% in 2002, 4.98% in 2003 and 5.64% in 2004.
13. The technological level of the semiconductors is indicated by the bigger diameter in inches of the silicon wafer and the thinner layer in microns of the ICs. Also see the fourth section, fourth question.
14. For more details on these conditions please refer to Ning (Citation2007).
15. Under the agreement, state assistance for R&D activities and the type of subsidies are limited. R&D subsidies are limited upto 75% of the costs of industrial research or 50% of the costs of pre-competitive development activity. Subsidies are limited only to the costs of personnel, instruments, equipment, consultancy, and permanent land and buildings for the research activity only; assistance to promote adaptation of existing facilities and processes to new environmental requirements for firms with financial difficulties are limited to one off payments of 20% of the cost and do not cover replacing
16. According to the CCID 2005 report, China's semiconductor imports accounted for 23.1% of the world semiconductor sales worth 62.04 billion USD in 2004 and with an average growth rate at 46.5% from 2001 to 2004.
17. Although the Wassenaar Agreement identifies the equipment of sophisticated semiconductor manufacturing for export control, licensing decisions were left for each member to make its own judgments. Unlike the US, neither the European Union (EU) nor Japan regards that China's import of semiconductor manufacturing equipment would cause international and regional instability. With strong US objections, these countries might not license export of state of the art equipment to China. The effectiveness of the Wassenaar Agreement at trying to deny China access to 0.25-micron semiconductor manufacturing technology was questionable as a number of the Chinese chip producers announced plans for 0.18-micron wafer and below processes in 2004.
