JAPAN TO CUT MICROCHIP OUTPUT, BOOST IMPORTS
Leading domestic semiconductor makers
will boost imports and cut production of key memory microchips
from next month in line with government attempts to ward off
U.S. Trade sanctions, company spokesmen said.
    The moves might persuade the U.S. To call off the
sanctions, despite obstacles to full implementation of the
plans, analysts said.
    The tariffs will affect about 300 mln dlrs worth of
products and are in retaliation for Japan's alleged failure to
honour a semiconductor trade pact.
    In announcing the sanctions last Friday, President Reagan
said Japan had not fulfilled its promise to halt predatory
pricing and open Japan's market to foreign products.
    But U.S. Trade representative Clayton Yeutter said
yesterday on U.S. Television that the U.S. Is willing to drop
the tariffs if Japan shows a "clear indication" that it will open
its markets to U.S. Goods.
    The Ministry of International Trade and Industry (MITI) has
urged producers to slash output of the chips by 11 pct in the
second quarter, following a call to reduce production by more
than 20 pct the previous quarter.
    MITI also urged makers to boost chip imports.
    Analysts said the moves could encourage Washington to
cancel the tariffs ahead of next month's meeting between Prime
Minister Yasuhiro Nakasone and President Reagan.
    "The U.S. Wants to be satisfied. It has rattled its sword
and shown that it can and will do business," said analyst Nick
Edwards at Jardine Fleming Securities Ltd in Tokyo.
    But analysts cautioned that although Japanese producers can
cut output, boosting imports -- the key to U.S. Withdrawal of
the sanctions -- is more difficult.
    "The U.S. Does not have the low-end consumer IC's
(integrated circuits) that the Japanese need for consumer
products. They're well supplied here," said Richard May, senior
analyst at Barclays de Zoete Wedd Ltd in Tokyo.
    The U.S. Leads in production of medium and high-end IC's,
but Japanese makers are keen to develop their own high-end
production skills, the analysts said.
    "The Japanese must be prepared to trade some losses on
semiconductors in return for free access to other areas," said
Edwards.
    A spokesman for Hitachi Ltd <HIT.T>, said the firm's
reduced output of 256 kilobit dynamic random access memory
(256K DRAM) was unrelated to MITI's efforts to ward off the
trade sanctions. Decreased production was a natural result of
the company increasing output of one-mln bit DRAM's, he said.
    Company officials unveiled the following plans -
    - NEC Corp <NESI.T>, Japan's largest chipmaker, plans to
slash production of 256K DRAM semiconductors by 29.41 pct to
six mln per month from a monthly average of 8.5 mln last
quarter.
     In the year beginning April 1, NEC will boost chip
imports, which comprised some 20 pct of all NEC chip
consumption the year before.
    - Hitachi Ltd's <HIT.T> April output of 256K DRAM's will
fall by 25.93 pct to four mln compared to 5.4 mln in March. The
company is trying to boost imports but has not set a specific
target. Imports are currently very low.
    - Toshiba Corp <TSBA.T> will reduce April 256K DRAM
production by 16.67 pct to just over four mln and is
considering ways to boost imports, a company official said.
    Toshiba has an agreement with Motorola Inc (MOT.N) to sell
the U.S. Firm's chips in Japan. The firms are planning a
joint-venture production of memory chips in Sendai, northern
Japan.
    - Mitsubishi Electric Corp (MIET.T) will trim second
quarter output by about 10 pct to between 5.5 mln to 5.6 mln
chips compared to the first quarter. Plans call for increased
imports but an official said "boosting imports will be difficult
as it depends on sales demand."
    - Fujitsu Ltd (ITSU.T) will cut production in accord with
MITI guidelines and boost imports from currently low levels.
    - Oki Electric Industry Co Ltd (OKIE.T) will reduce April
production by 10 pct from March's 3.2 mln. Oki is studying ways
to increase imports by 10 pct in the fiscal year beginning
April 1 from the previous year's total of more than five
billion yen, a company official said.
 REUTER
