THE SEMICONDUCTOR INDUSTRY IN THE 21st CENTURY: A GLOBAL ANALYSIS USING MICHAEL PORTER'S INDUSTRY RELATED CLUSTERS

The semiconductor industry has attracted considerable attention during the last twenty years as a major high stakes business battlefield between American corporations and Japanese society. Recently, other Asian countries have made inroads into this industry. Consistent with Michael Porter's thesis on the importance of national industry related clusters (Porter, J 990), this paper predicts that between now and the year 2000, the entrepreneurial characteristics of American companies will lead them to significant market share increases and that Japanese businesses will lose market share to other Asian companies, particularly in South Korea. Beyond the year 2000, the industry may evolve to the point where geographic areas concentrate on specific dimensions of the industry with the United States strong in innovation and Asia emphasizing manufacturing efficiencies. It is also possible that later in the 21st century, continued economic growth in Asia could lead to Asian companies taking expanded leadership roles in the industry. This paper acknowledges the importance of government intervention both in the United States and Japan in the early stages of the industry, but argues that the evolving maturity of the semiconductor industry is reducing the need for government subsidies, even though trade issues, especially with China, continue to be important.