"Exactly. 'Cause at this stage you don't care beans about profit. What you're going for is the big fish, market share." Henderson lit yet another Dunhill. "And sure enough, when it comes to the next generation, the 256K memory chip, you've got ninety percent of the action. In very short order most of your American competition folds. You ate them. Matter of fact, Intel, which started it all, dropped out of RAM chips altogether—which is kind of like Xerox throwing in the towel on copiers. This is less than a decade after MITI's start-up, in an industry born in the USA. Hi ho, silicon, away."
"But it cost a bundle."
"Short term, sure, but now the future's wide open. You live happily ever after, my friend, just like in fairyland, because big, bad America's dead and gone in the high volume end of semiconductors."
"But MITI can't use dumping as a regular strategy. After all, it is illegal."
"Well, now, ain't that a fact." He exhaled a lungful of smoke and coughed. "So's selling your ass. But just take yourself a cruise down Eleventh Avenue and you'll meet up with a lot of entrepreneurial ladies who understand the reality of market forces. You've gotta get caught, tried, convicted. If it ever does get that far, the most that's gonna happen is a fine. A lot of folks claim MITI's dumped TVs, cars, steel, textiles, you name it. So when they decided to move on memory chips, Asano was given a free hand to do it the quickest way he knew how. And your buddy Noda ain't exactly a pussycat either, the way he laundered the Japanese taxpayer's money into them low-interest, manana loans."
As he returned to his Scotch, I sat there trying to think. What Henderson had just described was a fundamental insight into how high-tech industries operate.
"Henderson, do you realize what you're saying? That's a beautiful way to knock out a country's high-tech research capability. Take away the volume end of an operation and there goes your cash. Pretty soon you can't afford to finance any more R&D. Which means that sooner or later you're selling yesterday's news. You can kiss good-bye to your technological edge, right across the board."
"Correct. America's semiconductor boys were figuring to use the profits from memory chips to pay for research in logic chips, where you put a whole computer's wiring on a chip. But now the money's gone. What it really means is, end of ball game in information processing. Maybe it won't happen tomorrow, but there's no doubt it's just a matter of time. You dominate semiconductors, sooner or later you're just naturally gonna control computer technology and all that goes with it. I even met a guy a while back who claimed that whoever's ahead in computers is eventually going to have the say-so about who has advanced weapons technology."
Could be, I thought. But that last extrapolation was a stretch. "Bill, I think you're talking a pretty long line of dominoes. For one thing, we've still got plenty of computer research here. The U.S. has a big lead in logic chips."
"True, true. Who the hell can crystal-ball this one? All I know is, Intel was claiming exactly the same thing about memory chips a few years back, just before Asano and Noda and their pals chewed them up and spit them out. All I'm saying is, you'd better watch your backside." He examined his drink and reached for the ice bucket.