Technology ownership is no birthright

At the end of the seventies, American semiconductor companies got a heavy beating. Their customers told them to their faces: you’re losers. In his book “The microprocessor, a biography,” Michael Malone describes the turmoil in the chip market with an anecdote from a 1979 conference in Boston. There, an executive from Hewlett-Packard presented a thorny issue to his suppliers. He explained that HP had bought in volume several hundred thousand components from outside manufacturers for use in its computers, calculators and instruments. Most of these devices had been purchased nationally but a few had been sourced from big Japanese electronics firms like NEC, Hitachi, Fujitsu, Toshiba and Mitsubishi.

Testing the US chip deliveries versus those from Japan, HP found out that the latter weren’t just better, but shockingly so. Whereas the computer maker typically had to return one in every twenty US chips, the Japanese devices rarely were faulty. What’s more, initial deliveries from Japan were always on time, and any replacements were made immediately. US chips were usually late and replacements were sometimes made with equally faulty chips. “The complaining customer, HP, was typically treated as if it should feel lucky to be getting any replacements at all,” writes Malone.