At Odds With Each Other?

SEMICONDUCTOR: Govt to Revamp Public/Private Chip Projects for Quick Standardization
The Nihon Keizai Shimbun

December 6, 2003 (TOKYO) -- The spread of cell phones and digital cameras is producing a business climate favorable to the domestic semiconductor industry. Trying not to miss this opportunity, the Ministry of Economy, Trade and Industry (METI) is moving to overhaul public/private research and development projects for next-generation microchip technologies and use R&D resources more effectively. But with difference surfacing between the government and industry on the question of standardizing advanced technology, the ministry's plans are unlikely to proceed smoothly enough to revive Japan's status as the leading producer of semiconductors.

The basic presupposition operating here seems to be that standardization is a good thing. While most people wouldn't argue with that, it often turns out not to be the case. Optimization and effective use of resources are often the worst possible management themes during the initial tsunami like stages of any technology wave.

"To promote R&D activities more efficiently, the government decided to redefine the role of each project more clearly. By doing so, it aimed to develop a standard production format immediately and prompt participating firms to shift their focus to R&D efforts in their respective areas of strength, such as chip circuit design, from those for manufacturing technology. It reckoned that lessening the burden of research on manufacturing technology would help them reduce annual R&D costs by about 10 billion yen per company, enabling them to increase their profit margins."

Standardization promotes sameness. It puts everyone on the same level playing field. It also demands a level of cooperation and coordination, and ties up critical resources. Even more importantly, it requires compromise. Companies have to be willing to give up a particular initiative that might give them some competitive advantage in order to achieve the group goal of standardization. When they are competiting on the world stage against major opponents that aren't weighed down by the same restrictions it puts them at a distinct disadvantage.

"However, the planned overhaul of government/business projects has not proceeded smoothly mainly because participating firms have failed to move in step with each other. Since higher added value usually must be incorporated into sophisticated chips, design and production work are inseparable."

Companies have "... failed to move in step with each other..." because they don't perceive it to be in their own best interests. There are many cases where companies have formed alliances, joint ventures, and even joint R&D projects. Companies entered into those relationships because they held common goals and objectives. No government intervention or direction was required.

SEMICONDUCTOR: Govt to Revamp Public/Private Chip Projects for Quick Standardization