Japan's surprising rise in transistor bewitchment

The wounds of World War II were still unhealed. The United States wanted to destroy Japan's technology sector completely in the beginning. However, they changed this mindset over time. They realized that the role of a strong Japan is unavoidable in maintaining stability in the world. So America decided to pave the way for Japan to advance in technology while maintaining its leadership.

When American scientist John Bardeen, the only person to win the Nobel Prize in Physics twice, arrived in Tokyo in 1953, Japan welcomed him wholeheartedly. That same year, Sony founder Akio Morita visited New York to obtain a license for transistor technology. Physicist Morita was a resident of this magical world of electronics. Immediately after World War II, Akio Morita and Masaru Ibuka jointly founded Sony in 1946. Their journey began with 'rice cookers' and 'tape recorders.'

When Morita visited the United States, he was stunned by the vastness and abundance of the country. Telecommunications giant AT&T agreed to license him to manufacture transistors. Of course, they thought Morita would only use it to make 'hearing aids'. But Morita had long understood that this transistor would be the mainstay of future consumer electronics. His vision was far-reaching, and his target was the towering American market.

However, Sony's path was not easy. The Japanese Ministry of Commerce withheld the approval of the transistor license for a few days because Sony had signed an agreement with a foreign company without their permission.

But Sony was not deterred. While other countries like the Soviet Union used the strategy of copying Western technology, Sony adopted the technology by licensing it and by focusing on innovations. This was the key to their success. Sony's greatest success came in the transistor radio. Although the American Texas Instruments failed to achieve commercial success in this field, Morita achieved success. Sony's affordable and easily portable radio quickly captured the world market.

However, American companies such as Fairchild and Texas Instruments were still ahead in chip design. Japanese companies had to pay hefty royalties - 4.5% to Fairchild, 3.5% to Texas Instruments, and 2% to Western Electric. At that time, Japan was working on innovating new consumer products, and the necessary chip technology came from America.

Calculators were one of the areas where Japan showed success in inventing consumer products using chips. Although the American company Texas Instruments took the initiative to make calculators, its marketing department couldn't pay attention to their potential. And at that opportunity, Japan's Sharp Electronics took over the market by making small and cheap calculators in the 1970s.

By the 1960s, Japan and the United States had developed a complex interdependence in the technology sector. By 1964, Japan had surpassed the United States in transistor production, although the United States was still leading in integrated circuits and computers. In 1965, Japan's electronics exports were $600 million, rising to $60 billion in just two decades.

This path to interdependence was not always smooth. In 1959, the US Electronics Industries Association called for caution against importing Japanese electronics, citing national security concerns. But the US government wanted Japan on its side as an ally in the Cold War. The argument was that if Japan could not trade with the West, it might turn to China or the Soviet Union.

The long-term policy of the United States was to make Japan more technologically capable. Japanese businessmen also embraced this vision. When Texas Instruments wanted to open a chip factory in Japan, it was blocked by Japan's strict regulatory restrictions. At that time, Morita himself came forward. He was a friend of Texas Instruments Chairman Pat Haggerty. On Morita's advice, Texas Instruments officials secretly came to Tokyo. Meanwhile, Morita negotiated with the Japanese government and proposed a joint venture - Texas Instruments would manufacture chips, and Sony would coordinate with the Japanese government.

Thanks to Morita's extraordinary strategy, Texas Instruments was approved to open a factory in Japan, and Morita became known as a legendary businessman in the Pacific Ocean region. In this way, trade and investment relations between the United States and Japan deepened, and the Japanese economy prospered rapidly. Japanese Prime Minister Hayato Ikeda's goal of doubling the country's national income within ten years was achieved two years ahead of schedule.

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(Adapted and abridged from Chapter 9 ('The Transistor Salesman') of Chris Miller's acclaimed book 'Chip War')