Thomas Hoover - The samurai strategy

"You're selling at a loss. Dumping."

"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 amp;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.

About that time Ben came lumbering up the stairs to observe our maudlin ruminations. I watched as he settled himself near my feet with a grunt, then plopped his chin down on his paws.

"Well, your fairy tale about MITI may or may not be true. But that's water over the dam. Besides, who are we to be pointing a finger? The U.S. has done its share of tinkering with foreign governments, making the world safe for American shareholders."

"Hey, I make a profession of separating pious pronouncements from reality. I never take an official story at face value."

"Okay, so Noda says he's just playing the market. But if he's actually planning something else, then what is it?"

"Don't have the foggiest. Wish I did." He glanced at his watch. "But I do know duty's about to call. I'd better get uptown if I expect to have any female companionship for the apocalypse."

"Take it easy. Nobody flies on schedule anymore." I settled back into my chair and glanced up at the large Japanese screen I had mounted on the wall opposite. It was Momoyama, around 1600, the time when the most recent crowd of shoguns took over Japan. Against a gilded background was a fierce eagle, perched menacingly on a pine branch. The thing was so powerful I just kept the rest of the room bare; nothing else I owned could stand up to it. "You know, Henderson, the trouble with your pattern is that it doesn't quite fit this time. Shorting Treasury futures is not exactly going after an industry. So what's the new angle?"

"Damned good question." He stared at his glass, probably wondering if one more for the road would impair his performance later on. I guess he concluded yes because he didn't budge. "Speaking of angles, what do you make of that sword business last week? Caused one hell of a flap in Japan, so I hear."

"Major event. That sword should tell us a lot about early Japanese metal technology. I've been trying to find out more about it, but nobody's talking. No pictures, anything." I reached over and gave Ben a pat. "Curious though. I think I remember Noda's mentioning that sword the night I met him. Eight hundred years ago, the emperor gets caught at sea and loses the imperial symbol. But he didn't breathe a word about having a project underway to locate it."

"Well, you're my Japan expert. What's it all about?"

"Never assume you understand the Japanese mind." I pointed up at the wall. "Take a good look at the eagle on that screen. You'd think it's just a picture, but actually it's an important subliminal message. The daimyo who commissioned this piece had that eagle put on it to let everybody know he was cock of the walk. Means you cross him and you're dead. Symbols are important in Japan. Noda and this woman Mori talked a lot about shoguns and emperors. Maybe they hope the sword will somehow bring back the good old days."

"Well, he's got enough money to do it."

"Looks that way."

"Hope we're not about to get kamikazes with a checkbook. Thoughts like that could make a man real nervous." Henderson rose and strolled to the fireplace. He examined his reflection in the large mirror over the fireplace, then set down his glass on the mantelpiece and turned back. "You know, Walton, I think I'm starting to lose my touch. I don't believe anything I hear and only half of what I see." He sighed. "Been one hell of a day."

"Pretty standard Friday, far as I could tell."'

"Well, a damned strange thing happened this afternoon."

"Some woman turn you down? Maybe you ought to start working out, Henderson, trim that little spare tire creeping in around the waistline."

"Still no complaints in that department, friend. No, this actually goes back a ways, to a few months ago down in Washington, when I bumped into a long-haired professor coming out of a committee session. Guy I mentioned a minute ago."

"The linkup between computers and weapons?"

"Him. We got to BS'ing in the men's room, and it turned out he was some computer hotshot from Stanford. He'd been testifying, I think, and he was still wound up. Probably I got to hear all the stuff he'd prepared and nobody'd asked."

"What was the pitch?"

"Defense semiconductor dependency. Claimed that if we keep on the way we're going, relying more and more on foreigners for advanced chip technology, we may as well kiss the farm good-bye. I had a little time to kill, so I invited him to have a drink. He good as chewed my ear off. Finally had to fake a dinner date to get loose. Man had a bug six feet up his ass about the U.S. buying half the latest chips for our hot-dog military hardware from Japan. Next war we fight, says he, we'll be buying high-tech weapons systems from the Far East. Problem with that is, anybody else could buy them too. And we'd get replacement parts whenever MITI feels like getting around to it. Today I happened to remember him, so I decided to give him a call, ask him if he still saw things the same wav."