This isn’t the cry of the abused mistress of an unstable misogynist; it’s the refrain now heard from the Intel Corporation. The Federal Trade Commission has hit the producer of Pentium processors with a complaint of monopolistic practices. Yes, this is part of the Clinton administration’s ongoing assault on successful companies. Since the Antitrust Division of the Justice Department has its hands full strong‐arming Microsoft, why not let the FTC in on the action?
But the FTC’s actions highlight the deeper dangers of the Faustian bargain of granting governments the power to “help” industries or ensure “fair” competition.
In the 1980s Intel, along with other American semiconductor manufacturers, whined to Washington that unfair Japanese business practices were holding their share of Japan’s market to only 10 percent. They also accused Japanese firms of dumping chips on American (and other) markets at unfairly low prices.
Washington listened. In the 1986 Semiconductor Agreement, the U.S. government thought it had gotten the Japanese government to guarantee a 20 percent share of it’s market for American products and to “voluntarily” restrict exports of semiconductors by Japanese manufacturers. Further, in that same year the federal government helped create Sematech, a research consortium of the 14 largest American semiconductor manufacturers. To date, Sematech has spent around $900 million in taxpayers’ funds to match industry contributions.
But the government’s manage‐trade‐by‐the‐numbers policy obscured the fact that part of the American industry’s situation was of its own making. The Japanese specialized in less‐complex DRAMs, the memory chips used in appliances and consumer electronics. Around 1980, American manufacturers, including Intel, began shifting production away from DRAMs to higher‐valued microprocessors, the brains of personal computers. But by the mid‐1980s the Americans wanted to get back into DRAMs and were not shy about enlisting the U.S. government to help them establish their vision of “fairness.”