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ARE THE U.S. AND JAPANESE INNOVATION SYSTEMS CONVERGING? EVIDENCE FOR AND AGAINST 23 Europe. For example, in 1995 Hitachi and Texas Instruments teamed up to build a factory in Richardson, Texas to manufacture first 16Mb and later 64Mb DRAMS.30 The venture, TwinStar Semiconductor, began operations in 1996. At about the same time, Motorola, IBM, Siemens and Toshiba announced an alliance to develop future generations of chips, such as the 1Gb DRAM. The alliance was built on the separate relationships in 16Mb DRAM manufacturing by Toshiba and Motorola (in Japan) and by IBM and Siemens.31 Also at about the same time, Toshiba and IBM announced their plans to establish a joint venture for the manufacture of 64Mb DRAMS in Manassas, Virginia.32 A similarly tradition-breaking development was the agreement by Hitachi to buy IBM's S/390 mainframe CMOS, Power, and PowerPC microprocessors for Hitachi computers. This was the first time that IBM had sold these microprocessors to other companies; and it is evidence of the difficulty which Hitachi had with its own microprocessor development strategy, and perhaps IBM's need to gain more value from its mainframe technology investment.33 Similarly, Toshiba, in a departure from its previous policy of keeping the manufacture of semiconductors inside Japan, licensed its 0.5 micron CMOS chips to Singapore's Chartered Semiconductor Manufacturing Ltd. due in part to the cheaper costs of production in Singapore.34 However, the same trends that led to these new initiatives have also made their survival difficult. Successful innovation which has lead to greater memory capacity of DRAMS; increased supply due to entry into the DRAM market by newcomers to IC production in countries like Korea, Taiwan and others; and the slump in demand due to Asian financial troubles among others have led to a glut in the DRAM market. This state has also been exacerbated by the emergence of DRAM alternatives like flash memory cards. According to Dataquest, demand is not expected to catch up to supply until 2001.35 As a result, Hitachi and TI have decided to end their joint venture, with TI buying out Hitachi's share of TwinStar Semiconductor.36 Furthermore, TI has decided to sell its remaining memory businessâincluding the Richardson operationâto Micron Technology Inc. in order to focus on digital signal processing solutions and analog semiconductors.37 In a similar move, Motorola has decided to exit the DRAM business, but it will continue its manufacturing joint ventures with Toshiba in Japan, switching the production capability over to logic products.38 Meanwhile, Toshiba is balking at continued development of the 1Gb DRAM with Siemens and IBM due to Toshiba's desire to focus on stacked-capacitor memory while IBM and Siemens are backing trench capacitor cell technology.39 Issues Raised by Globalization Globalization of the world economy and corporate technology development raises important policy questions for the United States and Japan, which have been widely debated in recent years.40 On one side are those who believe that governments should embrace, not restrict cooperative technology development with foreign companies and governments and on the other those who believe that policies of openness that ignore reciprocity concerns are ideologically driven and ignore the enduring importance of national interest.41 The former emphasize the strong trend toward global technological and economic integration, the global spread of innovative activity, and growing technological cooperation among private firms. They believe that restrictive measures threaten to cut off a critical source of innovation, productivity improvement, and economic growth, namely the influx of