The Ministry of International Trade andIndustry will ask Japanese computer microchip makers to further
slash output in the second quarter in an effort to save its
semiconductor pact with the United States, MITI officials said.
    The United States has accused Japan of reneging on the
semiconductor pact by failing to stop the flow of cut-price
Japanese chips to Asian markets. Washington has threatened to
take retaliatory action after April 1.
    The pact, agreed last year, calls on Japan to stop selling
cut-price chips in world markets and to increase its imports of
American chips to reduce some of its huge trade surplus.
    MITI, anxious to salvage the bilateral agreement, has been
pressing chip makers to limit production in the hope that will
boost domestic chip prices and reduce the incentive to export.
    Last month, the ministry asked Japanese chip makers to
reduce first quarter output by 10 pct. To meet that request,
they had to slash production by 20 pct over the final six weeks
of the first quarter.
    If that reduced production level were maintained through to
the end of June, second quarter output would come in 10 pct
below that of the first three months of the year.
    MITI officials, who declined to be identified, said the
ministry has not yet decided on the extent of the second
quarter cutback.
    One said that Japanese chip makers are losing ground in
Asia to South Korean and U.S. Competition just as markets there
are picking up.
    MITI has been criticized privately by some Japanese
semiconductor makers for what they see as heavy-handed attempts
to ensure the success of the Japan/U.S. Chip pact.
 REUTER
