JAPAN REJECTS U.S. OBJECTIONS TO FAIRCHILD SALE

  A Foreign Ministry official dismissed
  arguments made by senior U.S. Government officials seeking to
  block the sale of a U.S. Microchip maker to a Japanese firm.
      "They appear to be linking completely unrelated issues,"
  Shuichi Takemoto of the Foreign Ministry's North American
  Division told Reuters.
      U.S. Commerce Secretary Malcolm Baldrige has asked the
  White House to consider blocking the sale of &lt;Fairchild
  Semiconductor Corp> to Japan's Fujitsu Ltd &lt;ITSU.T>, U.S.
  Officials said yesterday.
      Baldrige expressed concern that the sale would leave the
  U.S. Military dependent on a foreign company for vital high
  technology equipment. Pentagon officials said Defence Secretary
  Caspar Weinberger also opposes to the sale.
      U.S. Officials have also said the sale would give Fujitsu a
  powerful role in the U.S. Market for supercomputers while
  Japan's supercomputer market remains closed to U.S. Sales.
      Takemoto said national security should not be an issue
  since the planned purchase of Fairchild from its current owner,
  Schlumberger Ltd &lt;SLB>, does not include Fairchild's main
  defence-related division.
      In addition, Takemoto said tension over the supercomputer
  trade should not affect the sale as Fairchild does not make
  supercomputers.
      Analysts noted that Fairchild does make sophisticated
  microchips used in supercomputers. Fujitsu makes similar chips
  and supplies them to U.S. Supercomputer makers, they said.
      Takemoto also dismissed U.S. Fears that the proposed
  takeover would violate U.S. Antitrust law, saying "the purchase
  would not result in Fujitsu monopolising the U.S. Semiconductor
  market."
      Two separate issues appear to have come together to boost
  pressure to block the purchase, industry analysts said.
      The move is in part an attempt to force Japan to open its
  domestic market to more U.S. Supercomputer sales, they said.
      U.S. Officials have repeatedly charged that the Japanese
  public sector is closed to U.S. Supercomputer sales despite
  U.S. Firms' technological lead in the field.
      "The United States believes Japan will only react when
  bullied, and this is a bullying ploy," Salomon Brothers Asia
  analyst Carole Ryavec said.
      However, the analysts said more is at stake than
  supercomputer sales as the U.S. Fears it is losing its vital
  semiconductor industry to Japanese competitors.
      "The real issue is xenophobia in (the U.S.) Silicon Valley,"
  said Tom Murtha of brokerage James Capel and Co.
      U.S.-Japanese tension over the semiconductor trade has
  failed to subside despite recent efforts by Japan's Ministry of
  International Trade and Industry (MITI) to get Japanese firms
  to abide by a bilateral pact aimed at halting predatory pricing
  and opening Japan's market.
      A MITI official said that while Japan is faithfully abiding
  by the agreement, problems remain in halting the sale of
  microchips in Europe and Southeast Asia at prices below those
  set by the pact.
      "It is only a matter of time before we solve this problem,"
  he told Reuters.
      Despite the furore, Fujitsu will proceed with talks on the
  acquisition in line with the basic agreement reached with
  Schlumberger last year, a Fujitsu spokeswoman told Reuters.
  

