The Tokyo Connection
Why some smart companies are selling out to the Japanese
Developing cutting-edge technology costs a lot of money, and many of America's most innovative companies are running out of it. So what do they do? They give up a piece of the action to the Japanese for a chunk of capital. Why are small companies increasingly looking to Japan for their money? And what does it mean for the rest of us? -- E.D.W.
Tazz Pettebone wheels his Ford Bronco into the freshly paved parking lot, hops out, and heads for the door to see how things are coming on the new building. Outside, it is a warm, dreamy November day in Silicon Valley. Inside, ductwork and insulation glint through the shadows as the hum of power tools resonates off the freshly poured concrete floor. Pettebone looks around appreciatively and says, "We'll move in here in January."
Pettebone is president and chief executive officer of Akashic Memories Corp., in Santa Clara, Calif., widely recognized as a technologically advanced maker of thin film magnetic disks for computer data storage. With this move the company will more than double its manufacturing capacity. It recently signed a 10-year lease for the space, with options to stay beyond that. In a glutted real-estate market, where one-year leases are the norm and landlords routinely dangle all manner of improvements before choosy tenants, Akashic clearly intends to be a long-term player.
The scene is as affirming as the day's Indian summer warmth: American entrepreneurial know-how building long-term value from little more than the germ of an idea. But a closer look reveals a flaw in the scene, a disquieting disjunct between historical expectation and present-day predicament.
Akashic Memories was once an American company. Starved for cash two years ago, it was bought outright by a $5.5-billion Japanese multinational. "We needed the money -- absolutely," says Pettebone. "This is a technology-driven business. It's very capital intensive. If you don't invest, then you quickly fall behind." Akashic's acquirer not only paid $20 million for the company in December 1987, but has invested another $55 million since then.
That acquiring company, contrary to what you might expect, is not an electronics giant. Akashic's owner is Kubota Ltd., a 100-year-old company whose core business is farm equipment. Kubota bought Akashic as a means to shuck its heavy-metal chrysalis and take wing as a brave new competitor in the global economy of the twenty-first century. Kubota knew that farming was a mature business. Computers, not combines, promised growth.
Kubota's aim five years ago was to become a major force in technology. It would buy into an array of state-of-the-art, early-stage American technology companies. It has already spent $200 million to accomplish that task.
Kubota's major thrust is to become an integrated manufacturer of high-powered workstations, the fastest-growing part of the computer business. This is the market that turned Sun Microsystems Inc. into a $1-billion company in six years.
Aside from Akashic, Kubota has made the following other high-tech investments:
* $50 million for 44% of Ardent Computer Corp., in Sunnyvale, Calif., a hot new maker of graphics and departmental supercomputers. (Ardent Computer later merged with Stellar Computer Inc., giving Kubota a 22% interest in Stardent Computer Inc., the combined entity.)
* $26 million for about 20% of MIPS Computer Systems Inc., also in Sunnyvale, a front-runner in the development of the RISC-based microprocessor -- which goes into Stardent machines. (Stardent's chairman, Allen Michels, introduced MIPS's CEO, Robert Miller, to Kubota when his company was foundering for lack of capital.)
* $10 million for a 15% share in Rasna Corp., in San Jose, Calif., a start-up software firm that writes sophisticated mechanical engineering programs -- which will run on the Stardent machine
* $6 million for 9.2% of Exabyte Corp., in Boulder, Colo., a maker of high-capacity cartridge tape subsystems for data storage
* $12 million for 25% of an optical storage joint venture, Maxoptix, with disk-drive maker Maxtor Corp., in San Jose.
"They came and found us," is how Tazz Pettebone describes Kubota's purchase of Akashic. In 1985 Kubota engineers began studying thin film magnetic-disk technology with an eye to in-house production. Their research turned up Akashic and four other U.S. companies pursuing the same technology. Growth through acquisition proved the path of least resistance. Not only was the yen strong against the dollar, but buying into an American company gave access to the U.S. market, the world's largest. "There was some mutual wooing on the part of our venture capitalists," adds Pettebone. "We were running out of money, and our venture capitalists were not prepared to go into deep funding."
Pettebone's story is commonplace in Silicon Valley these days. The script reads something like this: hot technology company, started by U.S. venture capital, burns through its start-up money. Cash-heavy Japanese company offers what appears to the Americans as a premium price. To the Japanese, with their robust currency, the price seems cheap. Everyone is happy. Entrepreneur gets much-needed capital. Venture capitalist -- burned by recent mediocre investments in high technology -- gets a hefty boost in valuation. Japanese behemoth gains access to a vital technology, easing the process of a long-term strategic repositioning of the company.
Tazz Pettebone, not surprisingly, has kind words to say about his Japanese managers. Yes, they sit on the board. No, they don't meddle. Their financial people haven't come in and turned the place upside down, something that often happens with these deals. "They really do their homework," says Pettebone. "They ask the tough questions." He even likes the sense of mystery the relationship has brought. The mastermind behind Kubota's computer acquisition program is a Mr. Yoshida. He sits back in Osaka, calling the shots. Pettebone sees him infrequently. They are slowly getting to know each other; the two men share a passion for the game of golf. (Kubota has also moved into the business of constructing and owning of golf courses in Japan.) What kind of a man is Mr. Yoshida? Pettebone ponders the question, then offers a confiding, appreciative smile. "He's a gambler. He's very shrewd."
The sale of Rockefeller Center, Columbia Pictures Entertainment, and Van Goghs at $40 million per canvas to Japanese buyers make for eye-catching headlines. But these big deals obscure more meaningful, less glitzy transactions carried on beyond the scope of media focus and public awareness. Foreign money, primarily Japanese, is buying into a host of many small, leading-edge technology companies -- the heart of America's entrepreneurial legacy. While its implications for the future remain unclear, this growing phenomenon has begun to spark serious debate (see "What's Wrong with Japanese Capital?", page 7).
Unlike Japan, the United States does not require comprehensive registration and reporting of the purchase of U.S. assets by foreign interests. In fact, an amendment to the Omnibus Trade and Competitiveness Act of 1988 requiring just that was killed. As a result, the picture of Japanese investment in U.S. technology is fragmentary. The U.S. Commerce Department's Office of Trade and Investment Analysis, for example, employs only one economist to work on global trends in international investment. Its data, not surprisingly, are correspondingly crude. Still, when the pieces from various sources are assembled, they do offer a compelling, if not comprehensive, mosaic.
According to Office of Trade and Investment Analysis calculations, direct Japanese investment in the American machinery industry (which includes computer-related companies) jumped from $1 billion in 1986 to $1.5 billion in 1987 to $2.5 billion in 1988.
The Washington, D.C.-based Japan Economic Institute -- funded by the Japanese government -- offers another perspective. It reports that in 1988 Japanese corporations' direct investment in U.S. manufacturing assets rose by 52% to $53.4 billion, that 205 companies, owned wholly or in part by the Japanese, were added to the list in 1988, bringing the total to 890. As a very rough comparison, between 1955 and 1984 there were only 32 examples of Japanese companies being acquired by foreign investors.
Numbers from Venture Economics Inc., in Needham, Mass., add further detail. During the first half of 1989 Japanese corporations invested a record $214 million in minority stakes in small U.S. technology companies. This is about two and a half times the figure from the first half of 1988. Moreover, it compares with $42 million for all of 1985, and a paltry $7 million for all of 1983. Two-thirds of that $214 million went either into computer or health-care companies. Nearly half of 1988's investment went to companies located in one state -- California -- and more than 80% of that money went into computer-related firms. In 1988, 40% of the Japanese dollars invested went into computer hardware and software companies.
Japan's hungry capital and America's open market have given rise to an elaborate infrastructure in this country of venture capitalists, investment bankers, lawyers, lobbyists, and assorted other middlemen. Their job is to ease Japan's access to the U.S. market, to find the fattest fruit.
Mark Radtke, a vice-president with the U.S. venture capital firm of Advent International Corp., is one such deal maker. On his travels to Japan he inevitably collects the annual reports of the large Japanese companies he visits. They make for startling reading. Says Radtke, "They all say pretty much the same thing, which is: 'The biggest thing happening right now is trying to figure out what sort of a company we want to be in the twenty-first century. What will we look like?' "
Virtually every large, mature company in Japan, says Radtke, is either setting up its own venture arm or working through U.S. funds to effect this transformation. The names, by now, are all but household words in America. Sony, Canon, Asahi Glass. Nippon Steel, Kobe Steel, and Kyocera. Fujitsu and Hitachi. "They pick out and develop the exciting new businesses. They actively try to figure out how to identify them, how to approach them," says Radtke, who finds the Japanese keen students of technology. "They study it, they ask questions. Then they visit the company and ask more questions. I'm in awe of their efficiency, the way they track down stuff that falls through the cracks here. When they find something they like they're willing to overpay, but in the long run it's not overpaying. The strategic value to them is enormous."
Radtke acknowledges past cases of Japanese expropriation of American technology. He ascribes this to naïve American companies that did not take sufficient steps to protect their intellectual property. He asserts that the Japanese more often than not enhance American technology. They widen its application and thereby benefit the U.S. companies they do business with.
Michael Borrus, a member of the Berkeley Roundtable on the International Economy at the University of California, says this is an issue that deserves more study. "One sensible perspective to take is to ask, 'What have the Japanese done for my economy lately?' " says Borrus. "If they use state-of-the-art technology, employ a lot of workers at well-paying jobs, and if they add something new, one could anticipate that this should be treated as positively as any investment. If it's set up so that all the value-added R&D and manufacturing is done in Japan, then it ought not to be welcomed at all."
The answer to that question remains open. More to the point, it is muddled by culture, believes Ronald A. Morse, a Japan specialist and, since March 1988, the development officer at the Library of Congress in Washington. The trade deficit, he argues, is owed in part to the now widely held belief that Japan's markets -- which favor the Japanese corporation at the expense of the Japanese consumer -- are closed relative to ours. Moreover, U.S. corporations must borrow capital at roughly twice the interest rate charged Japanese companies. The result is much more "critical mass" (money, technology, and management skill) available to Japanese companies.
But the true Japanese advantage, Morse argues, lies in their approach to technology. Unlike the Americans, they divorce science (innovation) from technology (application). "They buy up the scientific breakthroughs. That's where they're weakest. But when it comes to applications -- making something tangible and marketable from those innovations -- they're geniuses," says Morse. "They know exactly what they want, who has it, and how it can feed into their interests. They also know their only hope of surpassing the United States is to take their financial power and their human resources and hook them up to technology."
Cytel Corp., in La Jolla, Calif., sits in a gleaming new building that seems more air and light than matter. Vegetation grows from its courtyard core, water plays on stone. The scene, quiet and lulling, suggests an upscale shopping mall, not home for a fledgling company trying not to get stepped on in the global marketplace of the 1990s. In his cable-knit cotton sweater, canvas trousers, and deck shoes, Jay Kranzler, Cytel's president and CEO, hardly dispels the impression.
But beneath the youthful "what, me worry?" exterior, Kranzler, 31, is very much a man on the go. Like many entrepreneurs seeking to do business with the Japanese, he sees it as a way to gain access to the world market. To get that, he is willing to give up pieces of his company.
Cytel, a two-year-old biopharmaceutical company, is a hot little business right now. Last September Kranzler forged a strategic partnership deal with Sandoz Ltd., the Swiss pharmaceutical giant. In exchange for five-year worldwide rights to Cytel's research into a class of drugs that combat autoimmune diseases, Sandoz pumped more than $30 million into Cytel. For that sum Sandoz also got close to 20% of Cytel's stock.
You'd think $30 million would be plenty to keep Kranzler going for now. It isn't. Kranzler is just back from Japan. "We are looking for more money, and Japan is the place to go for it right now." In fact, the sooner Kranzler can find a Japanese partner the better off he'll be. He figures that because Japanese pharmaceutical companies are not yet the global players that U.S. and European companies are, he can cut a better deal. He may be able to retain rights to other markets, giving up only the Japanese market.
Kranzler is a canny pragmatist. The Japanese have a lot of money; his business burns it. "To develop a drug now costs on average $125 million and takes 13.5 years." To get a payback Cytel must crack the world market. But that, especially in this industry, is tough. "There are tremendous regulatory and cultural barriers to entry in Japan."
Getting a big partner like Sandoz was a vital and calculated first step. (Kranzler began that process by drawing up a list of all U.S. and European drug companies with sales of more than $1 billion -- potential partners.) The Sandoz deal would convey credibility to the Japanese. A Japanese partner will, Kranzler hopes, accomplish something else. Kranzler is looking for complementary expertise in fermentation technology and organic chemistry, areas in which the Japanese are strong. That is the upside.
The downside is all too real. Kranzler's strategy is to sell pieces of his technology. Inevitably, he says, big companies want worldwide rights to the technology. But such deals threaten to turn Cytel into little more than a generator of a "royalty stream" and prevent Kranzler from ever building Cytel into a bona fide, integrated company. He can only go out so many times and sell parts of his technology before he gives away too much. His problem is compounded by figuring out which part and how much of his research base to give up. "You have to be smart about which slice you give away," admits Kranzler. "On the one hand, it has to be attractive to them. On the other hand, it has to be one that you know you need someone else to help you with."
Kranzler acknowledges that he is engaged in a nimble dance. He needs capital. He needs access to world markets. He needs to hang on to as much of his company as possible. "Each of us has a need we are trying to fill. The Japanese are trying to get access to new technologies. We are trying to survive and grow," he says. The Japanese, he admits, will be no different from Sandoz. Generous, co-operative -- potentially predatory.
Subtle evidence of that exists a stone's throw from Cytel's building in the same sun-bleached and lavishly landscaped industrial park, which is also home to an outfit called Gemini Science Inc. Gemini was established by Kirin Brewery Co. with the aim of putting its expertise in fermentation technology to work in the field of biotech. "This allows Kirin to establish a presence in the United States. This will be its eyes and ears over here," says Kranzler. Outposts like this one are cropping up around the country, most notably in university settings, where the Japanese exchange bricks, mortar, and test tubes for research generated by U.S. gray matter.
Kranzler doesn't see a threat in this. He notes that European companies have funded research in the United States for years. He adds: "Sandoz has a large asset base in the United States and no one complains. I don't think of them as a Swiss company. They're an international company. It serves us badly to be xenophobic. If you're xenophobic then you cut yourself out of the global marketplace. You can't compete."
Similarly, Kranzler believes companies that worry about losing their technology to larger partners have deeper concerns. "If you are so worried about losing your technology, then you're probably not going to survive anyway. The stronger players will continue to innovate. People look at this and say it's scary, but this is the way things have to move. Ultimately, industry has to go global. It will be healthy that some Japanese companies will be winners and some U.S. companies will be losers."
Jim Summerton is the founder of Antivirals Inc., in Corvallis, Ore., which is engaged in the design and development of gene-inactivating agents. He has worked in this field for 20 years. About 9 years ago, Summerton, like many a wide-eyed entrepreneur, went out looking for some good old U.S. venture capital. As a man of science and a would-be company builder, he came back disillusioned. "I must have talked to 50 venture capitalists," he recalls. "They don't give a damn about your technology. All they care about is who's on your management team. They want to know how many Harvard M.B.A.s you've got. I get the impression that most venture capitalists we talk to are mainly businessmen. They hire consultants to tell them what the technology is all about."
Summerton has since gone to money sources more comfortable with technology: Du Pont, the state of Oregon, and the National Institutes of Health. Now, he is talking to Mitsui & Co., which is trying to interest a number of its trading partners in Antivirals. He says the Japanese appreciation for technology runs deep. "Their high-level people across the board are technology people. They don't have M.B.A.s running the show. Mitsui has told me, 'We don't care about your management. We care about whether or not you've got the best technology and whether or not you've got a long-term future.' "
It wasn't so many years ago that Japan bashing was a favorite pastime in entrepreneurial and venture capital circles. Start-ups like Antivirals were in stiff competition with the Japanese. U.S. venture capitalists were throwing money at them. That sense of common cause crystallized in the hot IPO market of 1983 -- a market of unreal valuations that soon burned itself out, scorching plenty of investors in the process. The 1987 stock-market crash only worsened the climate for IPOs. That has left venture capitalists with no easy exit from technology companies, and they have been putting their money elsewhere.
One biotechnology company that didn't go public was San Diego's The Immune Response Corp., which had to postpone indefinitely its IPO for lack of institutional investor interest. The company has an AIDS vaccine in phase II clinical trials. The chairman of the company's scientific advisory committee, better known than Jim Summerton, is Jonas Salk, developer of the first polio vaccine. Jay Kranzler notes dryly, "You know where he's going to be going for his money."
A 1988 study by Electronic Trend Publications, in Saratoga, Calif., says that from 1986 to 1988, venture capitalists have reduced the percentage of their funds invested in start-ups from 23% to 7%. Moreover, in the deals they do fund, U.S. venture capitalists drive a harder bargain. They ask for a fatter slice of the company. They pull the plug sooner when the deal sours. When entrepreneurs these days talk about U.S. venture capital they no longer rhapsodize about being in league with their U.S. financiers against the Japanese. They quietly curse venture capital's fickle, impatient nature. They call it "hot" money.
Reid Dennis, a senior partner at Institutional Venture Partners, in Menlo Park, Calif., hardly implies hot money. A gray-haired man in bow tie and tortoiseshell-rimmed glasses, he conveys a kindly, avuncular mien. The hushed ambience of his tasteful, well-appointed office also suggests a success that has not come overnight, will not disappear tomorrow. It thus comes as a bit of a jolt when Dennis announces: "There's going to be a shakeout in this industry. The performance figures are abysmal. It's amazing to me that investors are still willing to invest with venture capital firms."
Dennis attributes much of the dismal performance to sheer numbers. Too many inexperienced people getting into the business. Too much money being flung at too many deals. Now, he admits the pendulum has swung. "There are not as many interesting opportunities. There's intense competition for virtually every good deal." He adds, "We are somewhat priced out of the later rounds [by the Japanese]. We can still play, but it's not as economically attractive."
Nonetheless, Dennis says he does not feel threatened by increased Japanese entry into the venture field. In fact, he welcomes their presence. There is, in fact, good reason for that. A venture capitalist's early-round stake can suddenly get a boost when a Japanese investor buys in at a much higher price later on. The venture capitalist rides the valuation wave. In so doing, a subtler reality arises. Not only entrepreneurs but venture capitalists have succumbed to the lure of Japanese capital.
Over the past two years, Kubota paid $6 million for 9.2% of Exabyte, a computer peripheral company that Reid Dennis's partnership had funded early on. In its most recent round, Kubota paid eight times more per share than Dennis and the other early investors had. After some lean years in high tech, that looked pretty good. Says Dennis: "They were willing to pay a price that at the time looked astronomical."
Dennis describes this deal as "win-win." Kubota gets an important new product. Exabyte gets manufacturing muscle. Dennis and his firm get a nice payoff. But then in the next breath Dennis expresses an entirely different sentiment -- worry for the start-up he has nurtured and now must offer up to well-heeled suitor: "Kubota is so big. When a flea sleeps with an elephant, it's awfully easy to get rolled on."
Dave Pidwell is an engineer who knew he wanted patient, rather than hot, money for his fledgling software company, Rasna, after he ran through his first round of financing -- $5 million from U.S. venture capitalists. Says Pidwell: "I chose to bypass venture capital. Corporate partners are willing to pay more and make decisions more quickly."
Pidwell made a list of 12 Japanese companies he considered "ideal" investors. "I then went over and met with every one of them. Within a month I had a handshake with Kubota." Three months after that Pidwell sold 15% of Rasna to Kubota for $10 million. In America he never could have gotten so much money while giving up so little of his company -- a company that will not produce its first product until this March.
In making this deal, Pidwell wanted more than access to foreign markets. He wanted a partnership with a company whose long-term objectives jibed with his. He was looking for a corporate partner that shared his values. Rasna develops sophisticated mechanical engineering programs. Kubota clearly intends to remain a leader in engineering design and manufacturing. Rasna's software will be the heart and soul of that effort. "They received the right to use my technology under certain conditions," says Pidwell. "They don't receive ownership rights to the technology." Pidwell is now engaged in the same systematic search on the other side of the globe, looking for a large German company as a second strategic partner.
Dave Pidwell was an early employee at ROLM and a founder of Inmac, which today is a $250-million company. He is a software star, the very personification of what has made the Valley hum -- and what the Japanese most lack. When Pidwell speaks about the Japanese he sounds almost grateful that they have afforded him a chance to do his creative thing over a long period of time. "They clearly want their investment to be successful. They measure it not only in yen, but in access to technology. Kubota has a long-term business strategy to be a leader in mechanical automation. It's not a 2- or 5-year strategy. It's a 20-year strategy." He cites the example of Japanese automakers, a number of which Pidwell is currently talking to. "Through technology Toyota can bring a car from concept to market in three years. Right now it takes GM twice as long. What Toyota has done in the auto industry Kubota is trying to do in heavy off-road equipment." Using Rasna's software -- Pidwell's brains -- will make it all the more possible.
If hot money is what the entrepreneur finds in America these days, then patient money is what flows from across the Pacific.
Allen Michel, an associate professor of finance at Boston University and consultant to start-up companies, found patience incarnate in the form of Hitachi Ltd. It was working on a 50-year plan.
"At first I thought this was nuts. How can you possibly know what the world is going to look like in 50 years? But after I talked to one of their planners for half an hour I was convinced that I liked the idea." Michel says that Hitachi's approach is hypothetical: "They say, 'If our competitors develop a certain product, what do we do in response, and where does that put us 10 years down the road?' They look at the interaction and the reaction. They assess the competitive landscape."
Michel notes that in 1988 Hitachi had a return on equity of 7.1% and return on assets of 2.5%. This compares with IBM's 14.9% and 8.1%, respectively. He says that few U.S. investors would tolerate such low returns in exchange for the prospect of longer-term reward. In Japan, such modest numbers are the norm. This takes investor pressure off the large Japanese companies and allows them to make venturesome technology investments and thereby assure themselves a future.
In the United States there are opposite incentives. While large corporations have traditionally made minority investments in innovative start-up companies, they are often seen as sidelights to the business, not integral to its future. Says Reid Dennis: "These ventures are relegated too far down the line. They are run by somebody who's scared to death of making a mistake because he knows it could threaten his corporate career. On the other hand, if he does well he won't really be rewarded, because what he does is not part of the corporate charter."
Many large U.S. corporations these days are run by financial managers, not technologists. Moreover, they feel the heat from Wall Street to produce quarterly increases in profit -- and not make investments that take years to pay off. One notable exception, though, is U.S. pharmaceutical companies, which have not only made considerable investments in R&D but have taken minority stakes in small biotech companies.
Nonetheless, the persistent pressure for short-term financial return threatens a deadly downward spiral. Money has moved away from technology investments. But technology investments such as Rasna are integral to manufacturing. Notes Allen Michel: "We in America now pride ourselves on being a superservice economy. That's all well and good, but the value of the dollar depends primarily on the imports and exports of manufactured goods. Services don't transport well; they don't help the trade balance. I don't see us over the next five years turning into a banana republic, but our trade balance will be more and more negative. We will end up with a dollar of lower and lower value."
It is that threat of decline -- in the currency, in the manufacturing base, in the U.S. standard of living -- that worries Tom Longo, CEO of Performance Semiconductor Corp., in Sunnyvale, Calif. In the past two years Asian investors have approached his company four different times. In each case they offered Longo large-scale top-notch manufacturing capability in Asia in return for access to his technology. In each case Longo steadfastly refused.
"What we need in this country is a good, stable, manufacturing-engineering environment," Longo asserts. He believes that technology deals with the Japanese and other Asian countries inevitably lead to the loss of U.S. manufacturing capability, the sapping of the economy's sinew. He believes it is delusionary for Americans to think they can constantly stay ahead of the Japanese in technology simply through innovation, while allowing manufacturing to be done increasingly overseas. Eventually the Japanese pick up on and adapt our innovations to their manufacturing muscle. Says Longo: "We are in an economic war, and the standard of living of people in this country is at stake. I've got to tell you, there's so little awareness of the problem."
Tom Longo is a heavy-set, slightly sad-eyed man, an old technology war horse. He is a former board member of and chip supplier to Cray Research Inc. (In fact, Seymour Cray was an early investor in Longo's company.) Sitting in his Spartan boardroom, the man looks tired. His building looks tired. It is probably not more than 15 years old, but fraying a bit at the edges. It seems functional in contrast to the gleaming new edifices you see around Silicon Valley with their polished stone, the fancy modern art on the walls, the offshore money in their coffers. Longo's building looks as though every last cent has been poured into production.
Longo insists there is historical precedent for his fears. He cites Fujitsu Ltd.'s purchase of 46% of Amdahl Corp., starting in 1972, enabling Fujitsu to establish a beachhead in this country and to challenge IBM in Japan. He cites the high-performance CMOS SRAM chip market, which his company, Integrated Device Technology, and Cypress Semiconductor pioneered. When large U.S. chip makers couldn't crack this market on their own, they simply marketed chips churned out in Japan at a low price. Says Longo: "There's not a lot of patriotism in our