Search

Article Information


Capital Financing Strategies of the Japanese Semiconductor Industry
Rappa, Michael A.
27/2  (Winter 1985): 85-99

In 1980, the Semiconductor Industry Association (SIA) published a study prepared by Chase Financial Policy. The Chase study has become an important aspect of SIA lobbying efforts in the U.S. Congress. The study is a detailed examination of the capital financing characteristics of the U.S. and Japanese semiconductor industries. Estimates are made of the cost of capital and rate of return on investment for each country's principal semiconductor manufacturers. The basic findings of the study are: The Japanese semiconductor companies' size and diversity provide them with a financial advantage over most U.S. semiconductor companies. Japanese semiconductor companies employ significantly higher debt leverage than U.S. semiconductor companies. Japanese semiconductor companies are able to employ high leverage ratios because of their affiliation with large industrial groups, Japanese lending practices and a supportive government policy. The rates of return on capital of the U.S. semiconductor companies have been higher than the rates of return of the Japanese semiconductor companies.

 

California Management Review

Berkeley-Haas's Premier Management Journal

Published at the University of California for more than sixty years, California Management Review seeks to share knowledge that challenges convention and shows a better way of doing business.

Learn more
Follow Us