[CamperBob2]

It took a lot of US government funding through VHSIC and the VLSI Project to prevent semiconductors from collapsing completely.

What are some specific examples? I don't remember anything like that happening. Japan had Hitachi and Matsushita and Toshiba, but we had Motorola and Intel and NatSemi and TI and countless other dominant players. There was plenty of room in the market for both.

[bsder]

Please remember that the only thing which had any real volume in that time (1985 and prior) period was dynamic RAM. DRAM drove semiconductor process development until microprocessors eventually took over as defining the process capabilities (about 1990-ish).

The US DRAM manufacturers got absolutely destroyed by the Japanese ones. So much so that getting out of DRAM was an existential crisis moment for Intel.

One big point of the crux was scan lithography vs step and repeat lithography. You needed step and repeat lithography to get to the next level, but it was way more complicated than scan lithography. The US companies made the jump--the Japanese ones didn't. The Japanese companies clobbered the US companies in terms of profitability and production.

This is part of the origin of "never be first" in the semiconductor industry.

The US government then stepped in and pumped a massive amount of money behind semiconductor tech to stabilize that. Of course, once step and repeat (and some other related technologies) went online, the Japanese DRAM companies now got slaughtered and basically driven out of business.

Things don't always "just work out" and sometimes the game really does create "winners and losers".