The vulnerability of America’s technology superiority has already raised concern. But, is it due to just China’s IP infringement? Or, is there a systematic pattern of erosion of America’s edge? The first industrial revolution was led by the British and followed by the rest of Europe. subsequently, the USA started establishing its technology edge at the dawn of the 2nd industrial revolution. America’s forerunner roles in the invention of the light bulb, the airplane, electricity production and distribution network, internal combustion engine-based automobiles, and production line are notables. Furthermore, the two world wars gave a strong technology footing in key technologies like microwave, radio communication, and jet engines.
The invention of the Transistor in 1947 by the Bell labs consolidated America’s role in the emerging information technology revolution—giving birth to the 3rd industrial revolution. Despite such a success, during the 3rd industrial revolution, Japanese Sony demonstrated a model to destroy America’s supremacy through peacetime effort. Perfection and replication of this model by other Japanese companies, and lately by Chinese, is showing the high-level vulnerability of America’s technological superiority. Here are a few examples to draw a lesson.
Sony’s Radio, TV, and Digital Camera
America’s RCA was at the forefront in the invention and rolling out the radio and TV Innovation in the market. While the dust of destruction of Tokyo, Nagasaki, and Hiroshima just started settling, two former Imperial Navy employees Mr. Masaru Ibuka and Mr. Akio Morita, together with a small team of a passionate and committed group of employees, started to build Sony, in 1946. The journey began as a radio repair shop in the bombed-out Shirokiya Department Store in Nihonbashi, Tokyo.
Soon after, in 1947, America’s Bell laboratory invented Transistor. It’s a solid-state device to replace vacuum tubes in electronics products. Those two former research committee members of the Imperial Navy got intrigued with this invention. Hence, they moved quickly to take its production license from Bell Labs in 1952. While American companies were busy using the newly invented component for defense purposes, the wartime agreement forced Sony’s founders to focus on civilian innovations. So, they targeted to innovate pocket radio by replacing vacuum tubes with transistors. But at that time, Transistor was noisy and could handle little power. Hence, Sony embarked on vagarious research to improve, leading to continued quality improvement and cost reduction. Subsequently, Sony Transistor radio started taking over the market of America’s RCA and other radio makers. Eventually, many of them could not withstand the invasion of Sony’s innovation.
In addition to applying the same model of causing disruption to incumbent firms in TV, Sony pursued a similar strategy to attack Kodak’s camera business’s dominance. Again, Sony took the license of the raw image sensor technology from Bells, nurtured it, and released innovations to make Kodak bankrupt. Sony’s such successes are not out of luck or accident. There is a repeatable pattern.
Nichia’s LED light bulb replicated Sony’s model of disrupting incumbents
Nichia is a Japanese company. It emerged as a small chemical company in 1956. In the 1970s, Nichia attempted to enter into the lighting business. Hence, it followed the path of Sony. It pursued the strategy to change the energy-hungry technology core of light bulbs–with a light-emitting diode (LED) for creating the entry. But the LED had a major limitation to producing bright, white light. The problem was with the blue LED. Hence, like Sony, Nichia embarked on a refinement journey, leading to a Nobel Prize-winning discovery. Consequentially, Nichia succeeded in inventing a perfectly white LED light bulb. This invention has led to Nichia’s emergence as the world’s best LED chip maker while marginalizing America’s GE’s lighting business. Like RCA or Kodak, GE was a pioneer in the electric lighting business. Its founder, Thomas Alpha Edison, invented the electric light bulb.
Lithium-ion battery further underscores the vulnerability of America’s technology superiority
To power the portable video camera, Sony badly needed a high-energy-density battery. In 1985, Akira Yoshino assembled a prototype cell using carbonaceous material into which lithium ions could be inserted as one electrode and lithium cobalt oxide as the other. This development gave birth to a commercially usable lithium-ion battery. Subsequently, Sony and Asahi Kasei released the first commercial lithium-ion battery in 1991.
At the beginning, it was just an auxiliary device. But the continued refinement for meeting the energy density need for smartphones at an affordable price has led opened a new opportunity. The lithium-ion battery has now become a target to change the gasoline technology core of automobiles. Economically, lithium-ion battery-based energy storage is also becoming a feasible option for storing energy. It will be dealing with intermittent renewable energy sources. As a result, the lithium-ion battery technology core has been showing the potential to change the technology core of the way we produce and use energy. It’s will likely cause disruptive effects in major industries such as automobiles, energy production and consumption, and petroleum. Hence, like the past, `the Fourth Industrial Revolution will likely kick start by changing the energy technology core.
As opposed to following up American technology, Japanese firms like Panasonic and Toyota have developed intellectual property edge in this critical technology. On the other hand, in addition to acquiring an intellectual property edge, China has taken control of deposits and the refinement facilities of raw materials for making a lithium-ion battery. Recent data indicates that China controls the world’s 80% raw material refining, 77% cell capacity, and 60% component manufacturing.
Mobile communication and 5G
In the age of the fourth industrial revolution, low latency wireless communication is critical for ensuring real-time communication between physical devices. These devices range from automobiles to industrial robots, commonly known as the internet of things (IoTs). As opposed to catching up with American and European technologies, China has established a leadership role in the new technology core—5G. China’s Huawei has the highest number of 5G patents. China’s leadership role will likely cause disruption to the wireless communication industry landscape.
AI and Intelligent Machines posing a further threat to the vulnerability of America’s technology superiority
Due to the availability of low cost and high performing software, wireless internet connectivity, and ease of developing software, both economic and technology feasibilities in adding AI features to machines have been increasing. In the course of supporting incremental features, AI has the possibility to grow as a major technology core. Although Microsoft and IBM have leadership positions in AI patent-holding, Japanese companies dominate the top 10 AI patent receiving. On the other hand, Chinese firms, universities, and R&D labs are dominating AI scientific publications.
Over the last 70 years, America got significant millage through military R&D-led commercial innovation capability development. In fact, it was articulated by Dr. Vannevar Bush’s report, commissioned by President Roosevelt. However, during the same period, Sony led Japanese companies demonstrated a different model. It is to cause disruption to high-performing firms by changing technology core out of emerging ones. In retrospect, gaining a leadership role being a follower appears to be a highly powerful strategy demonstrated by the Japanese. It seems that the Chinese Government and firms after scaling up this model of Japan. Hence, upon losing firms like Kodak, RCA, DEC, GE’s lighting division, and many more, the large-scale vulnerability of America’s technology superiority appears to be a real possibility.