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MIT Cancels Plans to Buy Supercomputer

November 06, 1987|Associated Press

BOSTON — Massachusetts Institute of Technology said Thursday that it has canceled plans to buy a supercomputer because of U.S. government concerns that Japanese bidders illegally offered to sell at unfairly low prices.

MIT Provost John Deutch said the school reacted to concerns raised by the Commerce Department, which has accused the Japanese of closing their home market to U.S. supercomputers while "dumping" their own supercomputers in the United States.

Dumping means selling below fair market value, which is either the cost in the company's home market or the cost of production plus a reasonable markup for profit.

Bidders, in addition to American manufacturers such as International Business Machines, Cray Research and Control Data, included Honeywell-NEC Supercomputers Inc., a joint venture of Honeywell Inc. and the Japanese computer company NEC Corp., and a joint venture of Amdahl Corp. and the Japanese company Fujitsu Ltd.

Though bidders declined to provide the amount of their bids, supercomputers sell for roughly $15 million, depending on configuration.

Commerce Department spokeswoman Desiree Tucker said federal officials sent MIT President Paul Gray a letter Oct. 13, informing Gray that officials were aware the university was considering bids for a supercomputer.

"We have no objection to the acquisition of a foreign-produced supercomputer," the letter said, but it added information about litigation the Commerce Department could use if price dumping by any of the bidders was involved.

"We explained to them that we do enforce trade laws, and explained what our responsibilities under the law are," Tucker said.

She added that the department was unaware of any dumping by the bidders.

Deutch said the Commerce Department "threatened litigation" against companies allegedly bidding at dumping levels.

"In the course of the bidding process, it became clear that important elements of the federal government would like to see MIT acquire a supercomputer based on U.S. technology," Deutch said. "The federal government provides research grants to MIT, and the views of the federal government had to be seriously assessed by us.

"It was concluded that MIT, at this time, should not acquire a supercomputer based on Japanese technology."

Gregory Kosinski, a spokesman for Dataquest Inc., a San Jose-based market researcher, said the MIT case could slow Japanese efforts to break into the $1.3-billion U.S. supercomputer market and other U.S. markets.

"There's some emotion involved here," Kosinski said. "I think the Commerce Department is trying to take a stand somewhere. Supercomputers are involved in national defense, and they represent national pride. There's quality of technology involved here, and two countries that definitely want to beat out each other in quality are the United States and Japan."

Samuel Adams, a spokesman for Honeywell-NEC, said his company's business often is scuttled by U.S. government officials overly concerned about the U.S. trade deficit with Japan.

"It seems to be the government wants to solve problems on a product-by-product basis," Adams said. "We'll allow current negotiations to run their course. When we think the two governments have reached a level of understanding, suddenly we'll be back into the world where we can sell price-performance.

"All we're looking for as a U.S. company selling Japanese products is to be able to compete on a level playing field."

Instead of going ahead with an immediate supercomputer purchase, Deutch said MIT is now studying establishing a supercomputer center.

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