Company News

M.I.T., Pressed by U.S., Won't Buy Computer

By David E. Sanger
The New York Times

November 6, 1987

The Massachusetts Institute of Technology said yesterday that it was canceling plans to buy a multimillion-dollar supercomputer after Federal officials strongly objected to the prospect that the university might buy Japanese technology.

''It became clear that important elements of the Federal Government would prefer to see M.I.T. acquire a supercomputer based on U.S. technology,'' M.I.T.'s provost, John Deutch, said yesterday, The university complied because Federal agencies would effectively be paying for the computer by providing funds for research projects.

Legal Action Threatened

In an interview last night, Professor Deutch said the university's decision to abandon its plans came after the Commerce Department threatened litigation, accusing Japan of trying to dump the supercomputer -sell it at unfairly low prices - in order to break into the United States market.

Technologically, the Japanese bids were ''very competitive,'' Profesor Deutch said. The entire purchase had to be scuttled, he said, after the Japanese proposals were excluded because ''I decided that there was no longer a level playing field'' among the bidders.

Professor Deutch said that, in place of the supercomputer acquisition, M.I.T. was considering a plan to build a linked supercomputer center involving the university, industrial partners and the National Science Foundation, which already supports five supercomputer centers around the country.

A Time of Conflict

M.I.T. officials said they hoped that project could begin in about a year.

The university's action comes at a time of tremendous conflict between the United States and Japan over supercomputer technology.

Reagan Administration officials charged early this year that the Japanese Government had systematically barred American supercomputer makers from selling to its agencies.

Although the two countries reached an uneasy truce on the issue in August, Federal officials have been reluctant to help Japan's entry into the hotly competitive American supercomputer market until companies like Cray Research Inc. and the Control Data Corporation have substantial footholds in Japan.

Defense Department officials have also expressed grave concerns that the United States might be losing its lead in supercomputing technology, which is at the core of weapons design, code-breaking and aircraft and ship engineering.

Thus, M.I.T.'s status as one of the nation's premier computer research centers placed its selection under particular scrutiny.

The university planned to use its machine for basic research in physics and engineering, and to support unclassified research at Lincoln Laboratories, a research center financed by the Pentagon that M.I.T. has operated since World War II.

'A Genuine Concern'

Professor Deutch said last night that, with the exception of the Commerce Department's threat of litigation, he did not believe that the objections voiced by American officials constituted ''improper pressure.''

''They conveyed a genuine concern that it was not good for the image of the United States to buy Japanese technology in this area,'' the provost said. ''There are many people on this campus, though not all, who share that view.''

When M.I.T. first announced its intention to acquire a supercomputer, it indicated that it was willing to pay $1.5 million to $2 million a year, for five years or more, to any company that could provide the right computer. Supercomputers can cost $10 million to $15 million.

5 Companies Responded

Three American companies responded to M.I.T.'s call: the ETA Systems subsidiary of the Control Data Corporation; Cray, which based its proposal on its fastest Cray 2 supercomputer, and the International Business Machines Corporation, which offered a souped-up version of its 3090 mainframe, which is, technically speaking, not a supercomputer.

Two companies jointly owned by American and Japanese entities also bid. One was Honeywell-NEC Supercomputers Inc., which offered an NEC supercomputer, and the other was the Amdahl Corporation, which is half-owned by the Fujitsu Corporation and which offered a Fujitsu SX-2 supercomputer.

Mr. Deutch said that, as the bids were being solicited, he talked to a number of Government officials, whom he would not name, about what their reaction would be if one of the Japanese firms won. Among the agencies consulted, according to several M.I.T. officials, were the Defense Department and the National Science Foundation.

Letter From U.S. Official

After hearing their objections, an M.I.T. panel decided to exclude the Japanese bids. Then, three weeks ago - before the decision was announced - Paul Gray, M.I.T.'s president, received a letter from S. Bruce Smart Jr., then Acting Secretary of Commerce.

Mr. Smart, now Under Secretary of Commerce for International Trade, said ''We have no objection to the acquisition of a foreign-produced computer.'' He added, though, that ''you should be aware that imported products may be subject to U.S. anti-dumping proceedings'' that could raise the price of the Japanese-made equipment.

Telephone calls to Mr. Smart's office and his spokesman were not answered last night.

Soon after Mr. Smart's letter was received, M.I.T. officials said, the two Japanese companies withdrew their proposals. One of the companies, Mr. Deutch said, indicated that it withdrew under pressure from the Japanese Government, which apparently received complaints from American officials about the bids.

Copyright 1987 The New York Times Company