The big thing that caused all the differential was scan lithography vs step-and-repeat lithography.
The US companies made a bet that step-and-repeat was the future of photolithography. They were entirely correct, but it took longer than expected to make it work well and bring the cost down.
However, in the meantime, the Japanese continued refining scan photolithography and absolutely slaughtered the US companies on production cost.
Eventually, scan lithography ran out of gas and the situation reversed--the US companies were similar production cost and could produce chips that the Japanese couldn't even try without retooling everything.
Pleased to see Asianomentry on HN. Fantastic YouTube channel. All of his content is well made and fascinating. I would recommend starting with “The Amazing Silicon Wafer”: https://youtu.be/sIRfWyyOFPg
Brings back memories of the 1000's of Japanese made IC's I've seen in my life. Nec (uPD...), Toshiba (TC...), Mitsubishi, Hitachi, Fujitsu, Sony custom IC's, Yamaha sound & video chips, OKI, Ricoh, Sharp & others.
Come to think of it, most simpler IC's (voltage regulators, 74LS logic, opamps etc) back in the day was US (TI) or even EU made (Philips, ST).
Especially Nec had extensive databooks (late 70s/early 80s) with everything from CPUs (including V20, V30, or 2nd source like Z80), various types of memory, peripherals like LCD controllers, that famous 765 floppy controller, 4-bit microcontrollers, early DSPs (7720 family), etc, etc.
The US companies made a bet that step-and-repeat was the future of photolithography. They were entirely correct, but it took longer than expected to make it work well and bring the cost down.
However, in the meantime, the Japanese continued refining scan photolithography and absolutely slaughtered the US companies on production cost.
Eventually, scan lithography ran out of gas and the situation reversed--the US companies were similar production cost and could produce chips that the Japanese couldn't even try without retooling everything.