"Let's make radios," Ibuka replied.
"As long as we're going to produce transistors, let's make them for a product that anyone can afford to buy. Otherwise we'll be wasting our time. What I have in mind is a radio. Let's work on a transistor radio from the beginning, regardless of any difficulties we may face," stressed Ibuka. At that time even in the U.S. the only transistors available were low-frequency ones which could best be used in hearing aids or similar types of items. Ibuka's idea was a bold one, but he was full of confidence. "I am sure that we can produce transistors for radios." Fired by Ibuka's confidence, the Totsuko engineering staff accepted the challenge.
For these engineers, the greater the challenge, the greater their reward. Still some at Totsuko were anxious and questioned the merit of risking the future of the company on the unproven transistor.
Outsiders were even more skeptical. In fact, a majority thought that it would be an impossible venture for a small company like Totsuko to make a transistor radio, which even American companies could not produce. NHK's Shigeo Shima felt the same way.
"We are going to produce transistors at our company. We'll make radios with them," Ibuka said to Shima proudly. "Transistor radios? Are you sure? Even in the U.S. transistors are used only for defense purposes where money is no object. Even if you come out with a consumer product using transistors, who can afford to buy a machine with such expensive devices?" Shima warned Ibuka out of genuine concern for his old friend. "That's what people think. It is true that the production yield of transistors is very low at this stage, 5% at most even in the U.S. People are saying that transistors won't be commercially viable. But I disagree. This will make an interesting business all the more because yield is low, for we can always improve production yield," Ibuka reasoned somewhat vehemently. Shima was convinced, but when Ibuka went to MITI again, they were not.
"Actually, we have already obtained a license from Western Electric. So we earnestly ask for your approval." But MITI officials were incensed saying, "It's inexcusable that you signed a contract without our permission!" Totsuko had no choice and did what could be done under the circumstances while waiting for MITI's move. A transistor development task force was formed immediately with the most capable staff. Kazuo Iwama, general manager of tape recorder production, volunteered to head this team. Physicists Tetsuo Tsukamoto and Saburo Iwata, mechanical engineer Sukemi Akanabe, chemical expert Akio Amaya, electrical engineer Junichi Yasuda, and others from various fields joined together to work on the project with Iwama.
Before they could make a radio, they had to produce a high-frequency transistor. But Totsuko had virtually no research material to go on, let alone production know-how. The only reference book that was available was Transistor Technology (regarded as the 'transistor bible'), which Morita had brought back from the United States. With this book in hand, Iwama and his team began their research.
Toward the end of 1953, MITI had a shakeup of its personnel in charge of the electronics industry. As a result, things took a sudden turn in favor of Totsuko, and the prospect of obtaining MITI's approval for transistor production brightened. At the beginning of January 1954, Iwama went to the U.S. to learn about transistors. Later that month Ibuka joined him and visited Western Electric's transistor plant with him. This gave Totsuko the foundation it needed to work on the transistor.