TOKYO - Japan may freeze spending on supercomputers, dealing a blow to a crippled sector and threatening brain drain in a country that prides itself on technological prowess.

A government panel set up to unearth wasteful spending recommended all but wiping out a 27 billion yen ($300 million) budget to build the world's fastest supercomputer at state-affiliated Institute of Physical and Chemical Research (Riken).

The move could spell the end to a series of failed bids by Japan to leapfrog U.S. dominance in computing, including the ill-fated, 50 billion yen Fifth Generation Computer Systems project which became obsolete in 1992 without meeting its goals.

Riken's supercomputer, developed with Fujitsu Ltd, is designed to analyse complex patterns such as wind and air currents and climate change and help nanotechnology research.

But members of the Government Revitalisation Unit questioned spending on a project that has already cost 54.5 billion yen and is likely to require another 70 billion.

Does Japan need to be No.1 in this? one member said at an open hearing to examine public science and technology programmes. Japan will not become second-rate just because we don't have this, said another.

Japan, trying to cope with snowballing debt, has fallen far behind in supercomputer spending compared with the United States.

While Hewlett-Packard and IBM now dominate the sector, a lack of public funds has forced NEC and Hitachi to pull out, leaving Fujitsu as the sole Japanese supercomputer developer.

Supercomputers are custom-built systems that run at high speeds, allowing scientific research.

The Next-Generation Supercomputer Project is an important part of Japan's scientific infrastructure, said Riken official Masaharu Shiozaki, adding he planned to continue to promote the supercomputer program. Companies and universities depend on it.

Insufficient funds and infrastructure could exacerbate an ongoing exodus of top researchers from Japan, drawn by grants and research opportunities not just in the United States but also in Singapore and China, scientists have said.

You hear of whole teams of researchers leaving, said an executive director at another public research institution, who asked not to be named after having one set of grants for next-generation research cut by more than 60 percent. Japan's scientific community is hollowing out.

The number of supercomputers made by Japanese firms peaked in the early 1990s at well over 100 machines. Today, of the world's 500 most powerful supercomputers, Fujitsu was the vendor of just three machines, while NEC supplied three and Hitachi two.

Hewlett Packard supplied 212, IBM had 188, Cray and Silicon Graphics International each had 20 and Dell supplied 14. (Reporting by Mayumi Negishi; Editing by Dan Lalor) ($1 = 90.12 yen)

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