Alarm bells ring for DRAM firms

Alarm bells ring for DRAM firms
David Manners Texas Instruments (TI) has exited the DRAM business and intends to shed 3,500 jobs. Hitachi has denied Japanese press reports that it will pull out of the DRAM market. It is crunch-time for the semiconductor industry. TI has exited the market after coming to an agreement with US firm Micron Technology. TI is to give Micron a $750m loan and get $950m worth of Micron shares. Micron will assume $190m of TI debt. Micron takes over TI’s Italian fab in Avezzano and TI’s 25 per cent share in two DRAM joint ventures: TECH Semiconductor – the Singapore fab shared with Canon, HP and the Singapore Economic Development Board; and KTI – the Japanese fab shared with Kobe Steel. Micron takes on TI’s rights to all the output of TECH and KTI. These facilities should add TI’s six per cent share of the world DRAM market to Micron’s 11 per cent. Micron acquires the TwinStar DRAM fab in Texas, which TI shared with Hitachi. Micron intends to close it down with a loss of 600 jobs. With the disposals and the restructuring, TI will reduce its headcount by 8,000. TI will take a charge for the restructuring in Q2 which could result in a ‘material’ loss. “It’s long overdue from TI’s point of view,” commented Richard Gordon, Dataquest’s memory analyst. “TI have got rid of a problem.” Hitachi, meanwhile, has denied reports in Japan’s financial newspaper Nihon Keizai Shimbun that it will pull out of DRAMs. “We have said we are shifting the focus of the business away from memory towards logic and microprocessors,” a Tokyo spokesman told EW. “That doesn’t mean we’re exiting DRAM like TI.” The DRAM market has shrunk from $40bn in 1995 to an expected $14.5bn this year. From representing 25 per cent of the world semiconductor market in 1995, DRAM currently represents 10 per cent. However, DRAM unit shipments have doubled every year since 1995. TI’s announcement comes shortly after Motorola announced 15,000 job losses, Intel announced 3,000 and National Semiconductor announced 1,400.


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