Fujitsu and Hitachi are cutting back on DRAM production in their European plants in England and Germany respectively.
Job losses are to be avoided, however, by switching production to other devices.
The move follows massive price cuts needed to deplete the surplus stocks that started to form earlier this decade. For the past year, memory prices have been in freefall and the companies have now decided to cut their losses and cease production of 4Mb and 16Mb chips.
Fujitsu's plant in Newton Aycliffe, County Durham, was purely responsible for DRAM production, but the company has acted quickly to switch production to logic chips.
Len Davies, personnel director for Fujitsu in Durham, told PC Week: "Last October we started to produce logic chips on a trial basis and we are investing in new equipment which we expect to be on line by August. By 1999 we will be fully involved with producing logic chips and DRAM production will have ceased."
Peter Glaskowsky, senior analyst at chip market researcher MicroDesign Resources, commented: "The announcement hardly matters for a huge part of the market which is shy of applications that demand the smaller chips."
The changeover means that the Durham plant will be working more closely with Fujitsu's logic chip design centre in Germany. DRAM production will be solely handled by the company's facility in Japan which will ramp up production to ensure sufficient stocks are available for Fujitsu's customers.
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