IBM is rapidly retreating from the volatile Dram manufacturing market and has ended a joint venture with Toshiba.
Toshiba will buy Big Blue's 50 per cent stake in US fab company, Dominion Semiconductor, in a transaction that is scheduled to close by December next year. It is believed to have paid between $200-350 million for the stake.
Although IBM will maintain some Dram design and production operations in locations worldwide, a spokesman said the deal was part of Big Blue's strategy to exit the low margin, commodity Dram market. But it still intends to continue its research in the field and will license the resultant technology to existing players.
The spokesman said that since John Kelly was appointed head of IBM Microelectronics in March, the firm's emphasis had moved away from Drams towards Asics. Lou Gertsner, IBM's chief executive, also underlined plans to exit the market at an analysts' meeting in May.
But today's agreement is not IBM's first move to pare down its Dram business. Earlier this year, IBM and Siemens Microelectronics (now known as Infineon Technologies) ceased Dram production and started making logic chips.
Dram prices have dropped from $7 to $4 for a 64 Mb chip in the last three months, and the volatility of the market caused Texas Instruments to end production in 1998, selling the business to Micron Technology, the world's number two producer of such chips after Korea's Samsung.
Despite this, however, Toshiba was very upbeat about the move. "Securing a full-fledged manufacturing site in the US will allow Toshiba to realise stable production and a supply of products best suited to meet market demand, and will significantly strengthen the company's presence in one of the world's central markets," it said.
The firm plans to use Dominion for 128 Mbit Dram production and to establish a US production base for its Nand type flash products, which will be aimed at audio and other multimedia solid state storage.
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