Is US Memories DRAM Co-op in Trouble?
 
Microbytes Daily News Service
Copyright (c) 1989, McGraw-Hill, Inc.
While undergoing Congressional scrutiny last week in antitrust
hearings on Capitol Hill, U.S. Memories hit snags that could
derail its plans. The consortium was proposed in June as a
cooperative venture to produce DRAM chips in the United States.
The group currently consists of IBM, Intel, Hewlett-Packard, DEC,
LSI Logic, Advanced Micro Devices, and National Semiconductor.
 
Just as testimony before the House Judiciary's Subcommittee on
Economic and Commercial Law was getting started, Apple Computer
announced it would not invest in the consortium because doing so
does not fit the company's current priorities. "We're not in the
business of selling semiconductors," an Apple spokesperson said.
"There's no benefit to our customers." Apple did say it still
plans to purchase DRAMs from the group.
 
U.S. Memories president Sanford Kane said Apple's decision was
not a major financial blow to the venture because several other
investors are expected to join the group within a few weeks. But,
he added, "it could be a political setback.
 
Meanwhile, T.J. Rodgers, president of SRAM-maker Cypress
Semiconductor and a vocal critic of the U.S. Memories concept,
sent a letter to IBM outlining an alternative to the consortium,
under which IBM would transfer its 4- and 16-megabit DRAM
technology to Cypress in exchange for royalties and a guaranteed
supply. Rodgers is opposed to U.S. Memories because he says it
could threaten small chip companies such as Cypress and favor
large players such as Intel. Rodgers claimed Cypress could make
DRAM chips as soon as June 1990, whereas U.S. Memories couldn't
start until 1991 at the earliest. IBM executive Jack Kuehler said
he would consider the Cypress proposal.
 
U.S. Memories will have to raise $1 billion and might have to
gain congressional exemption from antitrust laws in order to go
into business. In testimony before the subcommittee Thursday,
Kane said the consortium will not violate antitrust laws because
"none of the investors . . . now participates in the merchant
market for DRAMs." US firms now make only 10 percent of the DRAMs
used here, compared to 70 percent in 1977.
 
                              --- Andy Reinhardt
 
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