Toshiba castaways its DRAM unit

Once the world's largest DRAM producer, Toshiba is now desperately trying to sell its DRAM memory chip unit. After approaching Germany's Infineon, Toshiba has reportedly offered the unit to arch rival Samsung Electronics of South Korea.


Samsung is already the world's largest DRAM producer. The company said it had received the unsolicited take-over offer from Toshiba. "As far as I know, Toshiba is contacting several ranking DRAM makers around the globe," said Kevin Jeong, Spokesman, Samsung.

Toshiba is also talking with NEC and Elpida, the 50-50 joint venture between NEC and Hitachi about combining its DRAM operations with theirs.

"Desperate times call for desperate measures," noted one chip industry observer who noted that the Toshiba move indicates sharply how bad things have become in the DRAM business. "With each down turn a few major players give up. Last time (1996) it was Texas Instruments. This time it is Toshiba."

The memory chip market has absorbed the bulk of the downturn in chip sales hurt by slowing sales of computers and telecom equipment.

Some analysts said Samsung would not be interested in Toshiba's DRAM business, but may want to make a bid for its NAND flash memory operations, and area Samsung has been looking to expand. In the process of negotiations, however, taking some of Toshiba's DRAM facilities may be unavoidable.

Intel and AMD are the largest flash memory chipmakers with a combined market share of almost 40 percent. Samsung accounts for a mere 3.7 percent of the flash memory chip market, while Toshiba holds an 8.4 percent market share. Samsung licenses NAND flash memory technology from Toshiba, 

Lays off 19,000 workers

Facing a loss for the year of nearly $1 billion, Toshiba is laying of nearly 19,000 workers, primarily in the embattled semiconductor sector to make its chip units more attractive. Almost all of the affected jobs are at Toshiba factories in Japan.

Last week Fujitsu announced it was cutting 16,000 positions, but only 5,000 are in Japan.

As part of a major restructuring, Toshiba said six of its 21 fabs will be closed. ''With this action plan, we want to regenerate the company'', Tadashi Okamura, President, Toshiba, told a news conference.

Toshiba may be getting out of the DRAM memory chip business where prices have plunged 90 percent. ''This is one business that has gotten away from economic principles,'' Okamura said.

There are reports Toshiba is talking with Germany's Infineon about combining their respective memory-chip operations.

Toshiba and Infineon currently have a joint memory chip development project and Infineon's parent, Siemens is working with Toshiba to develop next-generation mobile phones.