Ali - Re: "And Motorola indeed makes very fast and high quality DRAMs in very slim packages. "
Put down your screwdriver and do some reading. For a self-proclaimed MASTER OF ALL THINGS TECHNICAL, you aren't keeping up with the industry - Motorola bailed out of DRAMS almot 6 months ago.
Paul
{===================================}
news.com
Motorola scraps DRAM
business
By Michael Kanellos
July 1, 1997, 12:45 p.m. PT
Following up on its promise to cut
underperforming business lines, Motorola
(MOT) said today that its Semiconductor
Product Sector would get out of the dynamic
random access memory market.
The move took few by surprise, given that
DRAM prices and profitability have been
dropping since the last quarter of 1995.
Motorola, moreover, was never a significant
player in the market.
Rather than struggle through tough pricing,
the company will shift its DRAM resources to
producing fast static random access memory
(FSRAM), electrically erasable
programmable read-only memory
(EEPROM), and logic chips.
The move comes against a backdrop of
plummeting prices in the DRAM market. Both
Japanese and Korean memory chip
manufacturers have been struggling to
maintain profitability in the face of downward
spiraling prices. (See related story)
The company will take a $170 million charge
against pretax earnings in the second
quarter, which just ended, to cover the
transition. Earnings for the quarter are
expected to come in around $594 million, or
57 cents a share, according to First Call.
This represents a 5.6 percent increase.
Motorola will announce earnings and revenue
on July 8.
"Motorola was making DRAMs to round out
their product portfolio. They had no
proprietary technology and little investment,"
said Jim Handy, an analyst with Dataquest.
"They don't need DRAM to succeed."
The transition will not take place overnight.
Motorola's DRAM production comes out of
two joint ventures with, respectively, Toshiba
and Siemens. Motorola will phase out their
own DRAM production at the plant co-owned
with Toshiba in Sendai, Japan, by the end of
the year and convert the resulting plant
capacity to make logic products next year.
Toshiba will continue to make DRAM chips at
the plant.
By contrast, the Motorola-Siemens joint
venture based in the White Oak
Semiconductor facility in Richmond, Virginia,
will actually only start to make DRAMs by
mid-1998, said Ken Phillips, a spokesperson
for Motorola. The plant is under construction,
he said, and will manufacture DRAM chips to
ramp up production. DRAM production will
continue until early 2000, when manufacturing
of fast memory chips will take over.
Brian Matas, a market research analyst at
Integrated Circuit Engineering, added that
further product streamlining is likely from the
Schaumburg, Illinois-based Motorola, a
process that could even affect the company's
commitment to the PowerPC multiprocessor.
"They might get out of some older [chip lines].
"They will probably place more emphasis on
microcontrollers, FSRAM, the digital signal
processor business, and [other specialized
chips]," he said.
The company suffered an 18 percent decline
in earnings and a 5 percent drop in sales in
the first quarter of this year as compared to
the same quarter the year before. Sales for
the semiconductor group were down 16
percent. |
