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Technology Stocks : Texas Instruments - Good buy now or should we wait? -- Ignore unavailable to you. Want to Upgrade?

To: pat mudge who wrote (3012)	2/9/1998 10:23:00 PM
From: DJBEINO	Respond to of 6180

TI (NYSE:TXN) seen easing from DRAM business-analysts *"That will someday create a shortage sometime beyond the second half of 1998 or next year," * Reuters, Monday, February 09, 1998 at 17:29 NEW YORK, Feb 9 (Reuters) - Texas Instruments Inc's plan to end its dynamic random access memory (DRAM) joint venture with Hitachi Ltd Inc (TOKYO:6501) may signal the start of Texas Instruments' withdrawal from that area of the computer memory business, analysts said. "My guess is that they will begin to extricate themselves from the DRAM business, and dissolving this joint venture is a step in that direction," said James Barlage of Smith Barney. Hitachi and TI said earlier they would discontinue and dissolve the venture, Twinstar Semiconductor Inc, in the first quarter due to "severe financial pressures" on the project. Although DRAM prices have recently stabilized, prices had fallen by about 80 percent in each of the past two years, forced down by tight market conditions, excess inventories and new manufacturing capacity. TI said it will form a new subsidiary that will buy the Richardson, Texas-based Twinstar's assets, including its advanced manufacturing facility and workforce. TI and Hitachi each hold a 36.46 percent stake in Twinstar, a $500 million project that produces about three million chips per month. "This (dissolution) is not surprising in light of the rather clear signal that TI has been sending to investors and analysts in the last year that it wants to de-emphasize its involvement in the DRAM business," said Drew Peck of Cowen & Co. "At their last analyst meeting, they spent six hours talking without ever mentioning DRAMs," he said. "It's clear that the company does not intend to be in the DRAM business long term and that they don't want to be perceived as DRAM manufacturers in the short term." In May 1997, Texas Instruments terminated a DRAM joint venture agreement with Alpha Memory Co Ltd in Thailand, due to difficult economic conditions that affected the Thailand-based partner who held a majority stake. One analyst noted that Texas Instruments has indicated it will seek growth opportunities in the production of Digital Signal Processor (DSP) products, and that the company can, in time, make those product at the Texas facility. "You have (there) a facility that is capable of producing anything that TI wants," he said. "They are now in a position to move that total facility out of DRAM if they choose to." Peck warned that the company could not soon exit the business entirely due to the scale of its remaining deals. They include TI-Acer, a joint venture with Acer Inc (TW:2306) of Taiwan; a plant in Japan that it owns jointly with Kobe Steel (TOKYO:5406); and a Singapore-based facility owned with Canon Inc (TOKYO:7751), Hewlett-Packard Co (NYSE:HWP) and the Singapore Economic Development Board. TI also has a wholly-owned DRAM plant in Italy. Barlage suggested that TI may yet score profits with its remaining DRAM businesses. He noted that while the Asian currency crisis has reduced capital spending for DRAM plants in Taiwan, Korea and other southeast Asian counties, demand is still strong. "That will someday create a shortage sometime beyond the second half of 1998 or next year," he said. "DRAM might not be a bad place to be if you look out over the next year or two." Copyright 1998, Reuters News Service