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To: Chas who wrote (29546)	3/5/1998 9:40:00 PM
From: Richard Russell	Read Replies (1) \| Respond to of 53903

A service of Semiconductor Business News, CMP Media Inc. Story posted at 4:30 p.m. EST/1:30 a.m. PST, 3/5/98 TI still looks for DRAM solution By J. Robert Lineback DALLAS--Texas Instruments Inc. has not yet given up on the DRAM business but it is finding it harder to tolerate the current round of losses and the unpredictable nature of the memory business, said TI president and CEO Thomas J. (Tom) Engibous during an annual briefing here today for financial analysts and the media. On Wednesday, TI and its original DRAM joint-venture partner, the Acer Group in Taiwan, announced an agreement to end their collaboration in DRAM manufacturing. Under the agreement, Acer intends to acquire TI's 33% stake in their Taiwan venture and will use the operation to pursue silicon foundry services (see March 4 story). The announcement has increased speculation that TI is planning to eventually exist the DRAM business after failing to bring stability to its much celebrated joint-venture model. In the early 1990s, TI pursued the joint-venture strategy to insulate itself from the volatile nature of the commodity DRAMs while it focused more resources to grow higher value products, such as digital signal processing (DSP). Fielding questions from analysts, Engibous admitted that TI's top management continues to struggle with the solution. When asked what it would take for TI to finally decide that it could no longer tolerate DRAM losses, Engibous refused to comment, saying it was TI's policy to not talk about exiting or acquiring businesses. However, it's clear that TI is not yet willing to say it is giving up. "Over the [entire DRAM business] cycle, we see a very good return on investment capital because our joint-venture strategy," Engibous said. "We are still working diligently to figure out how we get the volatility to be consistent with the goals of the whole company." Engibous added, "While we have made some progress, we don't have the answer as we stand here today." What Engibous and other TI officials want is to find a way weather bad times in DRAMs and still come close to the company's two key business goals: an average of 20% revenue growth and 20% return on invested capital. Engibous said the DRAM joint ventures have the potential to meet TI's return on invested capital goal because the majority of the capital investments are made by partners. The problem has been the volatility of DRAM pricing, he added. "Make no mistake about it, we look at our memory business as we look at all of our businesses," Engibous promised. "It must add value consistent with our company objectives." TI has explored a wide range of options--"more than there are options," quipped Engibous after his presentation. While he would not discuss details of these options, Engibous hinted of the kind of new arrangements being explored with TI's remaining joint-venture partnerships Singapore and Japan. "One option has been to consider payment based upon bits vs. DRAM devices," he said, referring to TI's discounted price for memories purchased from the joint-venture fab. "The bit growth continues at more than 70%."