Hitachi Ltd and Texas Instruments Inc have decided to call it a day with their Dynamic Random Access Memory joint venture, finally giving into pricing pressures that have hit the DRAM market. Texas Instruments intends to form a new wholly owned subsidiary that will purchase the assets of the TwinStar Semiconductor Inc venture. The companies started work to create TwinStar, to develop 16Mb and 64Mb memory chips in Richardson, Texas in 1995 (CI No 2,583), and production started in 1996. But the companies entered the DRAM market just before prices fell and competition boomed. TwinStar was unable to build adequate cash reserves to sustain operations and invest in the future. TwinStar will be dissolved at the end of this quarter, when operations will be transferred to the new Texas Instruments subsidiary. The subsidiary, which has yet to be given a name will be formed at some point before the end of March, and it will acquire the TwinStar assets, of which TI and Hitachi both own a 36.4% stake. Texas Instruments spokesperson Leslie Price said the company will acquire the TwinStar assets because it is in our backyard and will give us the flexibility to determine what is the best solution to operate the facility. Price describes the facility that is capable of .25 micron technology, as state of the art, and TI clearly doesn’t want to throw the money it has already spent on it, down the drain. The company will not say how much it has spent on the joint venture, but it does say the plant itself is valued at around $500m. All former TwinStar employees will be employed by the new Texas Instruments subsidiary. Both TI and Hitachi will recognize special charges in their results, both companies already been affected by the fall in DRAM prices. In October Hitachi was forced to drop its profit forecast for the year to March 31 by 15% to $740m as a direct result of the collapse in DRAM prices (CI No 3,259).
