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November 29, 1998

SIEMENS, IBM CHIP VENTURE SET FOR REBIRTH

By CBR Staff Writer

While en route to the flotation of its semiconductor business in the first half of next year Siemens will have to come to an agreement with IBM over their joint 16MB DRAM joint venture in Corbeil-Essones, France, the largest semiconductor manufacturing unit in Europe. The majority of the 150m chips produced annually at the plant in France are currently 16MB DRAM chips, an IBM spokesman said, which as both Siemens and IBM acknowledge, are far from being the money-spinning future of memory chip manufacturing. Apart from the 16MB DRAM chips churned out as part of a 50/50 joint venture between IBM and Siemens, IBM also uses the plant to separately produce a much smaller number of 64Mb DRAM chips. Both companies hope to have struck an agreement over the future of their joint venture before the end of the year. Current discussions between IBM and Siemens center around the logistics of cutting or dropping the production of 16Mb DRAM and shifting the focus of the joint venture into different products. Such a move will call for considerable investment in both technology and staff. Neither company would comment, however, on which products the French plant is likely to produce. The companies have been involved in ongoing research and development, with one Siemens and IBM joint product development project recently resulting in a 1GB DRAM , which will go into initial production next year, most likely at IBM’s Fishguild, New York plant. Siemens stressed that there is no question mark hanging over the future of its other manufacturing alliances with Motorola in Richmond, VA and with Mosel Vitelic in Taiwan are separate legal entities, which as separate legal entities will not be affected by the spinning out of the troubled semiconductor division in the first half of the year.

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