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Wednesday, 25 September, 2002, 07:15 GMT 08:15 UK
Mitsubishi investigates chip tie-up
Circuit board
Chip makers face a tough year in 2002
More signs of a radical shakeup in the global semiconductor industry emerged on Wednesday as Japanese number four chipmaker Mitsubishi Electric announced it was seeking a tie-up with its rivals.

The company would not name its potential partners, but a report in the Nihon Keizai Shimbun tipped NEC and Hitachi - numbers two and three in the chip market after Toshiba.

For Mitsubishi, such an alliance would mean that it - and Hitachi - would effectively have given up almost all their solo chipmaking capabilities.

The dynamic RAM (DRAM) market is heavily oversupplied, and volatile prices have caused havoc for companies which make them that goes well beyond the turmoil in the tech sector at large.

Realignment is seen by analysts as essential if the main players in the market are to recover their equilibrium.

Off balance

Thousands of jobs have been lost by the main protagonists in Japan in the past 12 months, as losses have mounted to record levels.

In response, Toshiba for one has given up on the DRAM market altogether, concentrating on the more lucrative and less competitive static RAM chips common in mobile phones and handheld devices.

According to the Nihon Keizai Shimbun, the proposed Hitachi-NEC-Mitsubishi joint venture - dubbed Elpida - would also include their own SRAM ventures.

If the deal goes ahead, the resulting company would take fourth spot worldwide in the DRAM market with an 11.1% market share, ahead of Germany's Infineon with 9.7%.

Shares in all three companies rose on Wednesday, bucking the Tokyo stock market's wider trend.

Further up the league table, world number one Samsung is still surviving, but the saga of bankrupt Korean chipmaker Hynix - the world's third biggest DRAM vendor - and its on-again, off-again takeover by the USA's Micron seems to be far from over.

See also:

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