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No. 359, August 1999

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Japanese Companies in the US


SEMICONDUCTORS

INTERNATIONAL BUSINESS MACHINES CORP.'s interest in limiting its exposure to the volatile DRAM market will give TOSHIBA CORP. the opportunity to implement the part of its semiconductor reorganization strategy that involves becoming a full-fledged U.S. manufacturer of memories. The two are equal partners in DOMINION SEMICONDUCTOR LLC, a Manassas, Virginia 64-megabit DRAM wafer fabrication facility that has been operational since September 1997. By the end of 2000, Toshiba will buy out IBM's half of Dominion. Financial terms were not disclosed, but industry sources in Japan speculate that the Japanese semiconductor maker will pay between $166.7 million and $250 million for its partner's share. That is a bargain price if these reports are true. IBM and Toshiba each put up $200 million toward Dominion's capitalization and equally split the estimated $1 billion cost of building and equipping the wafer fab. Even before the purchase is finalized, Toshiba will increase its share of Dominion's output to 75 percent from 50 percent. The plant currently has the capacity to make 4 million 64-megabit DRAMs a month, a figure that will rise to 6 million by yearend (see Japan-U.S. Business Report No. 353, February 1999, p. 9). In the fourth quarter of 2000, Toshiba will begin switching over part of the capacity used by IBM for DRAMs to the production of NAND flash memories. The company has tagged these devices as one of its core memory products, not just because of the rapid growth forecast for this market but also because flash memories, like static RAMs, another targeted product, have higher margins than DRAMs.

Although it promises considerable long-term financial rewards, the decision by SOFTBANK CORP. to become essentially a pure-play Internet company could prove costly in the short term as the firm divests or downsizes its non-Internet holdings. A case in point is Softbank's agreement to sell its 80 percent stake in KINGSTON TECHNOLOGY CORP. to the Fountain Valley, California firm's founders for $450 million. The Japanese company paid about $1.5 billion for this share of the world's top maker of memory boards for PCs in the fall of 1996.

A pair of semiconductor start-ups recently attracted funding from Japanese companies. MATSUSHITA ELECTRIC INDUSTRIAL CO., LTD. participated along with several name American investors in the third round of financing for TENSILICA INC. The Santa Clara, California company is involved in the emerging market for application- specific processor cores and software development tools used in high-volume, embedded systems. Tensilica, which has raised $33 million in venture capital, including $20 million in the last round, has a subsidiary in Yokohama (see Japan-U.S. Business Report No. 357, June 1999, p. 21).

For its part, KOMATSU ELECTRONIC METALS CO., LTD., an original investor in SILICON GENESIS CORP., joined in a second round of financing for the Campbell, California company that brought total funding to more than $30 million. SiGen will use the new money to further development of its Genesis Process layer-transfer technology for the cost-effective production of silicon-on-insulator wafers. At the start of 1999, the company won a contract from Komatsu Electronic Metals for a plasma implant system for SOI wafer production qualification. The two also signed a research agreement (see Japan-U.S. Business Report No. 352, January 1999, p. 19).

In a gutsy move, three small Kumamoto prefecture semiconductor production equipment suppliers are setting up shop in Hillsboro, Oregon. Their immediate goal is to win more business from Japanese-affiliated semiconductor and other electronics manufacturers operating in Oregon, although the large number of American high technology companies in the state no doubt is an attraction as well. PRECEED CO., LTD. already has formed a subsidiary; KHC CO., LTD. and KOTO SEISAKUSHO K.K. are in the process of doing so. All three have arranged to lease office and factory space from AIRTECH JAPAN, LTD.'s Hillsboro subsidiary.

Already the largest supplier in Japan of excimer laser light sources for patterning silicon wafers, KOMA-TSU LTD. is attempting to break into the American market. Its vehicle is the G20K, a fifth-generation, 248-nanometer krypton excimer laser light source operating at 2000 hertz. According to Komatsu, this product incorporates several advances to lower the traditionally high cost of using deep ultraviolet light sources, such as a 20 percent cut in power consumption and a doubling of the life expectancy of the light chamber. To backstop its move into the United States, Komatsu established a sales office in Santa Clara, California and a training center in Hillsboro, Oregon. It expects to have evaluation G20K units at the training center later this year and to open regional sales office on the East Coast and in the South in 2000.

NHK SPRING CO., LTD. is working with memory test equipment provider AEHR TEST SYSTEMS to create full-wafer probe contactors for use in wafer-level burn-in and test systems. Although best known as the world's largest spring manufacturer, NHK Spring is a leading supplier of miniature contactors for use in semiconductor wafer probe heads and in various test sockets. Mountain View, California-based Aehr Test Systems is developing a cost- and time-saving system that will enable chip manufacturers to perform burn-in and parallel functional testing of integrated circuits while still in wafer form. Contactors are integral to this system. The partners expect to roll out their full-wafer burn-in and test system in early 2000.

An exchange rate of ¥120=$1.00 was used in this report.aaaaaa

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