Mitsubishi plans to scale back its DRAM business

Mitsubishi Electric Corp. is looking for ways to scale back its DRAM (dynamic RAM) business and is considering an alliance with other companies, both in Japan and overseas, the company said Wednesday.

The announcement comes as Mitsubishi Electric looks to shift the focus of its semiconductor business from DRAM to system LSI (large scale integration) chips, said a company spokesman, who declined to give his name.

One possible solution may be to sell off its DRAM business. On Wednesday morning, the Nihon Keizai Shimbun paper reported that Elpida Memory Inc., a joint venture of NEC Corp. and Hitachi Ltd., is considering buying Mitsubishi Electric's DRAM unit and the two companies could reach an agreement in mid-October.

However, Mitsubishi Electric said no agreement had been finalized. "At this point, we are not planning to make such an announcement in mid-October," the spokesman said.

For its part, Elpida has said it plans to soon make an announcement but declined to confirm whether that announcement would be related to Mitsubishi Electric. "We cannot comment whether this announcement is regarding an alliance with Mitsubishi Electric and when this is taking place. However, we will be making an announcement soon," an Elpida representative said.

Falling DRAM prices and competition from companies in Taiwan and South Korea hit many Japanese chip makers hard last year. Companies such as Fujitsu Ltd. and Toshiba Corp. have already withdrawn from the business. Looking for a way out, Mitsubishi Electric and others are trying to reform their semiconductor businesses by cutting down on DRAM sales and shifting their focus to system LSI.

"By last year's earnings, our DRAM sales were down to five percent of our semiconductor business. More than half of our DRAM products are now manufactured by a Taiwanese foundry, too," the Mitsubishi spokesman said. The company plans to further reduce its DRAM sales, he said.

However, DRAM is still an important product for Mitsubishi Electric and the company wants to take advantages of related technologies that it owns, the spokesman said. Whether the company will continue to operate a small DRAM business has not been determined, he said.