Toshiba Dumps Infineon, Sells Chipmaking Plant To MicronToshiba Dumps Infineon, Sells Chipmaking Plant To Micron

Japanese electronics company Toshiba Corp. has ended talks about a chipmaking partnership with German semiconductor company Infineon Technologies AG and will instead sell its U.S. DRAM plant to Micron Technology Inc.

Toshiba and Infineon had been in talks for several months to partner their chip businesses, hoping to cut costs in a depressed market. Just last week, Infineon CEO Ulrich Shumacher said the two companies had agreed on the framework of a deal. But Toshiba has decided to get out of the commodity DRAM market entirely, selling the Manassas, Va., Dominion Semiconductor plant to Micron by the end of January. Financial details of the transaction have not been disclosed.

VLSI Research analyst Risto Puhakka says the deal is good news for the semiconductor industry, and particularly for DRAM makers. "It gets one supplier out of the picture," he says. "It's been so bad for DRAM makers that there really needs to be a serious consolidation." Puhakka says that DRAM makers sell the chips at a loss because supply outweighs demand, but consolidation will give them some leverage.

Good news for chipmakers could be bad news for customers who are used to bargain-basement prices. "The issue here is that if the industry consolidates further, the suppliers will get some pricing power," Puhakka says. "Eventually, the systems makers will have to pay more and charge their customers more."