Chief Expects Opposition to New Plan for Alliance With Fujitsu : Fairchild Blames Rivals for Failed Merger

The chief executive of Fairchild Semiconductor lashed out at his competitors Wednesday, accusing them of kindling “the fires of opposition” that led to the collapse of Fujitsu Ltd.’s plan to buy control of his company.

Fairchild’s Donald W. Brooks also said he expects industry leaders to oppose a new plan for the Japanese electronics giant and the Cupertino, Calif.-based chip maker to share technology and manufacturing instead of merging.

But that proposed alliance, Brooks said at a news conference here, is “legally and morally right” and offers no basis for opposition from U.S. industry or government.

Fujitsu and Schlumberger Ltd., Fairchild’s French-controlled parent company, on Monday said they had terminated the agreement for Fujitsu to buy 80% of Fairchild, citing the mounting “political controversy” that the proposed sale has raised since it was disclosed in October.

Brooks is heading a management team that now hopes to buy Fairchild from Schlumberger and join Fujitsu in a scaled-back venture.

He named semiconductor innovator Robert N. Noyce, vice chairman of Intel, and Wilferd Corrigan, chief executive of LSI Logic, as two of the industry executives who actively tried to block Fujitsu’s acquisition plan.

He said he was unaware of any direct U.S. government intervention in the proposed sale. “Our competitors have continued to kindle the fires to create opposition,” he said, adding that he expects the “competition will again raise protectionist objections to our (proposed venture) with Fujitsu.”

An Intel spokeswoman said that while Noyce had expressed his opposition to the sale, he did not actively lobby against it. An LSI Logic spokesman said Corrigan had “echoed views shared by the rest of the semiconductor industry” in opposing the sale, and believes that the government should examine the structure of the newly proposed partnership.

“If these alliances between Fairchild and Fujitsu are meant to circumvent the interests of government, they should get the same kind of examination and scrutiny the original venture elicited,” said the spokesman, and LSI Logic “will continue to raise the issues and let the government decide.”

Among the issues raised by Corrigan and others were the possibility that national security would be compromised by Japanese ownership of an important military contractor. Defense contracts account for about 30% of Fairchild’s revenue.

But Brooks discounted the possibility of selling the company’s government contract business to satisfy such objections. He said that 80% of the company’s assets required to make semiconductors for the military are also used to make the chips the company sells to its commercial customers.

Brooks said Fairchild has had a “handful” of inquiries from financial institutions and believes that it can obtain sufficient funding for the proposed management buyout. But, he said, “we are not interested in an investor that wants to downsize the company.”

He said funding would come from U.S. sources, but offered no details.

Officials at the Commerce and Defense departments declined comment Wednesday, saying they had no details on the new plans.