Western Digital Investment Aimed at Securing Chips

Hoping to ensure a future supply of a scarce computer memory chip, Irvine-based Western Digital Corp. has invested $2 million in a Silicon Valley chip manufacturer.

Western Digital’s investment was part of $39 million in financing raised by Vitelic Corp. of San Jose to build a chip manufacturing plant in Taiwan.

The Taiwan plant, scheduled for completion in 1990, will produce 1-megabyte DRAM chips, which can store 1 million bytes of information on a single chip.

Vitelic is one of the few U.S.-based manufacturers of dynamic random-access memory chips, or DRAMs. Japanese producers have captured the lion’s share of the market for DRAMs, the most widely used type of memory chips.

DRAMs have been in short supply for about a year, causing a sharp surge in prices. Western Digital is a major supplier of devices that control the video display in personal computers, and each device requires DRAM chips.

“The supply has been less than our total needs,” said Gordon Graves, Western Digital’s vice president of sales development. “Since we are a large customer of DRAMs, we are concerned that there be enough supply.”

Vitelic will supply specialized 256-kilobyte chips to Western Digital and “help us devise cost-effective memory solutions for future video applications,” said A. Keith Plant, vice president of corporate development.

The 256K chip, which can store 256,000 bytes of information, continues to be the lowest-cost video memory for these applications, Plant said. “Western Digital invested because we are impressed with Vitelic’s continuing commitment to supply devices for this market.”