Motorola Set to Re-Enter Chip Market After 4-Year Absence

Motorola, one of five U.S. semiconductor makers that stopped making the memory chips nearly four years ago because of Japanese competition, has started pilot production at its once-idled Phoenix plant--the first of the five to return to the market.

The Schaumburg, Ill.-based communications and electronics company, which shuttered the plant in 1985, has begun producing one-megabit dynamic random access memories, or DRAMs. These are the tiny slices of silicon used to store data in most electronic devices, from personal computers to toasters to weapons systems. One-megabit chips are capable of storing 1 million bits of data.

The company is now the third U.S. maker of DRAMs, along with Texas Instruments in Dallas and Micron Technology in Boise, Ida., which never stopped manufacturing the chips.

Motorola, along with four other U.S. chip makers, pulled out of the DRAM market in 1985 amid charges that their Japanese competitors had artificially depressed prices for the devices by dumping huge quantities of them on the U.S. market. Of the five companies that abandoned the market that year, Motorola is the only one--so far--to return.

Analysts say the DRAM market has become more attractive to U.S. semiconductor makers because they are increasingly viewing the DRAM as a fundamental component of a complete product line. Equally important, a 1986 trade agreement with the Japanese stabilized prices for the chips.

Venture Will Continue

Semiconductor industry sources say that other U.S. chip makers are studying the market and may be poised to re-enter. Last week, the Semiconductor Industry Assn. said it was developing plans to re-establish large-scale U.S. production of DRAMs. Also, a small Silicon Valley firm, Alliance Semiconductor, has said it will begin producing semiconductors at an abandoned American Telephone & Telegraph plant in Kansas City, Mo.

Production at Motorola’s Phoenix facility is still in the test phase, but shipments to customers will begin later this year. The company also plans to start shipments to its European customers of one megabit DRAMs from a plant in Scotland later this year.