Texas Instruments Will Make Computer Chips With Kobe Steel in Japan

In the latest in a series of linkups between American semiconductor manufacturers and Japanese companies, Texas Instruments and Kobe Steel Ltd. announced Monday that they have agreed to start a joint venture that will make computer chips in Japan.

The two companies said they plan to build a $350-million production facility in Hyogo prefecture (state) in western Japan and to begin production of CMOS (complementary metal oxide semiconductor) logic devices by mid-1992.

The arrangement provides a capital infusion to Texas Instruments’ manufacturing effort in Japan, where it is the leading U.S. supplier to the domestic semiconductor market. It also serves Kobe Steel’s strategy to diversify into the electronics and advanced materials sectors.

Kobe Steel, one of Japan’s largest steelmakers with projected sales of $8 billion (1.22 trillion yen) for the fiscal year ending March 31, will initially own a majority share in the joint venture, to be called KTI Semiconductor Ltd.

Dallas-based Texas Instruments, which has had a manufacturing presence in Japan for 27 years, will sell the semiconductors made by the joint venture in Japan and in overseas markets.

The agreement with Kobe Steel “fits very well with our strategic program to increase our involvement in the consumer electronics segment of the semiconductor market in Japan, while providing strong protection for our technology,” Akira Ishikawa, senior vice president of Texas Instruments’ semiconductor group, said in a prepared statement.

Texas Instruments operates four plants in Japan. Late last year, the company began building a research and development center in Tsukuba, north of Tokyo.

The venture with Kobe Steel follows the recent emergence of several other transpacific deals in the semiconductor industry.

At the beginning of March, AT&T; Microelectronics and Japan’s NEC Corp. announced an agreement to cooperate in a wide range of semiconductor technologies, including efforts to design American Telephone & Telegraph’s semiconductors into NEC computers. AT&T; previously had announced a manufacturing project with Mitsubishi Electric Corp., giving the American company access to Mitsubishi’s static memory chip technology.

Earlier this year, Intel Corp. teamed up with Japan’s NMB Semiconductor Co. and Advanced Micro Devices swapped one of its plants for access to some of Sony Corp.’s semiconductor technology.

Competition between the U.S. and Japanese semiconductor industries has been a contentious trade issue for more than a decade, with critics on the American side complaining that Japanese makers--strengthened by government support, cheap capital and the economies of scale--have flooded overseas markets and blocked foreign imports into their home market.

In 1986, the United States and Japan reached a controversial semiconductor agreement intended to stop Japanese dumping and to open the domestic market to American imports. U.S. officials said the agreement contained a side letter guaranteeing that the American market share would increase from about 8.5% to 20% by 1991, and imposed punitive tariffs on some Japanese electronics imports in 1987 when it appeared significant progress was not being made.

Recent statistics, however, suggest Japanese end users are beginning to rely more heavily on foreign suppliers. According to the World Semiconductor Trade Statistics organization, an internationally accepted authority, foreign makers had increased their share of the Japanese semiconductor market from about 10% at the beginning of 1989 to 12.9% in the fourth quarter of last year. The vast majority of these chips were ostensibly from American suppliers.