TECHNOLOGY : Spinoff by National Will Resurrect Fairchild Name

Fairchild, a historic name in the computer chip industry, is coming back.

National Semiconductor Corp. will spin off its memory and logic chip operations into an independent company called Fairchild Semiconductor. It took the first step Thursday by putting the operations into a new division and hiring investment bankers to help with the spinoff.

The operations are less profitable and have less growth potential than National’s main business, making so-called “mixed-signal” chips that convert analog and digital signals.

Investors were heartened by the prospect that National’s profit margin and balance sheet may get a boost from the move. The company’s stock rose 87.5 cents to $16.25, or 6%, on the New York Stock Exchange.

National’s sales and profits have fallen recently. New Chief Executive Brian Halla plans to revive them by eliminating the lower-margin operation and investing in design and manufacturing to build better products. He implemented a similar strategy to revive LSI Logic Corp.

“The depreciation associated with Fairchild is going to be much lower and the executives at National will be more focused,” said Drew Peck, analyst at Cowen & Co. “It looks like the impact of this and of the new products could come to fruition in late 1997.”

The spinoff resurrects a historic name in Silicon Valley. The original Fairchild Semiconductor was formed in 1958 as a unit of Fairchild Camera & Instrument. It gave birth to the first computer chip that could be mass produced and by the mid-1960s was Fairchild Camera’s biggest operation.